How Rivers’ fresh political crisis is affecting state’s economy

…May be losing N5.2 trn per year

…Many businesses on standby waiting for govt to settle down

…Motor manufacturing firm eyeing to set up plant in Opobo may hold back

States are in a competition they may or may not be aware of. States that excel, such as Lagos, Akwa Ibom, Anambra, Niger, Jigawa, among others are those that seem to find a way to put their political disagreements under wrap so it doesn’t destroy economic growth or scare away investors.

Rivers State seems to enjoy escalated political crisis to heavens and back, not minding the cost. In recent times, this has escalated to very dangerous dimensions. Costs, again, are being counted. There is the need to again look at the costs being counted and maybe how to reduce the crisis and allow the economy to regrow.

Read also: S/Court ruling on LGAs: Rivers enters into more conflict, more confusion

Origin of the crisis

The seed of the present crisis may have been sown when the then governor, Nyesom Wike, now Federal Capital Territory (FCT) minister, said he single-handedly picked Sim Fubara, then the accountant-general of the state, to be next governor. He may not have known that accountants do not want anybody to push them and their pen around when they find themselves in full charge.

The general accusation was that Wike would exercise something that would appear to be third term through Fubara, and that Fubara would love all of that. So, the Fubara cabinet was stuffed with Wike’s diehard loyalists to add to the members of the Rivers State House of Assembly and LGA chairmen who were his foot soldiers. Fubara seemed trapped.

Soon after, Fubara was said to be under pressure to hand the treasury to Wike (the FCT minister denied this). Soon again, it changed to being that the FCT minister wanted to control the governor’s movements, projects, who got what, who visited him, who he visited, etc. Later, it was rumoured that he wanted to control the internally generated revenue (IGR). This seemed a bit true when the governor announced he was getting N28billion instead of N13billion maximum in the past. Tongues wagged more.

The next thing, the House of Assembly except four lawmakers met to serve the governor impeachment notice in October 2023. This brought instant fight from the seemingly docile governor. The war began.

The measurement of this lag was traced to the fact that Lagos State which had same annual budget of N420bn in 2010 with Rivers State shot up to N2.1 trillion in 2024 while Rivers crawled to N800bn.

What previous crises caused the state:

Political crisis of very high magnitude had started in 2012/13 between Wike and then governor, Chibuike Rotimi Amaechi. Wike swept Amaechi off the feet by using an Abuja court to collect the Rivers State executive committee of the ruling People’s Democratic Party (PDP), with the seeming support of the then first family.

Amaechi fled to the then upcoming All Progressives Congress (APC) till end of his term. During the fight, the state was believed to have lost N2trillion worth of public sector investments. It also lost the huge opportunities it had always enjoyed working with the centre from the days of Yakubu Gowon to 2013. Many Rivers’ young professionals no longer found link to the centre. Investors coming at the instance of the FG who used to rush to Rivers State as destination of first choice dried up. Economic growth in the state has been stunted with huge debts and high unemployment rates on all rating agencies.

Present costs of the crisis:

Most investors and business persons interviewed mentioned lack of investment appetite in the state at the moment, wait-and-see attitude of businesses, sneak-away syndrome, etc. Those interacting with the public sector say decisions are not forthcoming from government agencies. An international NGO that wanted to partner a state government agency on environment and sanitation said they could not get a point man there because of crisis.

An expert from the USA expected to head a big institution in the state was said to have called his contacts to say he would not fly in yet until he got the direction of things in the state.

This could be real because Wike was quoted on viral video (no confirmation, yet) saying he may not win the fight but that he would cause maximum distraction so his opponent would not achieve anything and be rejected by the masses.

While the state is in crisis, investors seem not ready to wait forever. They are believed to be moving to more stable economies such as Bayelsa, Akwa Ibom, Abia, etc because capital does not wait. Investors always have alternative plans.

Read also: Rivers: Putting the “Sim Card” in the phone’s emergency mode

Some investors and business analysts have captured the true situation.

Eze Chukwuemeka Eze: An Amaechi loyalist

In his own word, Eze chronicled what he said was the situation of things and the losses the state has incurred as a result of the unending crisis.

“While other state governments are putting measures in place to ensure that the yearnings of their people are met, especially given the bad economic situation in the country, Rivers State is rather plummeting in an unnecessary brawl of superiority on the prompting of the FCT Minister who is banking on the President’s support.

“Around October of 2023, the multi-billion-naira Rivers State House of Assembly complex was razed by fire. It was noted that the incident came as a result of alleged plot to cow the President to declare a state of emergency on alleged footing that the state is enmeshed in violent crisis that has overwhelmed the security architecture. Today, the state government has committed to rebuild the complex with a whole lot of money; money that would have been channeled to other meaningful venture that would be beneficial to the people had there been peace.

