CROSS RIVER'S TINAPA: IF YOU BUILD IT, WILL THEY

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 001057 SIPDIS SIPDIS STATE FOR AF/W STATE FOR INR/AA E.O. 12958: DECL: 06/29/2016 TAGS: PINR PREL KDEM PGOV NI SUBJECT: CROSS RIVER'S TINAPA: IF YOU BUILD IT, WILL THEY COME? Classified By: Consul General Brian L. Browne for Reason 1.4 (D). -------------- Summary -------------- ¶1. (SBU) Cross River State's $350-400 million Tinapa Business Resort, scheduled to open in March 2007, is perhaps the most ambitious commercial project in Nigeria. If successful it would transform the economy of the state. However, significant questions remain about who will provide the needed investment to complete the project, what stores will occupy the site, and whether the local infrastructure can support it. Perhaps even more important than these fundamental questions about its completion are the questions that need to be answered once the project is finished -- who will be the customers, where will they come from, and how will they get there. Unless all these questions are satisfactorily answered, Tinapa is in danger of becoming a costly white elephant, draining government coffers but failing to pay dividends to the Nigerian people. Governor Duke has staked his reputation and perhaps his political future on Tinapa. End summary. -------------- Tinapa - A "Mall of Nigeria?" -------------- ¶2. (C) Cross River State's $350-400 million Tinapa Business Resort, a 256-hectare duty-free mall, resort and movie studio under construction outside the state capital, Calabar, is perhaps the most audacious commercial venture in Nigeria. The stated aim is to make Tinapa the shopping Mecca for West and Central Africans. Although the project is not even completed, the state's website and television advertisements promote Tinapa as Nigeria's primary entrepot and "the ultimate center for retail and wholesale commercial activities in the ECOWAS sub-region." Tinapa is a public-private partnership. The state will provide infrastructure, and other funding will come from as-yet unidentified private sources. The project is reportedly 60 percent funded. ¶3. (U) The mall will comprise four 10,000-square-meter "emporiums" for mega-stores with additional space for smaller merchants. A lower level will house restaurants, overlooking a man-made lake dredged to allow boating and other water recreation. A 300-room hotel is under construction, and a water theme park will be added after the complex opens. A monorail is being constructed from the airport to the park. The project's business plan calls for 3.5 million visitors annually. This customer figure is based on the assumption that Tinapa will function primarily as a retail haven. However, if converted more into a wholesale and/or duty free outlet, then fewer visitors would be required to reach profitability. (Note: Cross River State's 2005 population was an estimated 3.1 million. Meeting the projections of the business plan will require many visitors to travel into the state. End note.) ¶4. (U) According to the current plan, Tinapa will open for business in March 2007, just before Cross River Governor Donald Duke leaves office. Construction at the site is on schedule, according to the site manager. However, what vendors will fill the mega-mall remains unclear. President Obasanjo has written Wal-Mart to occupy one of the emporiums, offering to allow Wal-Mart to operate duty-free out of Tinapa to access a potential West and Central Africa market of 300 million people. Wal-Mart has not yet responded to the offer. Duke and others at the site named no other potential vendors, inferring none have been secured. ¶5. (SBU) The export processing zone that already operates in Calabar could complement Tinapa. The zone currently includes 56 manufacturers and service providers and employs more than 3, 000 people, according to zone administrators. A tour of the zone, however, revealed a low level of activity throughout and a general lack of maintenance. No U.S. companies operate in the zone and few products from the zone go to U.S. markets. In fact, Nigeria appears to be the primary or sole market of the companies in the zone. Tinapa provides an obvious outlet for potential companies in the zone, but until Tinapa secures its tenants, no linkages can be made. -------------- LAGOS 00001057 002 OF 002 What The Critics Are Saying -------------- ¶6. (C) Because of Duke's popularity and his ability to market Tinapa as a Nigerian achievement and thus a matter of national pride, there have been few vocal critics of the project. However, these, with sufficient temerity to commit lese majesty, raise points that bear observation. Duke's critics claim that he has leveraged the state to the hilt and he is scrambling to find the investors needed to complete the project. Others cavil that he has gambled the state's future on building this massive project without first having lined-up major retailers or wholesalers to occupy the site once completed. Others question how can sufficient numbers of affluent visitors get to Tinapa to make it profitable. Currently, the Calabar airport is small, handles two flights daily, and there are no current efforts to expand the airport. Travel to Calabar by road from any other major location in Nigeria is taxing and the road system cannot handle large volumes of traffic. ¶7. (C) Duke's more politically-oriented critics consider Tinapa the linchpin of an elaborate, very expensive campaign for higher office. They claim Duke has always eyed the Presidency or Vice Presidency. The only way to achieve it, coming from a small state on the periphery of the Niger Delta, was to build a larger-than-life project and an impressive record of performance to catapult him into the national limelight. Thus, he has mortgaged Cross River State's future by excessive borrowing in order to point to Tinapa and, to a lesser extent, the Obudu Ranch Resort, as great achievements. By making himself popular, he could dominate the process of naming his successor as governor and put himself in the running for higher office in 2007, particularly given his amiable relationship with President Obasanjo. After 2007, he would use his new office to attract the funds needed to finish Tinapa or to insulate himself from blame should the project sink back into the mire from which it is being built. -------------- Comment -------------- ¶8. (C) For most Nigerians, Duke is a visionary politician who has taken a bold step. For his critics who represent the minority opinion, he has sweet-talked and traduced an elephant through the eye of the needle. However, the elephant they see is white. Regardless of which camp you believe, numerous questions need to be answered. Where are the investors? Where are the stores? Where are the customers and who will they get there? Forgive the coarsely inaccurate, hyperbolic analogy that follows, but Duke exudes the feeling that what he is attempting is nothing short of the Nigerian gubernatorial equivalent of the construction of the PANAMA Canal. Minus the balderdash, Tinapa actually could change Cross River State if successful. If not, it will become another national monument to government mismanagement. End comment. BROWNE