Mudiaga Affe and Tunde Ajaja

TINAPA’s gradual journey to the bottom

Tinapa was not in operation for the first two years after its inauguration due to inoperative guidelines and framework, and the delay was one that economists say could have dampened the enthusiasm of some would-be investors. But following the intervention of the then Managing Director of the Tinapa Free Zone and Resort, Chief Bassey Ndem, who initiated moves to make the set guidelines operational, the hub experienced a sudden boom.

Our correspondent could recall that the hub experienced good business activities between 2009 and 2012. In fact, in 2009, big names such as Shoprite, Wal-Mart and Woodworth, among others, secured spaces in the large facility. Between 2009 and 2012 two out of the four emporiums were fully occupied with wholesale and retail businesses, while 42 out of the 53 shops were also put into good commercial use.

But the boom in business was short-lived as it slowly snowballed into its current state. Many business owners left the premises one after the other based on what they described as unfavourable government policies, high operating cost (including exhorbitant rent), unwholesome activities of the regulators and clash between the operators and regulators.

A business owner in his mid-thirties who spoke to our correspondent on the condition of anonymity said, “This place had been in existence since 2009 but business boomed around 2012 when Customs officials started disturbing customers. No matter what you buy, once it is above N30,000, you must pay duties when leaving. It became inconvenient for customers and many of them stopped coming.

“This made us to start having old stock and they would remain there until they expired, and so investors started pulling out because the influx of buyers dropped greatly. People even perceived goods in the premises as more expensive than what they would get outside.”

Meanwhile, a provision in the incentives and concession agreement as seen on Tinapa website, says “Persons who purchase goods up to a maximum of N50,000 or its equivalent within Tinapa Free Zone and Resort, in respect of which valid receipts from approved enterprises operating within the zone, have been issued, shall be entitled to import such goods into the Nigerian Customs Territory, duty-free and all customs and other licensing requirements that apply to goods imported into Nigeria Customs Territory from other countries shall not apply to such goods.”

Also, apart from the fact that the project is located at the outskirts, which could discourage willing customers, the refusal of the Federal Government to complete the dredging of the Calabar waterways to enable vessels bringing goods to access the site has also discouraged importation of goods.

While the port would have fast-tracked import and export from the zone, dredging of the sea is still facing slow progress due to hitches between contractors and the Nigerian Port Authorities. Thus, investors who would have shipped their goods could have opted out of their plans. The alternative for those who are resilient would be to make use of Lagos seaport (about 752km away) or the Onne Port in Rivers State which is about 215km away.

Findings however showed that trade zones are usually sited around sea ports to facilitate import and export and the absence of it can render the entire project inefficient.

An economist, who pleaded anonymity, told Saturday PUNCH, “Look at the Lagos Free Trade Zone under construction, a port is coming with it. Look at the Onne Oil and Gas Free Trade Zone in Rivers State, the Onne port is there. So, until the Calabar Sea is dredged and the port is put to use, independent of other administrative issues, Tinapa might continue to depreciate without meaningful impact.

“Tinapa even has an advantage because it can import and retail its products, unlike the Calabar Free Trade Zone that is maily for manufacturing.”

With a projected three million visitors expected to carry out business activities in the facility yearly with about N100,000 projected income per person, it was estimated that about N300bn would be realised annually. But, sadly, this is far from reality. As of 2009, the facility attracted only about 500 visitors daily and between then and now, many businesses have closed down while patronage has reduced drastically.

Even though the project sought to exploit the existing demand for such services that make both locals and expatriates go abroad to seek alternative destinations, it has been largely unsuccessful. Thus, its first mover advantage is largely being defeated.

Meanwhile, some economists who spoke to Saturday PUNCH identified the uncompleted dredging, which has been on for over 10 years, and clash between Tinapa licensed operators and investors as challenges bedeviling the project.

A crumbling project begging for government rescue

Notably, one of the issues that led to the dwindling rate of activities in Tinapa is the disagreement between the Customs and Tinapa-licensed operators, who alleged that the Nigeria Customs Service introduced policies that were not favourable to investors, especially in the areas of duties payable on goods.

