Cross River investment climate: What investors seek, what CRS government offers
Cross Rivers State with Calabar as capital holds a lot of attraction for businesses and investors, chief of it all being safety and security with a welcoming atmosphere to visitors. At a point, Calabar was toasted as neat with good roads, coupled with an airport, seaport and later the Tinapa mini-city.
The state is regarded as agrarian with 1.8 million hectares of arable land available for cultivation which has attracted or should attract investment in the agric and agro-allied value chain into the state. Many talk of good climate and soil that can support many cash crops such as palm oil, cocoa, rice, cassava, rubber, etc. Some insiders say Cross River State is the largest producer of cocoa and oil palm in Nigeria today.
In addition, the state is relatively peacefulcomparedwithmostother states troubled by upheavals. Yes, disagreements occur but they are not what the courts can handle. This is believed to have created stability. Besides, the state has been ruled by same political party since 1999.
Ups and downs in economic development
Within the political era (1999 to date), the state is said to have witnessed ups and downs in economic development. According to the Executive Secretary of the 76-year-old Calabar Chamber of Commerce, Industry, Mines and Agriculture (CACCIMA), Kenneth Asomi Itah, investment in the state has been witnessing some ups and downs since the return of democracy in 1999.
As he puts it, “The state witnessed influx some years back because of government actions. For now, the state governor has carried out some trips to attract investors but no serious results have been witnessed.”
Discouragements Crash in Ease of Doing Business from 4 to 35
Perhaps the strongest discouragement in the state is what insiders call inconsistency in government policies in terms of signals going to the private sector. Experts told BDSUNDAY during weeklong investigations in the state that during Donald Duke, the state had developed an investment framework on investments.
According to Itah, this led to the creation of the CRS Investment Bureau and One-stop-centre in the statecapital,thecomplexwherethe CACCIMA is located along with other business-related offices. “Of
late, policy summersault in that direction has whittled down interest in the state. A number of people who made inquiries say so.
In the World Bank Ease of Doing Business rating, CRS moved from number four in 2013 to 35 in 2018. Specific indices such as registering property show that the state is nowhere anymore. There is no procedure for it anymore. For the past five years, government is not known to issue land papers that help investors access finance. It alone discourages investors.”
State tax policy: Itah said there has been an upsurge in fees and levies now charged in the state. “As a chamber, we decried this and asked government to look at these taxes again so as to eliminate some of them.
“Talking with tax authorities will show that some of the taxes are illegal. Government has been lackadaisical in trying to eliminate them. Every person comes to ask for one levy or the other. This discourages investment flow into the state. The private sector however remains the key driver of the state economy.
Major risks include access to landwhichisregardedincrsasone big factor. The Organised Private Sector (OPS) said they have been trying to speak to government to ensure there is land process and acquisition. They believe the procedure needs to be clearly spelt out instead of being shrouded in mystery.
Actions expected from state govt
Let’s move backward: The OPS wants the state government to look into some of the policies of old that were no more in existence but which had attracted key investments into CRS.
They believe it was because of such policies that investments such as Wilmar (the biggest palm plantation owner in Nigeria today), GE (now setting up in CRS), Lafarge Africa, etc chose Cross River State.
Itah stated thus: “We have multinationals such as Flour Mills and Dangote with strong presence in the state. Most of them came in on the basis of the investment framework that the state government developed and pursued. This seems to have been abandoned. We ask the present administration to go back to that policy and seriously pursue investment. Show investors what they stand to benefit, tax holidays they can get and what support they can get from the government and the private sector. These are some of the things we look for.”
He went on: “We expect the government to look into infrastructure such as roads, shared facilities such as expanding the available industrial estates and ensure land processes, facilities, etc available for investors.
Calabar port
“One of the things we have been able to do is attract the attention of the FG to the Calabar Port. It has been neglected for decades; no dredging, drought is low, battling with 5.6 meter level when others record 7 and 8 meters. This does not allow big vessels to come in. A 60,000 metric tonne ships cannot come into Calabar. They have to stop somewhere and do trips of 20,000 each, making it three times. This increases cost and makes your cost not competitive in the country. We need help in this area.
“We expect intervention agencies such as the Niger Delta Development Commission (NDDC) to intervene in these areas such as roads, industrial park, etc. This would drive investment into the state.
“We have an EPZ (export processing zone) here but if three corporations set up there, it will not be enough. So, creating more is better. The CRS govt had attempted to set up one but it is limited in size, it can hardly take more than four. Proper industrial park is needed urgently to boost industrialization in CRS.
“It is good for the state government to look at the regulatory laws, infrastructure, tax policies, and incentives especially for SMES. The approach for now inhibits SMES in the state. Some have shut down, some left.
“We plead with the FG to dredge the port. The chamber with some others has attracted a shipping line to call Calabar but they cannot come with a big vessel. Deep sea port could take over 36 months to build, with funds on ground. The state does not have it. The first four years is gone. While waiting for deep sea port, let’s dredge the existing one and make it functional,” he said.
Farmers are weeping with loud lamentation, Itah said. “Most agric producers have to go to Onne or Lagos. I produce cocoa in Ikom, but I have to pay N1.5m to move a 40ft container to Lagos in two days plus two weeks between Apapa – Oshodi expressway into the port. That delays my cargo and delivery time plus additional huge cost. Bottom line is lower compared with others. If Calabar port were functioning, it won’t cost more than N120,000 and at the port, it would not last more than one day. It would make business more competitive. This is why we cry. Our businesses are not competitive.”
