Monday, November 17, 2014

Akwa Ibom Stadium: Alternative Uses for $96m

As my people are quick to say, what is good is good. Yes, I do agree; and might add that what is worth doing is worth doing well. So it was that Ibomites – as the people of Akwa Ibom call themselves – and Nigerians marveled at the state-of the-art stadium unveiled recently by the government of Akwa Ibom state. The presence of the current Ghanaian and Ivorian presidents, along with the ever-loved Jerry Rawlings, former Ghanaian president, in the company of President Goodluck Jonathan, added pump to the ceremony. Indeed, it was a stadium befitting of a state which has blazed the trail in development in modern Nigerian governance.

Akwa Ibom state boasts a population of about 4 million people scattered over 31 local governments, with an estimated 1.5m people within the 14-59 labor force age bracket. It is an agrarian state, with few solid minerals but plenty of the Black Gold off-shore; therefore, its federal allocation – NGN260b in 2013, an average of NGN21.6b monthly (plus NGN1.13b IGR -2012) – topping the list of the 36 states and the FCT. So, the state has enough money to throw around. The state’s GDP is estimated at $13.7b (2013), with a per capita income of $2,779 (2012); compared to Nigeria’s GDP of $522b and per capita of $2,800 (2012), Akwa Ibom is a state from which much is expected. It is heartening to say that the governments have not entirely disappointed.

Having said that, Akwa Ibom is also a state infected with the same national plague that bedevils the Nigerian nation; misplacement of priorities, high unemployment, and lack of rural roads, electricity, and adequate rural health clinics are still problems in the state. Granted, the government has made noticeable strides in some of these areas; however, for a state that’s internally-generated revenue (IGR) depends on food crops, or agriculture, high priority should be place on not only modernization of agriculture but, also, provision of access for movement of the produce. While the flash and dash of the state is mostly evidence in the major cities of Uyo, Ikot Ekpene, etc. places like Nkana, Obotme and the rest of the rural communities seem to have been forgotten. The roads are hardly passable, the lights are more of a twinkle, primary education facilities are far and few between communities and the residents in these communities are at a loss where they belong, Abia or Akwa Ibom. So, having all these priority needs, was spending $96m on a stadium a wise decision? My guess is that it depends on what the state government considers important.

The sum of $96m is equivalent to about NGN16.3b, which is a lot of money to spend on a stadium with very little benefit to the majority of the state’s population. With this amount, the state can provide any of the following: 4 23-km roads which will greatly benefit rural farmers and dwellers; 31 rural clinics to provide easy access to primary healthcare where it is needed most; 20 primary schools (by Nigerian standard) to decongest existing schools; 2 four-year universities, or 4 two-year polytechnics to increase admission space for intending students; one fully-operation hospital in each of the three senatorial zones for secondary and tertiary healthcare services; 16 vocational training centers for training of tomorrow’s engineers in various fields; 31 rural recreational facilities to provide unemployed and unemployable youths an outlet to relax and  let off frustration; or 6 strategically located food processing plants (2 in each senatorial zone) to harvest and process the state’s agricultural resources for both consumption and export as a revenue earner and source of employment. There are many more uses for NGN16.3b; however, since it chose, instead, to build a 30,070-seat stadium, any of the above-listed is considered an opportunity cost of building the stadium. Now, what does Ibomites stand to benefit from this 30,000-seat stadium?

Of course, as with everything Nigerian, the stadium is cited at Uyo, the state capital, meaning that residents outside the state capital wanting to participate in any function going on in the stadium will have to fund their way to the place. Since it is not the official home of Akwa United FC, the Nigerian premier soccer team based in Akwa Ibom, the prospects of a steady stream of revenue to the state, during Premier League season, is very dim. Expectedly, the team will on occasions, play important matches in the stadium; thereby, attracting paying fans. Unfortunately, since Nigerians prefer to patronize European soccer teams – for reasons yet to be discerned – the stadium will never be of full capacity for any of the Akwa United FC games. Now, when one factor’s in the cost of admission to these marches, say NGN1000-1500, affordability becomes an issue; thereby reducing access to only those who could afford to easily spend such amount. It is estimated that on any given Akwa United FC match, the stadium will be a half capacity – 15,000. For matches involving the Super Eagles, Falcons and/or any of the junior national teams, ticket prices will likely double that of the local team, further restricting access for many soccer fans and reducing government projected revenue from these matches.
Another use for the stadium are likely to be concerts by popular national and international artists whose tickets run into the north side of NGN5, 000 per show – affordable only to the very rich; athletic events like track and field which holds twice or three times in a school year and attract very little in terms of revenue; and Holy Ghost nights, and sundry weekend activities, by evangelical churches who attract huge crowd to these events and are able to rent the stadium. Unfortunately, with these kinds of clientele, the stadium will experience exponential deterioration due to overuse of its facilities. Businesses are less likely to avail themselves of the stadium for their conferences and AGMs, because the state already has a conference center and a 3-star hotel, and these business events do not attract huge crowds. Of course, state-sponsored events are free at the stadium, and do not generate revenue. Basically, the recovery period for the expended NGN16.3b would take up to 30 years – well beyond the contractual maintenance period entered into with Julius Berger. If one should go by experience, especially in Nigeria, the stadium would be in the same state as the Abuja stadium today in the next 10 to 15 years.