The former MD, Ndem, had said, “Apart from regulation, there was also the issue of getting those who were responsible for regulation to understand what a Free Trade Zone is and how they needed to support it. They created a micro-economic enclave that went against all the fiscal rules and policies that was originally set up. Duties are not charged on goods entering the zone, high duty rates are only being charged on those being taken out. So, if the regulators did not understand that, it becomes difficult.”

Findings showed that the disagreement between the NCS and Tinapa-licensed operators degenerated into argument and sponsored advertorials by both parties and while this was raging, some would-be shop owners halted their moves to secure shops in the facility due to the uncertainty of the outcome of the clash. It was gathered that the seizure of containers belonging to the investors by the Customs at the Onne Port made the matter worse.

Ndem said, “Customs seized about 75 containers that were meant for Tinapa at Port Harcourt and they wanted the investors to come and clear the containers in Port Harcourt, but we disagreed, saying that was not what the law said.

“Inviting them to come and clear their containers in Port Harcourt was against the ethics of having a FTZ. A FTZ is supposed to make trade smooth and easy and not being held up by bureaucracy. By making people go to other ports to clear their goods, you are subjecting them to the same bureaucracy and corruption they were running away from.”

The NCS however pointed out that it discovered cases of diversion and smuggling of prohibited items from the Free Trade Zone into its territory, hence it had to come up with stricter measures.

Following the altercation between the regulators and Tinapa operators, the surge in investment inflow to the zone started experiencing downturn as the rate of importation reduced drastically.

Implications of the neglect

At the inception of the project in 2007, the then Managing Director and Chief Executive Officer, Tinapa Business Resort, Mr. Sam Anani, had said Tinapa would be a major diversification initiative as duties and other revenues from the hub would play a major role in boosting the revenue base of the state.

Anani had said, “The truth is Tinapa will make more money for Nigeria than what they are collecting at the ports of entry as far as duty is concerned. Tinapa is targeted at West and Central African markets. Similar goods that will arrive Kano or Lagos will be more expensive for Nigerians. So we believe that Nigerians will start driving and flying to Tinapa to buy products because all the products that you will find in Lagos, London, New York, among others, we are bringing them into Tinapa.”

But nine years down the line, the hub is still far from realising these objectives. As a project that came into being through loan and equity financing, one would have expected that it would start on a quick note and increase the tempo within a short while.

Apart from the dashed hopes and expectation, there is a huge revenue loss from the project in terms of tax and contribution to the Gross Domestic Product. There is also the case of lack of employment opportunities for the residents, displaced persons and professionals who could have put their skills into profitable use, among others.

With the dwindling revenue across the country, the host state, Cross River, would have got enough money to pay its workers’ salaries given that it would have generated some revenue that would augment the paltry allocation it receives from the Federal Government. Also, the Federal Government would have been enjoying a sustained stream of income from the project in form of tax and duties.

According to the Director General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, who is also an economist, if the government had got it right, Tinapa would have brought a lot of development and investment to the state, South South zone and the country at large. He said the project would have brought a lot of foreign exchange through export, which would impact on the Nigerian economy.

He explained that the project would have been one of the building blocks to diversifying the economy because of the business and leisure combination; but that it turned out not to be the project that was conceived.

However, Yusuf blamed the decrepit state of the project on the fact that the critical policies and some other factors that should facilitate competitiveness, drive export, which is the whole idea of the zone, and drive the project to functionality and excellence, appear to be missing.

He said, “Even though the project was ambitious, it had not turned out to be the kind of project that was conceived. For example, the policy issues (conflict) between the Nigeria Customs Service and Tinapa operators, abuse by some operators who used the project as a transit for even items that were not allowed under our current trade laws and compromise by some regulators, were among the factors that really affected the project. It was a good dream but it didn’t turn out the way it should have.

“Thus, investors lost money. Some companies had to leave because there was no market, coupled with the incomplete dredging exercise that would open up the Calabar Port. I went there sometime ago and saw a supermarket where the clothes in the store looked terribly abandoned. People lost money, so they left.

“But the biggest loser is the state government, which still has a huge debt burden from the project. The concept of Tinapa was based on a number of assumptions, one of which was that the Customs would allow the place to function properly as a free zone. I’m not sure that happened, which also affected it.”