Budget: “We have asked for the CRS budget to be made public. Finally, 2018 budget was put online. We had running battle for this, but the preparatory procedure should be made more participatory. The state government hardly takes input from the OPS and non-state actors in the process. I believe that with the department of Budget and Planning, we should be able to have access to the expenditure of government for past five years. We leave that to the promise of the state to be more open.”
Regulatory framework: “We need soft infrastructures in terms of regulation. This state has not done too well in terms of regulatory environment especially for SMES about taxes, levies and fees. It is a huge challenge.
“Prior to 2015, we had done a number of interventions in terms of tax with support from international agencies especially the ‘James 3’, a Uk-funded project. They worked with the CACCIMA and others to come up with regulations and harmonized fees for businesses in the state about 2014/15. It took us up to September 2016 to get it passed. Even with the passing, it takes hell to get some of the MDAS to implement them. They sat down with groups and associations and SMES to agree on these things but just to implement it is hell. The previous administration had agreed on most of them especially LGA taxes. A new LGA tax law was passed in 2015 but the present administration with the present LGA people have found it to hard to work on a law that has been passed. It is a running battle in the Chambers to get government to operate from the framework that has been created. That is a big challenge.”
The technocrat said the number of taxes and fees that were unnecessary had been introduced outside the agreed ones. It was an uphill task to get them to look at this. We have been able to work with the Cross River State Internal Revenue Service to get 30 levies off but the work is still continuing.”
Security: Cults on rampage CRS has its own share of security challenges especially cult clashes and kidnapping. We expect the government to do more. It is important
We expect intervention agencies such as the Niger Delta Development Commission (NDDC) to intervene in these areas such as roads, industrial park, etc. This would drive investment into the state
to get the security situation better. There should be more effort in intelligence gathering to nip these things in the bud before they start. CRS was known as the most peaceful state. We must return to that.
“Government said they set up Urban Sheriff: It is more of an environmental monitoring police or vigilante to make people abide with sanitation rules. Yes, there is neighbourhood team which helps out in Calabar metropolis, but when you leave the state capital, you do not find them. So, outside Calabar, you are vulnerable. Kidnappings and flashpoints for incidents are outside such as Odukpani, Bakassi, etc. The city problem is cult clash and skirmishes.”
Ease of Doing Business (EODB): The emergency of the CRS Investment Promotion Bill gave rice to the belief that the agency was a business support and attraction scheme. “It attracted the big companies including the Songhai, Obasanjo Farms, etc. CRS was one of the states to set up a one-stopshop even before the FG did that. There was that forward thinking approach by government to attract investments in the state.
“Those things were meant to be housed in this building so that all agencies public or private that have to do for business have to be located in this building. Ministry of Commerce,investmentpromotion Council, Micro Finance Agency, Training Centre, Chamber of Commerce, are all in one building but the soft facilities are the issue. The idea is that from here you do all the things you ought to do. This helped to attract many investors into CRS. We hope Government can upgrade this and help make this concept better.”
Whyinvestorscan’tignorecrs – Patrick Umu Etete
The permanent secretary in the Ministry of Commerce and Industry, Patrick Umu Etete, who spoke with Businessday team, named major attractions to investors in the state.
Attractions to investors or positives to CRS: The vision of the governor is to turn the state to an industrialised state. That is his heartbeat. Thus, our focus is to make it happen through the Ministry.
An investor would be taken to the Industrial Park where we have most of the industries being located. We have industrial ventures spanned all over the state. It depends on what the investor wants to go into. We have cocoa industry, palm oil, and others coming up. It’s the choice of the investor to delve into any area.
Power: Our power plants have just been linked to the national grid andforsometimenow,wehavehad steady power.
Land: We have a window for investors in land matters at reduced rate. There is two-year tax-rebate for new investors.
Tax collection practice: The Cross River Internal Revenue Service (CRIRS) is always on air warning tax payers what to pay and what not to pay. Tax collectors are fully identified with ID cards and other things. Cash is not allowed. We have e-direct payment platform. When demand notice is served, after assessment, you go to the bank to pay according to the type of tax. At the end of the month, it will be consolidated into one account. For purpose of subheading, we have different accounts.
Conflict resolution: Arbitration mechanism. Use of MOU helps to create business harmony. It is when you deviate that you can have issues. The Ministry of Justice has arbitration units too.
SMES: Government gives soft loans to SMES. We have an agency for SME loans and we have state wing of SMEDAN with a Director General. We have Investment Promotion Agency to serve as first call to any investor. They guide you all through. Our ministry oversees them.
Power supply is a nationwide problem. Security is good in CRS and this is a very peaceful state. We do not have much security issues apart from some clashes in the villages because of land.
Politics: From the onset of this administration, emphasis has been on industrialisation, to move it from civil service status to industrialisation. We have industries and four are functioning in full capacity. In few years to come, civil service job would not be a priority.
These industries would be in full capacity: Rice milling plant, people come from all over the nation to buy. It is fully mechanized. Cross Rivers State Garment Factory is in full operation. Focus is on the possibility of having a contract for outsourcing to major fashion brands in the world such as Gucci.