US embassy cable - 02ABUJA630

UNCLAS SECTION 01 OF 03 ABUJA 000630 
 
SIPDIS 
 
 
NSC FOR USTR RWHITKER 
 
 
E.O. 12958: N/A 
TAGS: ECON, EINV, EAID, EAGR, NI 
SUBJECT: NIGERIA: GUM ARABIC SUCCESS STORY 
 
 
1.  Summary.  Ambassador Jeter and AUSTR Whitaker visited 
Jigawa and Kano states on January 28 and 29 respectively. Two 
years of negotiations, involving the U.S. private sector, 
Nigerian State and Federal Governments, USTR and the U.S. 
Embassy resulted in the January 28 launching of the Gum 
Arabic Initiative, and the sale of the facility,s entire 
2002 annual production to Coca Cola and other U.S. corporate 
consumers.  The Gum Arabic Initiative, jointly funded by 
USAID and Coca-Cola, established a quality control laboratory 
in Jigawa and will train farmers on quality control.  By 
producing an unadulterated product of certifiable quality, 
the Initiative will help Nigerian gum arabic exports to the 
U.S. grow from virtually zero to encompass the entire crop of 
Jigawa and much of the superior grade-1 produce from 
surrounding states, creating at least 600 new jobs.  Niger 
Republic will also be an indirect beneficiary.  Gum arabic is 
the first totally new public-private business opportunity 
created since Nigeria,s 1999 return to civilian government, 
and it offers economic development to one of the nation,s 
poorest areas.  In northern Nigeria,s commercial center of 
Kano, the Ambassador and AUSTR Whitaker met leaders from the 
private sector, State government officials and the powerful 
Emir of Kano to discuss developing other goods for export 
under AGOA.   End Summary. 
 
 
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Gum Arabic Project in Jigawa State 
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2.   On January 28, Ambassador Jeter and AUSTR Rosa Whitaker, 
accompanied by Embassy officers (ECON, USAID), traveled to 
the Maigatari Export Free Zone in Jigawa State to launch the 
Gum Arabic Initiative.  The ceremony was attended by over 
2,000 people, including the governors of Kano, Zamfara, 
Bauchi, Kebbi, and Jigawa States, the Federal Minister of 
Agriculture, Minister of Commerce, traditional rulers from 
Jigawa State, farmers, journalists and private sector 
representatives, including three of the top purchases of gum 
arabic from the United States and officials of Coca-Cola. 
 
 
3. In her speech, AUSTR Whitaker noted that the Gum Arabic 
Initiative represented an important partnership between the 
Jigawa State Government, the USG and U.S. industry.  The 
partnership will continue through USAID-provided training for 
numerous farmers in all gum arabic-producing states on tree 
cultivation, management and harvesting techniques that will 
enable them to produce higher-quality gum.  Coca-Cola and 
USAID together funded the construction of a gum arabic 
quality control laboratory in Maigatari.  The quality control 
laboratory will ensure that Nigerian gum arabic is 
unadulterated and meets required high U.S. standards. 
 
 
4.  In his remarks, the Ambassador emphasized that the gum 
arabic initiative was just one step in growing economic 
cooperation between Nigeria and the U.S. aimed at developing 
the agricultural sector.  The gum arabic launching 
represented a significant non-oil economic dividend for 
Nigeria and should help Nigeria establish itself in an 
important niche market in the U.S., he noted. 
 
 
5. Presidents of Importers Service Corporation, Atlantic 
Gums, and executives from Coca-Cola represented the U.S. 
private sector.  These three U.S. firms constitute nearly 70 
percent of U.S. gum arabic imports and consume 50 percent of 
gum arabic exports worldwide.  In an historic move, these 
firms announced their agreement to purchase the entire crop 
(300 metric tons) of high-grade gum arabic from Jigawa State 
this season.  This purchase is expected to generate 600 jobs 
for Jigawa farmers.  Gum arabic farmers from surrounding 
states as well as producers from the Niger Republic also 
stand to benefit as more and more regional production is 
channeled through Jigawa at the testing facility there.  The 
new quality control laboratory has provided the assurance 
needed to change U.S. industry's long-standing position of 
not purchasing Nigerian gum arabic in bulk because of the 
high level of adulteration. 
 