He, however, advised that there was a need for proper diagnosis to determine the critical variables that needed to be fixed to see whether the dream could still be realisable. “If it is something for which we could still mobilise investors, the feasibility can be examined. Another alternative is to see whether we can change the entire concept of the place into something else, like an institution.”

Residents’ lamentations

Apart from the traders that are disgruntled with the state of the project, indigenes of Adiabo, Tinapa’s host community, are also not happy with the way the project has turned out.

According to the Youth Secretary in the community, Mr. Francis Bassey, the TINAPA project brought great hopes that did not last long in the minds of the residents of the community. He said, “When the TINAPA project started, it brought great hopes but the tax regime introduced by regulators drove investors away.

“For us as a community, we see the project as a waste. We just look at it with regrets because we did not quite gain much from its establishment. For instance, the administration of former governor Donald Duke promised to compensate us with N50m for the land, but he never did till date.”

Another indigene of the quiet community, Mr. Okokon Mathew, said land owners regretted giving up their land for the project because they did not receive compensation. He lamented that none of the social facilities in Tinapa such as electricity or potable water scheme was extended to the community.

“We never benefitted anything from TINAPA as the host community, but there is nothing we can do,” he said.

They lamented that for a project that claimed farmlands and led to the loss of arable land, economic trees, pollution, deforestation and environmental degradation, there was nothing to show for it.

And, in spite of the ailing state of the hub, the interim Managing Director, TINAPA Free Zone and Resort, Mrs. Francisca Effiom, says the hub is still a destination choice for “foresighted” retailers and wholesalers.

All hope not lost

While the trade wing seems to be struggling to stay above a decrepit state, occasioned by the vacancy rate, the resort section seems to be recording fairer patronage.

For example, the Lakeside Hotel, which is three-star rated, is being fully utilised, coupled with the fact that the former management of the facility had raised the revenue base of the hotel from deficit to N100m per month. Also, the Water Park has continued to attract increased patronage by fun seekers and it is even more during festive periods.

In the bid to rescue the ailing hub, the Asset Management Corporation of Nigeria had shown interest in revamping the facility, which was indebted to Union Bank Plc to the tune of over N20bn.

According to Ndem, AMCON has shown all interest to buy back the debt and invest some funds to revamp the facility but the plan has yet to be actualised. An official of AMCON who spoke to our correspondent under the condition of anonymity said the corporation would not respond to the matters concerning Tinapa for now.

Tinapa tourism, a wasting potential

It is worthy of note that there are countries across the world that survive on their earnings from tourism, an initiative that was part of Tinapa’s conception. While Nigeria depends on oil revenue, one that has fallen greatly in recent times, experts say tourism, among other sectors, would have been a good way to drive the economy at a critical time like now.

For example, in Mauritius, tourism is an essential component of the economy and an important source of its foreign exchange earnings. The Mauritian economy developed from a low-income economy to a middle-income economy, much of which was traceable to the expansion of the tourism sector. According to the Bank of Mauritius, the gross income from tourism in 2012 was about $584m coming from about one million tourists’ visits. And interestingly, most visitors to the country were from European countries.

While the unemployment rate in Nigeria continues to rise, according to the National Bureau of Statistics, tourism has been a major employer of labour in Egypt, contributing about 12 per cent to the country’s workforce and about $12.5bn revenue as well as contributing more than 11 per cent of its Gross Domestic Product and 14.4 per cent of foreign currency revenues.

Other countries that depend on tourism or derive a reasonable percentage of their income from tourism include Italy, Cyprus, Austria, Croatia, Lebanon, Switzerland, Hong Kong, Greece, British Virgin Islands, US Virgin Islands, Cayman Islands, Bahamas and Luxembourg.

In the words of a tourism expert in the Cross River State, Tinapa was a great tourism project that never materialised. She lamented the declining traffic to the leisure centre, while blaming the failure of the project on the laxity of government.

She said, “Traffic has plummeted a whole lot. There is nothing wrong with Tinapa as a project, because it has potentials, but the brand, which is the Cross River State government, is leaving a lot of holes, which has led the project to where it is at the moment.

“Basically, there was a problem between former governor Donald Duke, who conceived the project, and his successor, Liyel Imoke. Given the impediments to the business arm, occasioned by incomplete dredging of the Calabar River and conflict between regulators and operators, more attention should have been given to the leisure arm, such that while we are waiting for dredging, let’s do entertainment which is a big industry on its own.”

