US embassy cable - 05LAGOS1064

UNCLAS LAGOS 001064 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PGOV, PREL, NI 
SUBJECT: WORLD BANK STRATEGY FOR DEBT RELIEF IN NIGERIA MAY 
FALL SHORT OF REAL NEEDS 
 
 
1. (U) On July 5, 2005, the Lagos Business School held its 
usual monthly breakfast for Nigerian business leaders. 
Different from the usual, however, this month's meeting 
focused on Nigeria's recent triumph in securing debt relief 
from Paris Club donors. Hafez Ghanem, the World Bank (WB) 
Country Director for Nigeria, spoke on debt relief and its 
impact on planned development programs in the country. 
 
2. (U) Ghanem confirmed that, in response to debt relief and 
the vote of confidence in Nigeria's economic reform 
programs, the WB would be nearly doubling its Nigeria 
portfolio from its present level of about $1.2 billion over 
the next two years. The WB's total portfolio in Africa is 
valued at approximately $5 billion. Ghanem then reiterated 
the WB's traditional commitment to poverty reduction and 
assistance in the areas of governance, infrastructure, and 
trade, but cited corruption and gender inequalities as 
problems that would receive particular attention in Nigeria. 
 
3. (U) Ghanem also said that he was hopeful that Nigeria 
would avoid common pitfalls of debt relief, namely that the 
country uses its increased creditworthiness to incur more 
debt, and swiftly returns to highly indebted status. 
Unfortunately, these remarks were met with a series of 
chuckles and acknowledgement on the part of many of the 
banking leaders present. Ghanem had trouble responding to 
one business leader's observation that neither debt relief 
nor WB programs affect the rising unemployment rate, one of 
the most inveterate and incapacitating problems facing 
Nigeria today. 
 
4. (U) Ghanem closed with an appeal for the audience to view 
debt relief and increasing development funds as a new and 
different start, but business leaders present appeared to 
adopt a wait-and-see posture. 
 
5. (U) This cable has been cleared by U.S. Embassy Abuja. 
 
HOWE