US embassy cable - 04LAGOS1291

UNCLAS SECTION 01 OF 02 LAGOS 001291 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: TBIO, SOCI, ECON, PGOV, NI 
SUBJECT: CHANGE OF MANAGEMENT AT NATIONAL HOSPITAL, 
ABUJA: RISKS AND OPPORTUNITIES 
 
 
1. Summary. In early May 2004, President Obasanjo 
canceled the contract of the expatriate management team 
of the National Hospital of Abuja, a year before it was 
to be up for review.  The British managers had been 
facing discontented staff, equipment breaking down, and 
the envy of Nigerian professionals who believe they are 
as qualified as were the expatriates to run the 
hospital. To do this well, the interim management team 
will have to liquidate substantial salary arrears and 
ensure repair and maintenance of key equipment. 
Commissioned in 1999, the hospital had state-of-the art 
equipment that risks falling into disrepair unless the 
new team effects a quick turnaround. The time may be 
right for U.S. firms like Adams & Associates to take up 
the challenge. End summary. 
 
2.  In April 2004, Obasanjo dissolved the governing 
board of the National Hospital, Abuja and replaced it 
with an interim management committee.  He also 
terminated the GON's management services agreement with 
International Hospitals Group Limited, a British firm, 
at that time.  Obasanjo's action may have been 
motivated in part by longstanding unresolved labor 
issues at the hospital. According a Daily Times report 
of October 3, 2003, the hospital staff was then owed 34 
months salary arrears.  By then, IHG had been managing 
the National Hospital about a year; that is, since 
November 2002 based on a contract signed in February 
2002. Perhaps these arrears should not be attributed 
solely to the IHG, however. The Daily Times further 
reported that while the Presidency had released funds 
to cover 17 of the 34 months in arrears, the Hospital 
had, as of October 2003, not confirmed receipt of such 
funds. 
 
3.  Whether such funds were ever disbursed is 
questionable.  It is possible that the GON withheld 
these funds from the National Hospital on the grounds 
that its contract with IHG was generous enough for the 
latter to cover the hospital's personnel costs.  An 
article that appeared in ThisDay, a leading Nigerian 
daily newspaper, in late 2002 or 2003 asserted that IHG 
was to receive $6.55 million annually over a ten-year 
period.  The award of the contract had provoked the ire 
of a former speaker of the Federal House of 
Representatives, Ghali Umar Na'Abba.  At his 
instigation, the Special Project Committee of the House 
had issued a report concluding that "for reasons of 
cost., availability of Nigerian doctors and personnel 
here and abroad to do this job, national security and 
pride, stemming the brain-drain, etc., the [Special 
Project Committee] advised that the management contract 
option be given another thought if not entirely put 
away." 
 
4.  Critics of the contract had alleged that that the 
British firm lacked experience and the capability to 
handle the project. Obasanjo replied that "the 
selection process [had] adopted international bidding 
standards through transparent and competitive 
tendering."  The President had further noted that 
unlike other bidders for the contract, IHG's proposed 
professional fee had been among the lowest and IHG had 
submitted audited accounts of its operations covering 
the preceding six years. More important, IHG had been 
the only bidder offering to invest in the National 
Hospital. While more than a year ago Na'Abba had 
asserted that staff morale had plummeted following the 
news of the proposed privatization of the hospital, as 
recently as May 11, 2004 the Daily Trust claimed that a 
South African firm was then negotiating to buy the 
hospital. 
 
5. Whether the change in management at National 
Hospital, Abuja is a sign that privatization is moving 
along is arguable. The communiqu issued at the end of 
the annual general conference of the Nigerian Medical 
Association on May 2, 2004 at Kwara Hotels, Ilorin 
gives cause for concern.  The communiqu noted that 
"the association commends the Federal Government for 
terminating its contract with the IHG Management 
Consultants hitherto engaged to manage the National 
Hospital and bringing back on board Nigerians to manage 
the hospital.  The Association sees this as a positive 
development, as it has always affirmed its firm belief 
in the ability of Nigerian doctors to manage the 
Nation's hospitals.  The Association hopes that the 
newly engaged indigenous managers will be given the 
utmost assistance and free hand in their efforts to 
reposition the National Hospital." 
 
6. Plans for the establishment of the National 
Hospital, Abuja, had been on the drawing board a long 
time.  Former Nigerian president Shehu Shagari first 
suggested the project on September 23, 1981.  His plan 
was derailed until the mid nineties when the wife of 
the former dictator Sonny Abacha declared in Beijing in 
1996 that his government would soon build was then to 
become the National Hospital for Women and Children. 
The hospital was commissioned in May 1999 by the 
military chief of state General Abdulsalami Abubakar. 
A year later, President Obasanjo approved its change of 
name to National Hospital, Abuja, to confirm its access 
to male and female patients. 
 
7.  Comment.  The performance of the management teams 
of the National Hospital, Abuja has been less than 
stellar since its opening five years ago.  The politics 
of labor may have prevented IHG from performing as well 
as it might have under a less politicized clime.  The 
risk is great that the interim Nigerian managers will 
do no better. The Daily Trust report of May 11 suggest, 
however, that the GON may be prepared to weather the 
storm.  If that report is correct, Obasanjo's 
termination of the contract with IHG may have provided 
an opportunity for a firm like Adams and Associates of 
Cambridge to manage or invest in the National Hospital, 
Abuja. This U.S. company is working with EX-IM Bank on 
other public health projects in Nigeria and might be 
prepared to take up this challenge. 
 
Kramer