A Granuloma is a collection of cells which remain after the cord has fallen off. Until these cells die a continual, sticky discharge keeps the navel moist. The discharge isusually not a sign of an infection and won't harm your baby but may irritate the skin around the navel and cause a red rash.
Granulomas can persist for several months. Your GP can touch the granuloma with some copper sulphate which helps it dry up but don't be tempted to do this yourself as there are rare times when a granuloma is a sign of something more complicated.
This is an explanation from Robin Barker's Baby Love book.
1 out of 500 babies have a granuloma.
My son's just dried up and the GP seemed unconcerned about it.
I just kept is clean by washing it with water and cotton wool and tried to avoid it rubbing against his nappies.
If you are worried then get it checked out.
Susan, NSW, 1mth baby