“Economists have revealed through in-depth research that Rivers State have lost public sector investments worth over N2 trillion as a result of endless political crisis. That figure is different from the cumulative effect of the raw figures that has been denied the oil-rich state, and the impact the projects would have made on the local economy and the state GDP,” he said.

According to him, “During Amaechi’s tenure as governor, the state was entitled to N375bn (or $250m) World Bank water project that was to transform Port Harcourt into a modern city. Everything was said to be done but the office of the Minister of Finance that was to sign off for its drawdown was allegedly prevented from signing it under Goodluck Jonathan on the prompting of the same Wike who was then a Minister. That young man is averse to the development of Rivers State. I can tell you for free. Today Port Harcourt has remained a borehole city.

“Another project was the plan to develop the state capital into a fast-moving transport system known as Monorail with about N250bn with over N20bn already spent by the state government and with most trunks of coaches said to already be at the Onne Port. The project was abandoned when Wike came to power.

‘Port Harcourt, under Amaechi, was designed to be a modern city through the creation of the Greater Port Harcourt City by expanding to eight local councils with modern facilities. The project was to consume N100bn per year for 10 years (N1 trillion) but under Wike the project suffered what looks like half-hearted status or what many call drain pipes to settle political backers.

“Amaechi conceptualised an idea to create an agro-village in Etche LGA in partnership with LR of Israel, the design was there talks for finding had reached advanced stage but the moment Amaechi left office, the project died a sudden death. It was meant to create an integrated agric system in Rivers State.

“What about the Rivers Songhai Farm Initiative (RSFI) which was 20 times the size of the original copy in Benin Republic. That project gulped over N3.6bn and was put for acquisition because it was becoming very viable. John Deer of California was said to have emerged preferred bidder. They were said to have planned to use Rivers as centre for their tractor manufacturing business to target West Africa, but they delayed sealing the deal waiting for the 2015 succession period to see how Rivers State would play. Songhai would have been a Songhai integrated farm centre for Africa as well as tractor and farm implementation automation centre. The crisis killed it.

“All of these projects are what Gov. Fubara have in mind to revive, but the crisis has distracted the young man and the President cannot call someone to order.

“So, part of the economic consequences of the crisis is the delay in reviving these economically viable projects that would create jobs and put food on the tables of Rivers people especially during this season of economic drought.”

Mayor of Housing: Rivers losing about 30% of GDP or N5.7 trillion per year

Mayor of Housing, My-Ace-China, a real estate guru in Port Harcourt, said: “Rivers State has an estimated GDP of $19Bn or N28 trillion. By losing about 30percent of this, the state may be losing $5.2bn per year estimated at N5.2 trillion per year, should the crisis persist. The value of distraction is always very insidious and not considered most times because we do not see what we are losing.

“A lot of projects would have started after the economic summit. Many initiatives outside the government by the private sector were lined up, but they are delaying. Whatever government does, multiply it by seven to get an idea what the private sector does.

“Many businesses need a government that has settled down to present their collaboration and public private partnership (PPP) models to work with. Civil Society Organisations (CSOs), private sector, captains of industry, and other external investors are still on standby. Lots of initiatives and projects that require government approvals and input are waiting.

“Report of the Economic Summit is not yet out, maybe because principal officers of the government are not settled to study it and approve. Basic projects are going on but the ancillary and auxiliary initiatives are suffering because attention is not coming from government.

“This has been made worse by the skirmishes at the LGAs from chaotic handover. Economic activities are yet to start. Many of the CTC chairmen are still trying to settle down. Approvals are on hold because of this.

“The distraction has cost the state about 30percent of State Domestic Product (SDP) because activities are on hold. Our firm is expecting an approval since January 2024 but it is to be out. One project worth over N90bn in Eleme is waiting since January. The zone is losing about N100m per week of site activities that are tied down. Activities that have to do with construction are on hold.”

Ekama Emilia Akpan:

An entrepreneur, manufacturer, and education investor, Ekama Emilia Akpan, said: “Standard business policy caution takes into consideration the globally known harms that occur to societies and business environments where there is political crisis. They include: Reduced business and consumer confidence leading to less investment appetite as investors prefer wait-and-see approach; there is usually disruption in trade, supply chains, and low flow of goods, capital, labour; Delays in government policies, regulations, and spending. The governor may not know who to trust; There is danger of higher risk premiums demanded by service providers, leading to higher costs within the disturbed economic zone, etc.”

According to her, “At the moment, possible setbacks due the crisis include issues of business climate. This may fuel more insecurity which is negative for fostering good business climate. A vehicle motor manufacturing company just declared intention to start a light vehicle plant at Opobo. This will be stalled or if started will attract higher cost which include security budget. Crisis will not make the vehicles produced to be cheaper. Good business climate is good for good business products cost.”

Conclusion:

No state can eat its cake and have it. As states fight for investments and business growth to increase IGR, those whose leaders focus on crisis may reap economic whirlwind.