Also, a tourism expert, Mr. John Offiong, said people should focus on the potentials of the investment and the efforts being made to make it work rather than see it as a failed project.

be optimistic about the project, saying the incumbent governor, Prof. Ben Ayade, had demonstrated commitment to the project by appointing his commissioner for finance as the new managing director of Tinapa, all in a bid to revamp the project.

He said people should “Even though some people complain that the site is far from the city centre, people would usually go to any length to have fun. For example, the Obudu Cattle Ranch is six hours away from Calabar, but people still go there. So, let’s look at the positive side,” he added.

GavelSlam:
A Legacy of PDP destroyed by PDP.

Should the president do everything to revive it we would be reminded how it was the brainchild of PDP.

Blue3k2:


That's a dumb question. Yes you should revive it be sure activity there means revenue for the federal government and state. It would be dumb to stifle development for such a petty reason.

GavelSlam:


The question is what has happened over the years?
Or should we pretend some people did not stiffle/destroy it?

Blue3k2:


Dude stop being childish. We know it's the fault of previous administration. Now that APC is at the helm it's time to fix wrongs and develop. If the don't they're no different from the guys they replaced simple.

GavelSlam:
A Legacy of PDP destroyed by PDP.

Should the president do everything to revive it we would be reminded how it was the brainchild of PDP.

osscarr:


Party politics has finished this one
Mtche...w

EazyMoh:
Interesting, I only read halfway though.

Blue3k2:


Download text to speech app. That's what I use to get through these long articles. If you have android device use @voicealoud. If you use Apple try natural reader. There's also an app for Windows 10.

deomelo:
This is a private investment with active private funding so I really don't know what the FG can do to make this facility productive.


If you really think the FG should intervene, please explain to us in what way and what kind of FG assistance do you think is necessary.?

Blue3k2:


They already did in the article citing the main issue being federal regulations. The investors said the business climate was hostile because of customs. The last issue would be dredging most economist agree on.

deomelo:



This project died even before construction started simply because the folks behind the project did not do the basics, they did not dot their I's and T's, they did not secure the necessary approvals, guarantees and licenses necessary for smooth operations.


Why are they talking about approvals and bureaucratic details years after commissioning? Why not secure everything you need before investing your money especially in a very corrupt and incompetent environment like Nigeria.

We create our own problems and start pilling blames and demands on the FG for bailout and remedies @ failure.

Between 2009 and 2012 two out of the four emporiums were fully occupied with wholesale and retail businesses, while 42 out of the 53 shops were also put into good commercial use.

But the boom in business was short-lived as it slowly snowballed into its current state. Many business owners left the premises one after the other based on what they described as unfavourable government policies, high operating cost (including exhorbitant rent), unwholesome activities of the regulators and clash between the operators and regulators.

GavelSlam:


How many times do you write such when people kill each other and people scream Buhari or APC.

HYPOCRITE.

Blue3k2:


I agree the state messed up but the federal government has it's role to play. The drefging should have been done anyway. The lack legal and regulatory framework crazy. That's the focus on the next article I'm posting.

According to this article the project was able to get temporary high 2009-2012 but the issues in article set it.

deomelo:




Ok, after dredging nko? Don't you need large human traffic to patronize the place and make money?


Per Tinapa and Obudu, the average Nigerian should be able to get up and drive or take the rail from any corner of Nigeria and get there in not time to enjoy both places, shop an have a good time, but it's absolutely impossible to access both places if you don't live in the immediate vicinity.


The FG can sink money and keep sinking money on such non viable investments and even keep dredging forever, there's still not going to be any kind of success since both places need money and large human traffic which they can not get because Nigerians from other states can not access easily.

I should be able to access both facilities from Lagos in less than 2-3 hours and be back in Lagos before the end of the day, but this is absolutely impossible because we don't have good roads express or freeways. Just like the folks in the US drive to places like Disneyland and their other major attractions.

Only rich folks can afford to fly to Obudu to enjoy whatever they have over there.

Both places can not survive with patronage from the folks in that state or neighboring states, they need patronage from places like Lagos with deeper pockets and disposable shopping income but it is absolutely impossible to leave Lagos and end up spending days on death trap roads just to shop many states away?


