ECONOMIC LIFE BUDS IN NIGERIA'S CROSS RIVER STATE

UNCLAS SECTION 01 OF 02 ABUJA 001593

SIPDIS

SIPDIS

STATE PASS TO USTR
TREASURY FOR DPETERS
USDOC FOR 3317/ITA/OA/KBURRESS
USDOC FOR 3130/USFC/OIO/ANESA/DHARRIS

E.O. 12958: N/A
TAGS: ECON SENV EAID EIND PGOV NI CM
SUBJECT: ECONOMIC LIFE BUDS IN NIGERIA'S CROSS RIVER STATE

REF: ABUJA 1138


1. Summary: Economic officer and REO visited Cross River
State to examine its economic infrastructure and potential
for ecotourism. Officers had a wide range of meetings with
local figures, including Cross River Governor Donald Duke.
Duke emphasized his plans to develop the state's
agricultural and tourism sectors. His goal is for Cross
River State by 2010 to be Africa's No. 1 tourism
destination. Duke termed the Tinapa Business Resort, a $300
million project now under construction outside Calabar, the
state's "crown jewel." Tinapa will feature an impressive
variety of attractions and is an unusual example of private-
sector activity in Nigeria. Duke was noncommittal about his
political future following the end of his second term, after
which is he not allowed to run again. End summary.


2. Economic officer and regional environmental officer (REO)
visited Cross River State, on Nigeria's eastern border with
Cameroon, to examine its economic infrastructure and
potential for ecotourism. Officers had a wide range of
meetings with local figures, including Cross River Governor
Donald Duke, state officials, and non-government
organization environmentalists.

Cross River governor a big tourism booster
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3. Governor Duke said Cross River's main challenge is its
limited availability of land, because Cross River National
Park occupies about one-third of the state. Duke emphasized
developing the state's agricultural and tourism sectors, in
which Cross River had a comparative advantage. Agriculture
was a "longer-term function" on Duke's agenda. Local
officials and Cross River environmentalists said Duke has
increased his focus on tourism, at the expense of
agriculture, probably because he can promote tourism more
quickly and inexpensively.

Cross River to be West Africa's No. 1 tourism destination?
-------------- --------------


4. Duke said his goal is for Nigeria, and specifically Cross
River State, by 2010 to be Africa's No. 1 tourism
destination. At a minimum, the state should overtake Ghana
as West Africa's primary travel destination. Cross River
was at the end of West Africa and where Central Africa
began. Calabar had a rich history, including colonial
architecture and its slavery museum, which Duke expected to
appeal to American tourists. Calabar was a major trading
port in the West African slave trade.


5. Duke termed as the state's "crown jewel" the Tinapa
Business Resort, now under construction and located 5 miles
north of the state capital of Calabar. Tinapa promotes
itself on CNN International television as "Africa's Premier
Business Resort," though its completion is still a year off.
The shopping complex will target the roughly 500,000
expatriates living and working in Nigeria, wealthy Africans,
and Nigeria's upper class, who currently spend much of their
disposable income abroad. Duke said Africans seeking
shopping and leisure no longer will need to fly to Dubai.
Prices for luxury goods sold at Tinapa would be lower than
in Paris, he claimed.


6. The governor said 2,500 people worked on the Tinapa
project and this figure would rise to 4,000. He visited the
construction site three times a week and sent his
representative there each work day. Construction was
expected to finish by the end of March 2007. Tinapa was a
$300 million project, with 21.5 billion naira (about $168
million) so far invested in the project. All the capital
was Nigerian, and Cross River State would bear the cost of
Tinapa's infrastructure. (Comment: A broad range of
persons in Calabar instead insisted that former Liberian
President Charles Taylor and Taylor family members were
major investors in the Tinapa project. End comment.)

Tinapa Resort to offer many delights
--------------


7. Tinapa, which located on a manmade inlet leading off the
Calabar River, will feature 4,000 parking spaces, and four
shopping and restaurant emporiums of 10,000 square meters
each. The complex will have a large hotel, a monorail, a

ABUJA 00001593 002 OF 002


multiplex movie theater, and a water park. Additional
attractions would be added during its second and third
phases. Duke was working to entice Nigeria's film industry
("Nollywood"),which produced 1,500 movies annually, to move
to Tinapa. Tinapa would include a "Cinema City" film-
production facility.

Economic privileges and the Calabar Free Trade Zone
-------------- --------------


8. Tinapa is contiguous to the Calabar Free Trade Zone,
established in 1992 to help develop export-oriented
manufacturing industries in the non-oil sector. The
Government of Nigeria (GON) granted investors in the Tinapa
project "special-purpose-vehicle" status, exempting them
from all federal, state, and local-government taxes, freedom
from foreign-exchange regulations, from import or export
licenses, and from limits on foreign managers and foreign
skilled workers. The GON permitted approved enterprises to
import, free of duty, capital goods, consumer goods, raw
materials, and other components. (Comment: This is unusual
freedom to operate in Nigeria, where business is heavily and
intrusively regulated. End comment.)


9. Duke was noncommittal about his political future
following the end of his second term in 2007, after which he
is not allowed to run again for governor. He would say
only, "It is important to prepare one's successor."

Comment
--------------


10. Governor Duke spends money on state projects even in
parts of Cross River that opposed him politically, according
to environmental contacts. This relatively nonpartisan
spending is unusual in Nigeria. Duke appears to be more
serious than most of his Nigerian gubernatorial
contemporaries about the need for economic development to
benefit constituents - although this growth sometimes occurs
in ways that concern foreign environmentalists. Private
enterprise, in the form of small businesses and shops,
appeared more prevalent and healthy in Calabar than in many
other Nigerian cities. Duke chose wisely in pursuing
agriculture and tourism, although it remains to be seen what
sustainable results these choices will produce.


11. If Duke and his successors succeed in pushing Calabar
and Cross River as tourist destinations, they may have to
deemphasize the association with Nigeria and promote them as
independent destinations and West Africa's gateway to
Central Africa. If the Tinapa project lives up to its hype,
the resort will be impressive in the Nigerian national
context, where the non-oil, private-sector economy remains
seriously underdeveloped. Duke's goals for Tinapa are
ambitious. No city in Nigeria except Lagos has such
entertainment facilities, and Lagos's are not concentrated
in one place. For Calabar to open a movie theater would be
impressive, especially if the city does so before Abuja and
its roughly 7.5 million inhabitants receive their first
movie theater. Currently, Nigeria's approximately 130
million people enjoy only three modern movie theaters - all
in Lagos.
FUREY