Lagos Business School Executive Breakfast
Lagos Business School
March 3, 2009
- Professor Doyin Salami, Host of LBS Breakfast Session
- Members of the Lagos business community
- Members of the U.S. Mission
- Faculty and students
- All other distinguished ladies and gentlemen
- All other protocols duly observed.
As business leaders, I imagine that you are focused on the global economic crisis which is really going to be the platform for my remarks today. I want to begin with the U.S. approach to the economic crisis; discuss the challenges that Nigeria may be facing; the way forward in the U.S. as outlined by my President; and what and how the cooperation between the U.S. Mission to Nigeria and Nigerians can affect these challenges, including what we see your government doing to address these issues.
On February 17, President Obama signed into law the American Recovery and Reinvestment Act -- an economic stimulus package designed to create over 3.5 million jobs while investing in priorities like health care, energy, and education that will jumpstart economic growth in the U.S. The Act focuses on investing in several things, from new technologies to produce clean energy, to science and infrastructure development to improving our health care system and schools. All together, these changes will lay the foundation for our nation for a rebirth in our values and American leadership.
But how did we get to this point?
President Obama attributed the current U.S. financial crisis and economic slow-down to the "greed and irresponsibility on the part of some" and "also our collective failure to make hard choices and prepare the nation for a new age," the Information Age. The rising rates of unemployment, housing foreclosures, and businesses going under have forced Americans to examine what went wrong and why and to recommit ourselves to the hard work of rebuilding the economy, reinvesting in the growth of American society, and remaking our institutions, particularly our banking sector, to being more transparent with effective macro economic solutions. The President, through his Treasury Secretary, has instituted for example, the Financial Stability Plan will:
Infuse fresh capital into banks deemed healthy and with at least $100 billion in assets;
Establish a public-private investment fund with up to $1 trillion to buy and manage bad asset-based securities; and;
Expand effort for small business lending, commercial mortgages, and consumer loans.
In addition, I know there are questions about the “Buy American Provision,” but that is just what it is, a provision, not protectionism. It does not apply to iron, steel , and manufactured goods produced by least developed countries or LDC’s. It will ensure that our trading partners will continue to have access to procurement in accordance with current WTO and FTA agreements. And, it does not apply to all manufactured products. It only applies to public buildings and public works that are funded by money appropriated by the U.S. Congress.
My president has also said he plans to increase our foreign assistance to our overseas friends from $25 billion to $50 billion, pending of course approval of the U.S. Congress, which will help if passed, all of our friends and all of our partners such as Nigeria.
Now turning to Nigeria. What are your challenges? I think you know them as well as I do.
First and foremost, I want to state for the record that I think Nigeria has the potential to be one of the largest burgeoning emerging markets in the world. Although there was a lag of about six months from when the global financial crisis hit the developed world and when it caught up to the developing world, there is no doubt that it has now arrived in Nigeria.
So what are we seeing here: problems to access capital markets, high interest and lending rates in your banking sector, pressure on the naira, signs of inflation, and economic growth around 3.5 per cent, down from earlier estimates of 6 to 7 per cent for 2009. There is a constriction in your economy registering itself slowly, but surely as the economic downturn takes hold here.
Your Government, under the able leadership of your new Finance Minister, has created several economic committees to look at macro economic issues, to review Nigeria's financial and monetary health, calling on the service of public and private sector experts, which I understand include a few members of this very audience to holistically examine what can and should be done, including action-to-consequence scenarios to help Nigeria weather this financial storm. These will protect some of the good economic decisions that have been made in the recent past and develop workable solutions to include enhancing financial transparency, better utilizing your revenue and wealth to help the common man, and diversifying your economy, with particular focus on the revitalization of your agricultural sector. Other issues on the top of this list include further reducing restrictive trade bans and barriers to help spur investment, particularly on Foreign Direct Investment and enhance trade relations with the U.S. and other countries.
