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).

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Summary
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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.

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Tinapa - A "Mall of Nigeria?"
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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.

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What The Critics Are Saying
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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.

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Comment
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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