Why Governments Should Avoid Investing in Unrealizable Projects – Lessons From Tinapa

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While giving credit to the vision of a former governor of Cross River State, Mr. Donald Duke to make the state the business and leisure hub of Nigeria, nay West Africa, especially with regards to the conceptualization of the Tinapa project, it must be pointed out from the onset that Tinapa was birthed without due diligence. A flagship project of such magnitude was conceived with little or no consideration for location, anchor tenants, access infrastructure, legal and regulatory framework and sustainability plan. A project with a cost outlay of about $600million intended to divert traffic that constantly left the shores of Nigeria and even other West African countries, to places like Dubai, to Cross River State, was conceptualized without proper feasibility report. By law, a project of such magnitude was not supposed to be spearheaded by a state government. Its supposed model in Dubai, the United Arabs Emirate from which Tinapa is derived is owned by that country, not a province or state government.  At least, the Cross River State government ought to have gone into partnership with the Federal Government in the Tinapa project. But this was not to be.

The Tinapa case is even more beguiling than it appears to the general public due largely to media hype. We must admit that Tinapa was built without anchor tenants. International best practice demands that you secure anchor tenants even before the foundation is laid. Before you bring a tenant like Walmart, for instance, to Tinapa, you ought to have had an agreement or even a Memorandum of Understanding ( MoU) with them. If you had wanted Walmart to come, you would not have opened your door to T-mart in the first place. If there was need to stop Walmart, then T-mart would not have been given opportunity. And how well did T-mart do in Tinapa? From investigations, it was T-mart that drowned Tinapa. Walmart and other retailers had discovered that Tinapa was not suitably located and did not have any clear operating or regulatory framework;  they realized that the Duke administration didn’t take into consideration some critical elements from the onset. It was touted as Public Private Partnership project, but now, everybody knows that the burden of Tinapa is being borne by the Cross River State Government which was made to pay a debt of N1billion monthly inclusive of another N200million maintenance cost with literarily no inflow.

From our findings, it was the succeeding administration which got the operating licence for Tinapa in 2008/2009, when the Customs operating regulations were approved. The simple truth is that Duke touted Tinapa as Nigeria’s Dubai when, in fact, as a governor, he could not in anyway change or amend the constitution or the fiscal policies of the Federal Government. All Duke did was put massive warehouses and line shops in place at the expense of the taxpayers. Secondly, when Tinapa was commissioned, the hotel, the water park and the studio were not ready. One of the first things the succeeding administration did was to get a loan of N3billion specifically to complete those outstanding projects in Tinapa. In fact, the hotel became operational during Imoke’s tenure. Imoke even introduced a new conference facility in Tinapa, even as he introduced a children amusement arcade all in the hope of bringing in some traffic to the complex. Imoke made offers to companies like Silverbird to take over the studio but Silverbird refused. Imoke made offers to Shoprite, and all of them said Tinapa was wrongly located; that Calabar did not have what it takes to bring business to Tinapa. Indeed, the failure of Tinapa is not due to lack of effort. Very clear effort was made by the Imoke administration including the completion of the studio and signing of an agreement with Ebony Life TV, which today is operating from Tinapa.

Tinapa was without electricity. The Imoke administration ensured that power supply was brought there, and everything else at the cost of billions of Naira. But someone would have Nigerians believe that Imoke ruined Duke’s efforts. This is because Imoke is media shy and does not talk. Were it not for the fundamental failure inherent in the structure of Tinapa, Imoke’s effort would have been enough to jumpstart the project. It was Imoke who approached AMCON and actually signed the AMCON Agreement. It was the Imoke administration that went through the whole arrangement of inviting AMCON, sitting down with them, negotiating the agreement. Imoke’s greatest mistake was that in an attempt to shield his friend and predecessor from public odium and disgrace, he tried to deodorize the white elephant project called Tinapa which Duke used to attract headlines. Yet, unfortunately, while Imoke was in office as governor, Duke tried to stop AMCON from concluding the transaction through subterfuge and blackmail. Duke is now trying to conclude it with the new governor, Prof. Ben Ayade.

Duke has made reference to Imoke not wanting his projects. By the way, what business has a State government operating a commercial entity? Duke ended up making the state to bleed from a project that was not well designed. Even when KPMG, the consultant, was asked how come they were a consultant to such a white elephant project, they said that what was developed was not what was recommended. The truth of the matter is that all effort was put in, resources mobilized to make Tinapa become operational. That the studio is working, the water park , the children amusement arcade functional and the Tinapa Hotel operational, is to the credit of the Imoke administration. Again, that nothing has ever stopped anybody from coming to do business at Tinapa was because the Imoke administration offered rent-free accommodation to tenants at Tinapa just to attract traffic to the complex. But a number of things hampered the operationability of Tinapa. It was developed as a Free Trade Zone which is on the Exclusive Legislative List, by a State government. Even the regulation was got by Imoke. Duke as a governor built the infrastructure of Tinapa without operating guidelines; without any regulations and without any tenants.

It also behooves on Nigerians to know that according to the plan, the Calabar channels were supposed to be dredged but was outside the control of the State Government; the Federal highway was supposed to be dualized and the airport was supposed to be expanded. These were also not at the control of the State Government. So, all the critical elements that would have been put together to give Tinapa a small chance to grow were outside the control of the State Government. Now, how would a governor undertake a project in which he has no control over its critical success factors with such huge amount of tax payers’ funds? All the success factors of the project were outside the control of the governor and government. He (Duke) should admit that the Tinapa project, from inception had failed. If there was any government that made effort to advance Duke’s legacies, it was the Imoke administration. The failure of T-mart, which Duke owns is a confirmation of the fact that the Tinapa concept is flawed from the word go.

Again, from findings, the Monorail was the last project Duke abandoned. But, today, in spite of the lean resources at the disposal of the Imoke administration, though some of the monorail parts had been ordered, Imoke deployed those parts and brought in the monorail itself, to link Tinapa and the City of Calabar across the Tinapa Lake. There are also other projects which Duke did not complete that Imoke completed. One of such is the Lemna Road. He did not complete it; Imoke finished it. The Tinapa Road was a one-carriage way. Imoke dualized it. In fact, Duke started the Calabar Carnival. But Imoke took it to the global annual calendar. Whereas Duke attended only two editions of the Carnival, Imoke attended eight and brought it to the living rooms of viewers across the world. The same goes for the Obudu Mountain Race. The lesson of the failure of Tinapa is a hard lesson in development: that no government should ever risk the tax payers money in venturing into any business without due diligence. A government which goes into any project without the control over the necessary fiscal policies and other critical success factors is bound to regret its action while leaving the impact of the failure on the tax payers. In fact, governments have no business being in business.

Bayo O. Michael, an economic analyst, Write from Lagos, Nigeria

 

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