 
6. The gum arabic launching was a tremendous success and was 
favorably featured in all the major media and lauded by many 
Nigerian leaders.  The Minister of Agriculture publicly 
praised the public-private partnership between the U.S. 
Government, U.S. industry and the GON.  He also announced 
that the Ministry of Agriculture would promote the production 
of acacia (gum arabic) seeds and seedlings for distribution 
to farmers at subsidized rates. 
 
 
7. This success story has encouraged Nigerian Governors and 
farmers who look forward to the expansion of the project to 
other gum producing states, and emulation of this program in 
other agricultural sub-sectors.  In this vein, the Ambassador 
emphasized that the quality control laboratory and U.S. 
support for Nigeria's gum arabic exports would not be limited 
to Jigawa State, but expanded to include the entire gum 
arabic producing belt. 
 
 
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The Kano Private Sector: Export of Leather Goods and Fruit? 
--------------------------------------------- -------------- 
 
 
8. On January 28, the Ambassador also hosted a dinner in Kano 
for AUSTR Whitaker to meet members of the Kano Chamber Of 
Commerce, Industry, Mines and Agriculture (KACCIMA). 
Introducing Rosa Whitaker as a leader and key implementor of 
AGOA, the Ambassador stressed the meeting would allow the 
Kano Chamber to air concerns or questions regarding AGOA 
benefits.  AUSTR Whitaker explained that AGOA has brought an 
additional USD 1.2 billion in U.S. trade and USD 1 billion in 
U.S. investment to Africa.  Whitaker gave examples of African 
achievements using AGOA, including the creation of 30,000 
jobs in Madagascar, 50,000 jobs in Kenya, and 66,000 jobs in 
South Africa, with South Africa now a major exporter of 
assembled Mercedes Benz and BMW vehicles.  Moreover, Namibia 
had attracted USD 100 million in the garment manufacturing 
industry, directly tied to AGOA. 
 
 
9.  Whitaker stressed that Nigeria and, in particular, Kano 
State could benefit from AGOA.  She said, for example, that 
Nigeria could become a leading exporter of leather goods, 
noting that Kano has comparative advantage in the production 
of leather.  High tariffs on leather goods originating in 
Taiwan and China would give further advantage to Nigerian 
leather producers.  The Chamber members noted that Nigerian 
leather is presently exported to Italy and Spain, though on a 
small-scale.  Whitaker offered to link the Nigerian leather 
goods industry to prospective buyers in the U.S. once the 
quality is improved and a wholesaler emerges. 
 
 
10.  Chamber members also commented that Nigeria produced 
large amounts of fruit, which eventually spoiled due to poor 
storage and preservation techniques.  Whitaker replied that 
if appropriate preservation techniques were adopted, a large 
market exists in the U.S for fruit and fruit products.  She 
noted that cane and straw products (furniture, baskets etc), 
also were in high demand in the U.S., a market she believed 
Nigeria could capture.  The Chamber members replied that they 
would convey Whitaker,s message to their constituency and 
would define areas where they might need U.S. support. 
Whitaker promised to help find a market for the products and 
assist in ensuring that the products meet the required 
standards. 
 
 
11. Ambassador Jeter and AUSTR Whitaker also met with key 
players in the Kano public and private agriculture sector. 
During the meeting, USAID and the Kano agriculturists agreed 
to form a committee to discuss on a regular basis USAID 
programs, such as the farmer-to-farmer program, and link 
these programs with AGOA export opportunities. 
 
 
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Meeting with Kano State Governor and Emir 
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12. The Ambassador and Whitaker met January 29 with the 
Governor of Kano State, Dr. Rabiu Musa Kwankwanso and members 
of the Governor's Cabinet.  Whitaker elaborated on the AGOA 
initiative and its achievements in Lesotho, Madagascar, 
Kenya, Namibia and South Africa.  She noted that leather 
(hides) could be produced at a comparative advantage in Kano. 
 