Like I said at the start of this write-up; what is good is good, and worth doing well. Nigerians do appreciate beautiful things, and will like to be associated with such beauties. Unfortunately, such appreciation is very flighty and short-lived. We have had such breathe-takers as the National Theater, Iganmu, the National stadium, Surulere and, in recent times, Tinapa, the Abuja stadium, Nnamdi Azikiwe airport, and many other magnificent national and state landmarks, only to watch them deteriorate with such speed, and within such a short period of time, that one wonders if Nigeria is some deserted island in the middle of nowhere.

This stadium, as beautiful as it may look today, as admired as it may be by not just the Ibomites, but the nation as a whole, and as jealous as other states may be of Akwa Ibom today, this is not a gift that keeps on giving to the people of the state. A progressive government does not invest NGN16.3 on one structure – not infrastructure – when citizens of employable age and education are jobless, and the rural farmers cannot bring their harvest to the market. It will not spend that amount of money on a stadium when infant and adult mortality rate remains high, and access to primary education and healthcare for the poor is still a problem. A progressive government would have invested that amount in job-creating ventures, which will generate more tax revenues that would be used, in due course, to build such a stadium.


For now, the state has made its choice and the people are happy. For now…..

Friday, November 7, 2014

Abia State: TAO, the Legacy Projects & Job Creation

Legacy:
1.       A gift of property, especially personal property, as money, by will; a bequest.
2.       Anything handed down from the past, as from an ancestor or predecessor.

Projects:
1.    Something that is contemplated, devised, or planned; plan; scheme
2.    a large or major undertaking, especially one involving considerable money, personnel, and equipment