As for the U.S. – Nigeria bilateral business relationship, we think the current economic environment might serve as a platform to encourage more two-way trade, lower trade barriers, and for Nigeria, to better utilize the benefits under the African Growth and Opportunity Act or AGOA which Nigeria has been eligible for since 2000, but has failed to fully capitalize on using this provision.
Nigeria was the second largest export market for U.S. goods and services in 2007, totaling $2.7 billion dollars with the total two-way trade figure between our two countries standing at $35.5 billion. However, for me the real indicator of the potential in our trade relationship is that total U.S. imports from Nigeria were $33 billion. This figure constituted about 48% of all U.S. imports from all of Sub-Saharan Africa with over $70 million coming from non-oil imports, up 45 per cent from 2006.
But the United States and Nigeria can do better as trading partners. Let's be honest, it is in both our best interests to do so.
We at the U.S. Mission to Nigeria will continue to seek ways in which we can engage and assist the Nigerian government, Nigerian businesses and Nigerian civil society in addressing key issues during these difficult financial times under our Framework for Partnership.
What we have been doing over this last year has been: helping spur more business ties through our export credit workshops; holding nation-wide AGOA related workshops to help explain the AGOA legislation and what it takes to be export ready for the U.S. market; sending Nigerian business people and poultry farmers to U.S. trade shows; and holding energy sector seminars with our export-import bank and our trade and development agency to demonstrate our commitment to help Nigeria in this sector.
I cannot forget, however, our efforts to help Nigeria reach international aviation standards through our seminars and workshops so that it achieves category one status and TSA approval, so Nigerian airlines can at last fly direct to the United States. However, both your airline industry and regulator still have a lot of work to do.
Going forward, we plan to continue our practical workshops, focused particularly on agriculture through 2009 and have asked other U.S. government agencies to send experts on power and energy issues to dialogue with your government and the private sector.
We hope that we can really jump start, and further advance negotiations with your government on our U.S. -Nigeria Trade and Investment Framework Agreement, or TIFA, as well as at last have a Bilateral Investment Treaty or BIT, so that we can have the same trade frameworks that we have with so many other countries, but not with Nigeria, and not for our lack of trying to do so. As long as we have been friends, we have not had these standard trade frameworks with Nigeria.
On energy, we have also invited your financial leaders to attend a sub-Saharan Africa infrastructure conference in May 2009 in Dakar where your officials can interact with U.S. private sector representatives about shaping the legal and regulatory framework to assist in your efforts in the power sector.
On development, we are working with other donors and your government on a Country Partnership Strategy to ensure Nigerian Government priorities are reflected in donor efforts to increase the effectiveness for Government of Nigeria assistance and foster Nigerian ownership of its development strategy.
On agriculture, through our $25 million Global Food Security Response Program, we are focusing on your agricultural sector with capacity building, value chain and processing improvements, including help with crop yields.
In the Niger Delta, we have conflict abatement programs and a range of development projects that help with clean water – particularly in the oil-polluted creeks of the Niger Delta, and helping with vocational and educational programs.
Of course, I cannot leave out education, which is one of our key areas where we have educational exchanges and training for teachers as well as scholarships for primary school children.
Much remains to be done, and the U.S. Mission is ready to work with willing and able partners to advance our common goals of ensuring economic freedom and prosperity for the Nigerian people and for generations to come.
We thank you for being our friend and for your regional leadership in so many areas, certainly your political stance on Zimbabwe, your peace keeping efforts in Darfur, and we are counting on your fulfilling your promise to send troops to Somalia.
I must close, however, by stating something that I truly believe. Nigeria is a country with incredible natural as well as intellectual wealth. You, in this room, are an example of this. I have a challenge for you and it is my expectation of you. Your country faces challenges economically as we have already highlighted, politically, certainly with the need for election reform, and on ethno-social issues with pockets of religious tension, particularly in the Niger Delta.
You are leaders here with impressive knowledge and talent, and the best solutions for Nigeria must come from you. You need to be engaged with your leaders and your populous, particularly civil society in making things better for the overall Nigeria public. This is what I expect from you. And this is what I know the Nigerian people want from you. We can be supportive, but you must lead.