US embassy cable - 04ABUJA1319

UNCLAS SECTION 01 OF 02 ABUJA 001319 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, PHUM, ECON, NI 
SUBJECT: KADUNA ROUNDTABLE:  GRIM ECONOMIC OUTLOOK AND LACK 
OF REFORMS CONTRIBUTE TO VIOLENCE 
 
 
1.  (U) Summary.  The Ambassador recently traveled to Kaduna, 
the political nerve center of the North, where he met 
political and religious leaders.  All agreed that Nigeria's 
situation was difficult, with less money in circulation in 
spite of outsized oil revenues over the last few years and 
President Obasanjo's economic reforms exacting an excessive 
toll on the ordinary people.  They also identified poverty 
and unemployment as two of the principle factors that trigger 
seemingly constant clashes among Nigerian communities.  End 
Summary. 
 
2.  (U) On July 15, the Ambassador traveled to Kaduna, the 
political nerve center of the North.  Long a haven for 
retired military officers and politicians, Kaduna provides a 
cross-section of northern political currents.  The Ambassador 
engaged locals on a variety of topics.  In addition to a 
meeting with the Governor (septel), he also met with a group 
of religious and political contacts.  They agreed that 
Nigeria faced many problems and identified poverty and 
unemployment as two of the worst contributors to communal 
violence. 
 
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On the Economy 
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3.  (SBU) Suleiman Hunkuyi, ANPP gubernatorial candidate and 
former Kaduna finance commissioner observed that the living 
standard of Nigerians was fast diminishing in spite of the 
"colossal amount of money generated from oil," adding that 
average citizens now found it difficult to meet basic family 
obligations.  "Many parents already owe school fees and find 
it difficult to feed their families," Hunkuyi stated.  He 
mentioned that half of the shops at the Kaduna Central 
Market, the biggest in the state, stand empty due to 
Nigeria's dismal economic performance over the past few 
years.  "Since the purchasing power of most people has been 
eroded, traders find it difficult to sell their wares," he 
said. 
 
4.  (SBU) Retired Colonel Hamid Ali, former Kaduna military 
governor and the current Secretary of Arewa Consultative 
Forum (ACF), an influential Northern pressure group, 
attributed the current economic problems to the shrinking of 
capital expenditure.  Because the government is a major 
player in the Nigerian economy, he said, its failure to 
execute capital projects is having a devastating effect on 
the economy.  According to him, there has been almost no 
major capital investment in the country over the last five 
years and without this, economic activities will continue to 
dry up. 
 
5.  (SBU) Bello Suleiman, Minister of Power and Steel under 
General Abdulsami Abubakar, blamed the newly introduced GSM 
cell phone standard for impoverishing many families.  While 
Obasanjo recently touted GSM as a success because many young 
boys were hawking recharge cards on street corners, Bellos 
said that breadwinners now divert money meant for family 
upkeep to buying recharge cards.  GSM in Nigeria provides 
questionable service, but has assumed a its place as a status 
symbol in society:  many low-income earners struggle to 
purchase GSM lines to demonstrate their status. 
 
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Economic Reforms:  a Blessing or Curse? 
--------------------------------------- 
 
6.  (U) The group unanimously averred that the reforms of the 
Obasanjo administration were good policies, designed with 
good intentions, but they complained that the institutions to 
support the reforms were either non-existent or too weak to 
implement the needed changes.  For example, deregulation of 
oil was a laudable policy, they said, but attempts by the 
Government to implement this policy without expanding 
Nigeria's tattered safety net had entrenched poverty and 
encouraged more corruption.  Nigerians are poorer now and the 
standard of living has plummeted to a level unprecedented in 
Nigeria's history, they agreed. 
 
7.  (SBU) Ali viewed the current economic reforms as 
desirable but said they lacked a "human face."  He criticized 
reform implementation as "poor and counterproductive."  Ali 
told the Ambassador that Obasanjo's "boardroom" economic 
strategies contradict "practical economic realities" and said 
some aspects of the reforms were hurriedly implemented 
without considering local conditions.  He described the 
recent banning of the importation of rice by the Nigerian 
government as "hasty" and "untimely," leading to price 
increases and excess profits for smugglers.  Ali wondered 
what the government hoped to gain by the ban when it had 
instituted no plans to stimulate local production. 
 
8.  (SBU) Hunkuyi echoed Ali's sentiments, emphasizing that 
it is counterproductive to ban imports without making 
provisions for local substitutes.  He claimed that serious 
local and international investors who expressed interest in 
supporting the reforms had been frustrated.  Hunkuyi recalled 
recently that an American firm offered to boost local 
production of rice in Nigeria by setting up rice mills and 
growing the rice locally, providing employment and improving 
the quality of the product.  According to him, the American 
firm had followed all procedures and satisfied all 
conditions, but abandoned the project due to harassment by 
government officials. 
 
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Causes of Communal Violence 
--------------------------- 
 
9.  (SBU) Reverend Bitrus Dangiwa of the Inter-Faith 
Mediation Center, a Kaduna-based NGO promoting harmony 
between Muslims and Christians, said that politicians and 
mischief-makers recruit unemployed youths to advance their 
cause during communal crises.  In the course of his work, 
Dangiwa said he encountered a direct correlation between 
poverty and ethnic conflicts.  "To address the issue of 
conflict, you must properly address the issue of poverty," he 
said.  He claimed politicians incite the unemployed against 
political opponents using religion, land ownership, economic 
disparity, and the settler-indigene issue to appeal to the 
lowest common denominator. 
 
10.  (SBU) Hunkuyi concurred with Dangiwa, pointing out that 
there is more tension and political upheaval now than during 
the military era, and he also identified poverty as one of 
the primary causes of communal unrest.  "Unemployed and poor 
people do not consider that life has any value.  Because of 
this they attack, kill, and maim at the slightest 
provocation," Hunkuyi commented. 
 
11.  (SBU) Colonel Ali blamed the Obasanjo administration's 
neglect of agriculture for creating "dislocations and 
distortions" in society.  He said that in addition to 
hastening rural-urban migration, it had created more 
unemployment and widened the gap between the rich and poor. 
"The escalating cost of agricultural inputs and lack of 
stable prices for farm produce have forced many farmers to 
abandon this age-long profession in search of elusive and 
non-existent urban jobs," exacerbating societal decay, Ali 
commented. 
 
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Comment 
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12.  (U) All interlocutors at this meeting professed to be 
"supporters" of America in Nigeria.  As observers of the 
Nigerian condition, they each brought a unique view to the 
conversation but invariably came back to the same conclusion: 
 Nigeria's economy is not improving. 
CAMPBELL