US embassy cable - 02ABUJA3075

C O N F I D E N T I A L ABUJA 003075 
 
SIPDIS 
 
 
STATE PASS USTR 
STATE FOR AF/W AND AT EB/TPP 
STATE PLEASE PASS DEPT OF AGRICULTURE 
COMMERCE FOR ITA/MAC 
 
 
E.O. 12958: DECL: 11/11/2012 
TAGS: ECON, ETRD, EAGR, BEXP, NI 
SUBJECT: NIGERIAN TRADE POLICY: BUSINESS (AND POLITICS) AS 
USUAL 
 
 
REF: ABUJA 1163 
 
 
Classified by Ambassador Howard F. Jeter, reasons 1.5 (b and 
d) 
 
 
(C) 1. Summary. Refuting reports that the GON planned a 100 
percent tariff on most imported goods that can also be made 
in Nigeria, the President's Chief Economic Advisor 
acknowledged some officials were advocating the idea, but 
said "there will be no such thing." However, the Principal 
Secretary to the President told a U.S. businessman that the 
 
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tariff would be imposed. The GON tariff policy is not yet 
settled as free traders and protectionists seek to prevail 
against each other. In the end, tariff policy will likely be 
more of what currently exists--not an across-the-board 
increase but a mixed bag of increases and decreases that 
reflect political considerations in an election year as much 
as they reflect GON economic concerns. Meanwhile, confusion 
at the ports likely will reign. End Summary. 
 
 
2. (SBU) Procter and Gamble (P&G) Vice-President for 
Sub-Saharan Africa Philippe Bovay met Principal Private 
Secretary to the President Stephen Oronsaye on November 4 to 
 
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discuss the March 2002 40 to 100 percent tariff increase on 
detergents. Bovay told Econoff that during the meeting, 
"Oronsaye re-iterated that it has become a matter of national 
policy to impose 100 percent import duty for items already 
manufactured in Nigeria, as a means to encourage more local 
manufacturing." According to Bovay, "Oronsaye advised there 
were two schools of thought in the Government, one for lower 
duties and one for 100 percent protectionist duties, and that 
the 100 percent school of thought was the current prevailing 
position." 
 
 
3. (C) During a November 11 conversation, Econoff asked 
Oronsaye whether the GON had amended its trade policy to 
implement a 100 percent tariff on the import of all goods 
that are also manufactured in Nigeria. Oronsaye said that he 
was "not able to comment." He suggested that within the next 
two weeks the picture would become clearer, after the 
Ministers of Finance, Commerce, and Industry had concluded 
their discussions on trade policy for the 2003 GON budget 
submission. 
 
 
4. (C) Chief Economic Advisor to the President Magnus Kpakol 
told Econoff on November 11 that the GON 2003 budget would 
not include a 100 percent tariff on all imported goods for 
which there are local competitors. However, he claimed that 
"There were people fighting for such a trade policy," and 
"that defeating them had been difficult." According to 
Kpakol, even if 100 percent tariffs helped to promote 
domestic industry, in practice the primary result would be 
steeply increased smuggling, with actually less protection 
for the domestic industry and no additional tariff revenue 
collected. 
 
 
5. (C) Kpakol denied press reports that the GON planned to 
ban imports of certain pharmaceuticals that could be produced 
in Nigeria. Kpakol said that although a Ministry of Health 
official made such a claim at a meeting of the Pharmaceutical 
Society of Nigeria, wiser heads would prevail, and no such 
policy would be established. 
 
 
6. (C) Comment. Kpakol is a key voice in GON economic policy 
and his stance on open markets is encouraging. However, at 
times Kpakol can overestimate his influence and can be overly 
optimistic about the strength of free traders in GON 
policymaking. He also knows us and knows what to tell us to 
cast the GON in the best possible light. Right now, the view 
on GON tariff policy is unclear. We cannot tell if there will 
be a radical increase in tariff rates. Our best guess is that 
a 100 percent comprehensive increase is improbable. However, 
some increases are indeed likely. As has been the case the 
past two years (Reftel), the tariff schedule will remain both 
a tool of GON economic policy as well as of political 
concerns. Meanwhile, confusion at the ports will likely reign 
as customs officials attempt to collect levies not based on 
the official tariff schedule that might be weeks or months in 
coming but, in an effort to extract additional payments, on 
the latest public announcement or media report that purports 
to reflect GON policy. End Comment. 
JETER