US embassy cable - 85KADUNA1207

UNCLAS KADUNA 1207 
 
E.O. 12356:  N/A 
TAGS:  ECON, EIND, ELAB, EPET, EAGR, NI 
SUBJECT:  NORTHERN NIGERIA ECONOMIC QUARTERLY 
 
1.  SUMMARY.  PUBLIC ACCEPTANCE OF THE NEW GOVERMENT'S 
POLICIES REMAINS TENTATIVE IN THE NORTH.  MOST CONSUMER 
GOODS ARE IN GOOD SUPPLY, AND PRICES ARE GENERALLY LOWER 
THAN A YEAR AGO.  DIFFICULTY IN OBTAINING RAW MATERIALS 
HAS LED TO PLANT CLOSURES TEMPORARILY IDLING MANY WORKERS, 
BUT EMPLOYMENT LEVELS GENERALLY HAVE REMAINED STEADY.  THE 
AGRICULTURAL PICTURE IS STILL BRIGHT, ALTHOUGH A NUMBER OF 
FACTORS MAY REDUCE THE HOPED-FOR RECORD HARVEST.  WITH THE 
EXCEPTION OF A BRIEF WALKOUT AT THE KADUNA PEUGEOT PLANT, 
THE LABOR SCENE HAS BEEN RELATIVELY QUITE.  END SUMMARY. 
 
2.  THIS IS THE FIRST IN A SERIES OF QUARTERLY ECONOMIC 
REPORTS AIMED AT GAUGING PUBLIC REACTION TO THE BABANGIDA 
GOVERNMENT AND THE ECONOMY'S RESPONSE TO ITS POLICIES. 
THIS INITIAL REPORT FOCUSES PRIMARILY ON KADUNA, BUT 
FUTURE REPORTS WILL INCLUDE THE ENTIRE NORTH AND THE SCOPE 
WILL BE BROADENED TO INCLUDE ADDITIONAL ECONOMIC 
INDICATORS AND REACTIONS. 
 
3.  PUBLIC CONFIDENCE IN THE ECONOMY 
 
THE GENERAL PUBLIC CONTINUES TO TAKE A WAIT AND SEE 
ATTITUDE TOWARD THE BABANGIDA GOVERNMENT'S ECONOMIC 
POLICIES.  KADUNA'S NEW GOVERNOR SEEMS KEENLY AWARE OF THE 
DISPARITIES BETWEEN THE HAVES AND THE HAVENOTS, AND THE 
BASIC ECONOMIC NEEDS OF THE GENERAL PUBLIC SERTAIN TO 
BE A MAJOR FACTOR IN DETERMINING WHAT FUTURE ROAD TO 
FOLLOW.  WHILE POPULAR SENTIMENT HAD TURNED AGAINST THE 
FMG IN THE LATTER STAGES OF THE BUHARI REGIME, THE PUBLIC 
SEEMS WILLING TO GIVE THE NEW GOVERNMENT THE BENEFIT OF 
THE DOUBT.  EVEN THE RECENT BANNING OF RICE AND MAIZE 
IMPORTS, A MOVE WHICH COULD CAUSE HARDSHIP FOR SOME 
PEOPLE, HAS RAISED NO PUBLIC OUTCRY. 
 
4.  MARKET SURVEY 
 
--AVAILABILITY OF GOODS:  MOST CONSUMER ITEMS ARE IN 
GOOD SUPPLY IN KADUNA.  AUTOMOBILE SPARE PARTS ARE 
OCCASIONALLY AT A PREMIUM, BUT THE SITUATION IS MUCH 
IMPROVED FROM A YEAR AGO.  TIRES THEN AVAILABLE FOR NAIRA 
300 (APPROX. USDOL 330) CAN NOW BE FOUND FOR LESS THAN 
NAIRA 100.  PETROLEUM PRODUCTS WERE BRIEFLY SCARCE DURING 
THE FIRST WEEK OF OCTOBER, EVIDENTLY DUE TO PANIC BUYING 
WHEN THE PUBLIC LEARNED THAT THE NIGERIAN NATIONAL 
PETROLEUM CORPORATION (NNPC) REFINERY WOULD BE CLOSING 
TEMPORARILY FOR ITS REGULAR ANNUAL MAINTENANCE. 
DISTRIBUTION PROBLEMS SEEM TO HAVE BEEN SOLVED, AND THE 
SITUATION HAS RETURNED TO NORMAL.  THE EXPECTED GOOD 
HARVEST SHOULD KEEP FOOD SUPPLIES PLENTIFUL IN THE 
MARKETPLACE. 
 