My point is, until we get our road and transportation system right, such investments will continue to suffer.


This is why we urgently need the Lagos-Calabar coastal Road/Railway, but many folks from that region representing that same region in Abuja are against that project and even voted to slash the budget for that project for silly, dumb and demented political and tribal reasons.




The FG is the lease of their worries

deomelo:




Ok, after dredging nko? Don't you need large human traffic to patronize the place and make money?


Per Tinapa and Obudu, the average Nigerian should be able to get up and drive or take the rail from any corner of Nigeria and get there in not time to enjoy both places, shop an have a good time, but it's absolutely impossible to access both places if you don't live in the immediate vicinity.


The FG can sink money and keep sinking money on such non viable investments and even keep dredging forever, there's still not going to be any kind of success since both places need money and large human traffic which they can not get because Nigerians from other states can not access easily.

I should be able to access both facilities from Lagos in less than 2-3 hours and be back in Lagos before the end of the day, but this is absolutely impossible because we don't have good roads express or freeways. Just like the folks in the US drive to places like Disneyland and their other major attractions.

Only rich folks can afford to fly to Obudu to enjoy whatever they have over there.

Both places can not survive with patronage from the folks in that state or neighboring states, they need patronage from places like Lagos with deeper pockets and disposable shopping income but it is absolutely impossible to leave Lagos and end up spending days on death trap roads just to shop many states away?


My point is, until we get our road and transportation system right, such investments will continue to suffer.


This is why we urgently need the Lagos-Calabar coastal Road/Railway, but many folks from that region representing that same region in Abuja are against that project and even voted to slash the budget for that project for silly, dumb and demented political and tribal reasons.


The FG is the least of their worries

Higher foot traffic means more money generally. You point about moving to Lagos to calabar in 3hrs is wild unless you have top class high-speed train. Even USA those type of trips by road take 6hrs. The point of dredging is to reduce battle of going to other port. The place was succeeding until 2012 so the non viable argument is wrong.

I don't agree with only rich can go to Obudu. I was going to go but the roads sucked. The rooms in Obudu are not cheap like Las Vegas but not wildly expensive. I ended up going to Abuja instead.

I do agree on rail and road transport. Can you link me to them cutting funding for coastal rail? The last I checked Amaechi could find funding which is why it hasn't been done yet.

@red Your big point about interstate transport infrastructure is federal issue. I was in Akwa Ibom and highway was so messed up it took a day to get to cross river assuming the vehicle didn't get stuck in mud.

Barrister Obla Berates Cross River NASS Members For Watching Over The Removal Of Calabar Rail Project From Budget



Frontline activist and opposition stalwart in Cross River State, Barrister Obono Obla has berated members of the national assembly from Cross River state for their in the removal of the N60 Billion Calabar-Lagos coastal rail line from the 2016 Appropriation.

Media reports say, the project which is one of President Buhari’s major infrastructure focus in the budget was removed and the funds re appropriated for the Lagos-Kano railway line and other projects in the constituencies of the chairmen of the Senate and House of Representatives Committees on Appropriation.

But curiously, members of the National Assembly from the state are feigning ignorance of the development despite the fact that the Chairman of the Senate Committee on Finance, Hon. Owan Enoh is a Cross Riverian and Hon. Chris Agibe representing Boki/Ikom Constituency is also a member of the House of Representatives Committee on Appropriation.

http://newswirengr.com/2016/04/11/barrister-obla-berates-cross-river-nass-members-for-watching-over-the-removal-of-calabar-rail-project-from-budget/

Blue3k2:


They already did in the article citing the main issue being federal regulations. The investors said the business climate was hostile because of customs. The last issue would be dredging most economist agree on.

Blue3k2:
Anyway this article mainly focused on federal government's failures. I got another that looks at state governments that's more recent and much shorter. The project still has potential in my opinion though.

I do feel for those people who haven't be compensated for land. They need to sue get their money.

docadams:


@OP , if I recollect very well one of the major complaint of customers was that prices of goods at Tinapia wasn't different from and sometimes higher than similar ones in the open market. There were many problems right from the outset which were left unattended. Now that the problems have become fossilized how can they be solved. Being a South Southerner, my wish is for Tinapa not to die but then we are in trying times.