US embassy cable - 05LAGOS1359

UNCLAS LAGOS 001359 
 
SIPDIS 
 
NOFORN 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, NI 
SUBJECT: ANALYSIS OF APPLICATION FOR OPIC FINANCE: JACKDAN 
INTERNATIONAL INC. 
 
REF: STATE 148325 
 
1. Per action request in reftel, Post submits observations on 
the planned OPIC loan of USD 2.4 million to support the 
development of Jackdan Breweries Nigeria Limited, a 
microbrewery and water treatment and bottling project in Uyo, 
Akwa Ibom State. 
 
2. There is a significant consumer base for beverages of all 
types in Nigeria; however, the two main producers, Nigerian 
Breweries and Guinness Nigeria, have tight control on the 
production side of this equation. Their market strength and 
lack of interest in encouraging competition would make it 
hard on potential newcomers.  South African Breweries is the 
only foreign firm to have penetrated the Nigerian market on 
any appreciable scale. The most successful recent launch of 
an alcoholic beverage was the introduction of Gordon Spark, a 
fruity gin drink, by Guinness.  The launch was successful in 
large part because of the participation by Guinness. Support 
from one of the Nigerian major producers is a large factor to 
success in this market. 
 
3. The Foreign Commercial Service (FCS) reports no knowledge 
of Jackdan Breweries or its owner, Mr. Daniel Jack.  The 
governor of Akwa Ibom State, Victor Attah, is a well known 
figure. He is U.S. trained and seeks U.S. investments for 
state projects.  These projects, however, tend to be large, 
and sustained funding has been a problem. For instance, work 
with General Electric (GE) on a power plant began in 2001, 
but the plant is not operational.  Construction has also 
begun on a hangar for an airport; however, an international 
airport already exists within 383 kilometers at nearby Port 
Harcourt.                   . 
 
4. Akwa Ibom may not be the best of locations for a brewery. 
Most of the demand for beers lies west of Akwa Ibom, and the 
road networks connecting East and West are poor. Both 
Nigerian Breweries and Guinness have facilities in Aba, Abia 
State which is 351 kilometers from Akwa Ibom's capital. 
These facilities cover much of the demand in the eastern 
regions, and transportation networks from Aba are much more 
friendly to national distribution than UYO.  A startup would 
do better either in Aba or further west near Lagos.  Post 
would advise that a detailed feasibility study be conducted 
on this project before proceeding. 
 
5. Political risks to companies operating in Nigeria include 
agitation by local communities who may be politically 
disaffected or motivated by monetary gain.  Risks include 
physical attacks on company personnel or infrastructure. 
However, we are not aware of the beverage industry being the 
target of such community opposition in the past.  The U.S. 
Department of State maintains a travel advisory for Nigeria, 
noting, "Violent crime committed by ordinary criminals, as 
well as by persons in police and military uniforms, can occur 
throughout the country." 
 
6. This cable has been cleared by Embassy Abuja. 
BROWNE