 
13.  Governor Kwankwanso thanked the Ambassador for the Gum 
Arabic Initiative, noting that the press in Kano State has 
called it the "Ambassador,s Initiative".  The Governor said 
that the gum arabic plantation in Jigawa was shared between 
both States since Jigawa was originally part of Kano State. 
Governor Kwankwanso said that his government would support 
farmers' participation in the initiative, and Kano would 
definitely benefit. 
 
 
14.  The Ambassador and Whitaker also paid a courtesy visit 
on the Emir of Kano, Alhaji Ado Bayero.  The Ambassador 
discussed the willingness of the United States to help the 
Nigerian agricultural sector and the economy of Kano.  USAID 
had just sponsored a conference for Nigerian exporters and 
trade associations to identify export products where Nigeria 
might have a comparative advantage.  Whitaker noted that 
Nigeria was not fully availing itself of opportunities such 
as AGOA.  Nigeria has comparative advantage in several 
products, e.g. cashew nuts, leather (hides), ginger, sesame 
and cotton because of duty free treatment under AGOA.  The 
Ambassador advised that a private sector-led development 
strategy should be pursued in areas such as fertilizer sales 
and distribution, and USAID had just launched an initiative 
to do just that. 
 
 
15. Whitaker emphasized that if Nigeria does not move quickly 
under AGOA, the country could miss the window of opportunity 
currently provided by large amounts of available capital 
seeking investment opportunities.  The Emir agreed that 
Kano's economy was based primarily on agriculture and looked 
forward to future U.S. cooperation with Kano, such as USAID's 
proposed meetings with Kano agriculturists.  The Emir praised 
the Gum Arabic Initiative and hoped it would be a success. 
 
 
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Jigawa State Governor Turaki 
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16. Governor Turaki, through the gum arabic and other 
initiatives, provides an excellent example of how a 
successful State Governor can "deliver the goods" to his 
constituency.  Governor Turaki has generated several 
initiatives during numerous trips to the U.S. in pursuit of 
foreign investment and trade.  The Governor's success has 
helped to vindicate him from growing criticism of 
participating in "excessive" trips abroad. 
 
 
17. Besides the gum arabic initiative, Governor Turaki's 
other initiatives are noteworthy.  First, Arkel Sugar in 
Louisiana has agreed to develop a sugar production project in 
Jigawa that may expand to include a bio-mass energy 
production facility.  Second, a Maryland firm, TCS, recently 
completed the first phase (broad band network) of Jigawa's 
telecommunications infrastructure as a part of the Governor's 
plan to have internet accessibility for all schools in the 
state.  Third, the Tennessee Valley Authority (TVA) has been 
working in Jigawa over the past two years to complete the 
state's infrastructure plan and will soon begin installing a 
power project. 
 
 
18. Several prominent Nigerian officials skeptical of 
Turaki's trips abroad expressed surprise and pleasure that 
the Governor is now landing deals.  These officials 
unexpectedly opined that of all Nigeria's State Governors, 
Turaki was the least likely to be re-elected in 2003 due to 
the perception that he has spent more time abroad than in 
Jigawa.  Many have criticized him for trying to do too much 
in an unfocused manner.  However, President Obasanjo told the 
Ambassador and Whitaker that he approved of Governor Turaki; 
"He's a maverick.  People think he's a mad-man, but he's mad 
with a method," he said.  Now that Turaki's initiatives have 
borne fruit, we suspect that his election prospect will be 
enhanced in 2003. 
 
 
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Comment 
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19. The Gum Arabic Initiative was a great success and 
positive image-maker for the U.S. Mission in Nigeria. 
Through this initiative, the USG has made significant inroads 
in introducing U.S. businesses to Northern Nigeria, a 
previously overlooked region.  Moreover, the USG has earned 
credibility with the Ministries of Commerce and Agriculture 
and northern State Governors in bringing U.S. investment into 
the country.  While the Embassy is receiving credit for this 
program, this initiative was really conceived and implemented 
by AUSTR Rosa Whitaker.  Ms. Whitaker deserves full credit 
for her hard work and leadership over the past two years to 
make this initiative a reality. 
 
 
Jeter