--PRICES:  PRICES ARE GENERALLY LOWER THAN LAST YEAR 
FOR MOST ESSENTIAL COMMODITIES, AGAIN REFLECTING THE GOOD 
HARVEST.  GRAIN PRODUCTS ARE SELLING AT PRICES 25 TO 50 
PERCENT BELOW LAST OCTOBER'S LEVELS.  PRICES, HOWEVER, ARE 
SUBJECT TO FLUCTUATION DUE TO A VARIETY OF CHANGING 
ECONOMIC FACTORS.  THE PRICE OF RICE MORE THAN DOUBLED IN 
KADUNA'S CENTRAL MARKET AFTER THE OCTOBER 1ST ANNOUNCEMENT 
THAT IMPORTATION WOULD BE BANNED, BUT MAIZE PRICES REMAIN 
STEADY EVEN THOUGH ITS IMPORTATION HS ALSO BEEN BANNED. 
GROUNDNUT OIL PRICES JUMPED AFTER PRESS REPORTS THAT A 
SIGNIFICANT PORTION OF THE CROP WILL BE LOST TO ROSETTE 
DISEASE.  HERE IN KADUNA, BEAN PRICES ALSO HAVE LEAPED 
DURING THE PAST TWO WEEKS, EVIDENTLY DUE TO HEAVY INSECT 
INFION ON LOCAL FARMS.  PRICES FOR NON-FOOD ITEMS, 
SUCH AS LAUNDRY DETERGENT, ARE AS MUCH AS 25 PERCENT LESS 
THAN 1984 LEVELS. 
 
5.  EMPLOYMENT 
 
THE TEMPORARY CLOSURE OF THE PEUGEOT ASSEMBLY PLANT IN 
AUGUST AND SEPTEMBER WAS THE MAJOR EMPLOYMENT NEWS IN 
KADUNA RECENTLY.  THE SIX WEEKS OF FORCED LEAVE IDLED MORE 
THAN 4,000 WORKERS, BUT THE PLANT HAS NOW RESUMED 
PRODUCTION.  DIFFICULTY IN OBTAINING RAW MATERIALS FROM 
ABROAD CONTINUES TO BE A PROBLEM FOR MAJOR INDUSTRIAL 
CONCERNS IN THE NORTH.  PRESS REPORTS SUGGEST THAT THE 
STEYR TRUCK PLANT IN BAUCHI MAY ALSO SOON BE FORCED TO 
CLOSE TEMPORARILY FOR THE SAME REASON.  NO MAJOR 
RETRENCHMENT EXERCISES HAVE OCCURRED RECENTLY.  THE NEW 
STATE GOVERNORS HAVE TALKED ABOUT REDUCING THE NUMBER OF 
CIVIL SERVANTS, BUT THEY HAVE ALSO PROPOSED SETTING UP 
ALTERNATE EMPLOYMENT SCHEMES, PRIMARILY FARMING PROJECTS, 
TO ABSORB THE DISPLACED GOVERNMENT WORKERS. 
 
6.  AGRICULTURE 
 
RAINS THROUGHOUT THE NORTH HAVE BEEN EXCELLENT THIS YEAR, 
BUT EARLIER PREDICTIONS FOR A BUMPER HARVEST MAY HAVE BEEN 
PREMATURE.  WHILE CROP PRODUCTION WILL CERTAINLY BE BETTER 
THAN MOST PREVIOUS YEARS, A NUMBER OF FACTORS WILL REDUCE 
HOPED-FOR RECORD CROPS.  IRONICALLY, FLOODING CAUSED BY 
TOO MUCH RAIN IN AREAS HIT LAST YEAR BY DROUGHT HAS 
DESTROYED MANY CROPS, AND PEST INFESTATION AND DISEASE 
HAVE STRUCK ELSEWHERE.  ONCE THE HARVEST IS IN, STORAGE 
AND DISTRIBUTION SEEM LIKELY TO BECOME PROBLEMS. 
 
7.  NEW INDUSTRY 
 
UNIPETROL WILL BE INAUGURATING A NEW MOTOR OIL/LUBRICANT 
FACILITY IN KADUNA ON OCTOBER 15.  THE PLANT, LOCATED ON 
THE NNPC REFINERY COMPLEX, IS HIGHLY AUTOMATED WITH 
LARGELY FRENCH-MADE EQUIPMENT.  IT WILL SUPPLY OILS AND 
LUBRICANTS FOR MUCH OF THE NORTH, GETTING VOST OF ITS RAW 
MATERIALS DIRECTLY FROM THE REFINERY; SOME ADDITIVES WILL 
BE IMPORTED FROM FRANCE.  THE FACILITY WILL ADD ONLY ABOUT 
20 JO LOCAL EMPLOYMENT ROLLS. 
 
8.  LABOR 
 
THE LABOR SCENE GENERALLY HAS BEEN QUITE IN THE NORTH. 
THE ONLY NOTABLE RUMBLINGS WERE AT KADUNA'S PEUGEOT 
ASSEMBLY PLANT OCTOBER 4 WHEN WORKERS WALKED OUT AFTER 
LEARNING OF COMPANY PLANS TO DEDUCT 15 DAYS' PAY FROM 
UPCOMING MONTHLY SALARIES TO MAKE UP FOR DAYS LOST DURING 
THE SIX WEEKS OF FORCED LEAVE IN AUGUST AND SEPTEMBER. 
 
 
LEE