Legacy Projects:
1.       A large or major undertaking, especially one involving considerable money, personnel, and equipment, handed down from the past, as from a predecessor.
In preparation of this article on the much-publicized legacy projects of the T.A. Orji administration in Abia state, it was important for me, and I hope the readers, to first understand the definitions of both legacy and projects in the context with which it is being applied by the Abia state government; that is why I selected and combined what I consider to be the likely definitions of both words to come up with a suitable definition of legacy projects as may be used by a government or its agency. Now, let us attempt to look at these projects, and their economic and social benefit to the people of Abia state. First, why are they necessary?
I will refer to the reason proffered by Ms. Susan Rice, the US ambassador to the UN, for why the coalition of US and EU partners toppled the Gadhafi administration. According to her, there were no foundational structures upon which to build a civil and democratic society; there were no judiciary, civil service structure, fiscal and monetary policies, etc., upon which a democracy could function. Gadhafi was running everything by himself as he wishes. For a democracy to function, one must have a functional and well entrenched legislative, judiciary and executive institutions – along with their various attendant bureaucracies. These structure/institutions, supposedly, were lacking or not functioning in the appropriate environment in Abia state for the 20, or so, years of its existence.
To anyone who cared to listen – and there are many -, the Theo Oji (TAO) government have been quick to shout it from the rooftops that they inherited no economic and social foundational structure from their predecessor, the Orji Uzor Kalu (OUK) administration, even though the current governor was part and parcel of that previous administration for the better part of its tenure. So, one is inclined to accuse him of culpability in the maladministration of the state by the much-maligned OUK administration. In any case, that is not the issue for review here.  Yes, given his youth and exposure outside the shores of Nigeria, and having experienced the benefits of good governance in developed countries, many expected OUK to attempt to lay the social and economic foundational structures TAO is doing now; unfortunately, one can take the horse to the stream but one cannot force it to drink. Admittedly, OUK was a disappointment to Abia state and her citizens. I had the opportunity to tour government offices in Umuahia in 2002, including the governor’s office, some commissioners’ offices, the secretariat, and those of some permanent secretaries; to put it modestly, most of these offices were not suitable for junior staff of the Biafra government at the height of the civil war.
Of the many legacy projects touted by the TAO administration, my attention was drawn to seventeen, of which ten were of particular interest. Some of them are the ministerial offices, government guest house, renovated federal and state secretariats, the broadcasting station, the house of assembly and constituency offices, high court, account allocation office, and the new governor’s lodge. One would easily notice that none of these legacy projects include a factory or an industrial complex of any kind, a specialist post-primary institution designated to the training of young Abians in the sciences and technologies of the future, an agricultural production and processing industry, or plants for the manufacturing of anything. That is, there are no continuous job-creating and sustaining projects on the list.
My argument is not the usefulness of these projects in some ways; yes, they are very useful in their own ways. However, in a state with a very high rate of graduate unemployment, very low functional industry concentration, and very minimal provision of social infrastructures beyond the two major cities of Aba and Umuahia, the construction and/or renovation of office buildings all over the capital city does not go far in providing a permanent or continuous solution to the huge unemployment problem facing the state.
One could argue that the construction projects provided employment, and created accessory business for the communities around these construction sites; that may very well be so for as long as the construction lasted. What happens to the hired hands when the project is completed and the construction company packs up and leaves? They go back to being unemployed and a security risk and a burden to government and society; and, since buildings last for decades – regardless of how many the governments construct in a fiscal year –they can never secure permanent employment. Therefore, there will always be frequent downtimes in employment among this segment of the workforce.  The ministerial offices, court houses, constituency offices, governor’s lodge and guest houses, the secretariats, and account allocation offices are simply government providing better working environments for the existing staff; there are no new recruits to the existing staff strength attributable to the construction of a new or modernized building. Therefore, their construction or modernization does not lead to a reduction in unemployment in Abia state in any way; neither does it improve the efficiency of the current workforce, or reduce the cost of governance in the state. At best, and for a period of five years, they just provide a comfortable working environment.
A second set of these legacy projects, like the Dialysis and Diagnostic centers, modern market, youth empowerment vehicles, and the international conference center, though necessary, will only create minimal employment opportunities. Twelve years of experience tells me that a fully utilized dialysis center capable of accommodating 16 to 20 patients during two 8-hour work shifts needs only three nurses per shift. That is 6 people right there. A diagnostic center also requires about that many staff. As for a conference center, unless it is in use, it only requires a janitorial staff of about 4, and a clerical staff of about the same number to run it. Were it to be in use, it would only employ temporary staff for the duration of the conference. Again, not much is there in terms of tackling the state’s unemployment figures. Construction of a modern market is the same as building a new secretariat; government is only attempting to decongest the city center by moving the congestion to the suburbs. A few more stalls may have been added in the new location for the benefit of those who never had one; other than that, employment could only come from the market authorities adding a few more people the existing staff strength to help keep the market clean and secure. Altogether, not more than 50 permanent jobs would be created by this set of legacy projects.
Of immense curiosity to me is the youth empowerment project: the idea of buying transportation vehicles of any kind for use by the unemployed on some contractual agreement with the state or its responsible agency. In doling out these vehicles, the government may be well-intentioned; however, in a society where a reliable tracking system is, to say the least, non-existent, how would the government know that its intent is being realized? Most of the beneficiaries of this arrangement are city dwellers, since the program is not really grassroots-based or replicated in the 17 local government areas of the state. Also, the terrible state of roads outside the two major states makes this venture less profitable for rural dwellers where these services are much needed. So, though the idea may be lofty and the goal well-intentioned, the result is only favorable to a small percentage of the unemployed.  Also, as with many government projects, once the TAO administration ends in May, 2015 the chances of the state recouping its investments on this transport-for-employment scheme vanish with the administration.
Legacy projects are two-fold: monuments in forms of office buildings, or industries in forms of factories which create jobs; the likes left behind by the late M. I. Okpara and his team – Modern Ceramics, Golden Guinea Breweries, Nkalagu Cement Factory, Rubber and palm oil plantations, solid interconnecting roads and rail system, etc. These legacies not only provided direct employment to the people of Eastern Nigeria, they spurned secondary and tertiary businesses like distributorships which, in turn, created more jobs; a much-desired multiplier effect. With today’s Abia state legacy projects, such results as witnessed by the Okpara projects cannot be envisioned. Now, were the diagnostic and dialysis centers to be replicated in all the 17 local governments of the state, the prospects of increased employment would be increased, and rural beneficiaries, kidney patients, will not have to travel long and tortuous distances to Umuahia to avail themselves of the services. That would have been a plus for the state government.
A preferable legacy project that would go a long way towards reducing unemployment in the state, as well as preparing its citizens for the jobs of tomorrow, would have been a well-funded, well-equipped technical and vocational training centers in each of the local governments of the state; creation of industries geared towards the extraction and processing of the natural resources of the state, like gold, salt, limestone, lead and zinc; a small business loan program under a contracted financial institution  tasked with not only disbursement of such loan, but complete recovery of same, with minimal interest, at the end of a generous period of time. Abia state generates about NGN5 billion a year (broken down to less than NGN500m per month), close to the same amount it collects every month from the federal government as allocations. So, it would have been more beneficial to the state if the legacy projects were focused on laying the foundation for increased IGR in the years to come.
This piece is not a criticism of the TAO administration, though many – especially, those in government – may see it as so. It is rather an opportunity for stakeholders of both the current and the next administration to review where the state is headed, what it needs to get there, and how it can go about acquiring that need. One thing is undeniable; Abia state needs to create jobs for its citizens, and in order to do so it needs to significantly increase its IGR; to achieve this, it needs to invest in revenue-generating ventures, and office buildings are not high on the list of such ventures. The state, with all its natural resources, cannot continue to run cap in hand to Abuja for salvation.

Felix Oti

Felix.oti@gmail.com