By CrossRiverWatch admin
Cross River State Garment Factory is the largest garment factory in the world by floor size and is awaiting the Guinness Book of World Records verification. The factory is a project of the Cross River State government under the leadership of Ben Ayade, the executive governor of the state.
The garment factory is a very innovative investment in Nigeria at a time of recession and is expected to create more than 3,000 jobs in shifts for Cross Riverians, especially women, and reduce importation of garments by promoting local production. The factory is expected to also promote economic development in Nigeria and add to the growth of the Gross Domestic Product.
In recent times, the Cross River Garment Factory has been trending in the media for many good reasons. The first is that of all the states in the federation, the factory is one of the most outstanding projects from any governor in the first year.
On the other hand there has been some negative publicity related to the garment factory propagated by a few Cross Riverians which has to do with the ownership of the garment factory and alleged embezzlement of funds appropriated for its construction.
I sought to find out more about the Cross River Garment factory for myself and many other Cross Riverians who would love to know the truth about the factory and separate them from the half-truths and lies being peddled in the media.
In this journey of discovery, I took a trip to the garment factory to see things for myself, met the commissioner for Commerce and Industries and had a chat with him and spoke with some of the contractors involved in the construction of the factory.
I also met the commissioner of finance in the state, met with some of the contractors, candidates shortlisted for employment in the garment factory and engaged a few citizens on their views about the garment factory. It was indeed an exciting and very revealing expedition. Follow me on this journey as I bring you up to speed on some of the things I discovered. I promise some of them will astound you.
The Cross River Garment factory is located on 2000 square meters land space on the Goodluck Jonathan bypass in Calabar, the Cross River State capital. The edifice stands in a picturesque landscape with well-pave driveway and parking lot to accommodate expected clients and staff vehicles. Inside the factory are more than 2,000 electric powered garment production machines ranging from cutting to sewing, embroidery, ironing machines and many more. I observed that many of the machines are computerized.
Work at the garment factory was more than 98 percent complete but there was still some skeletal work going on as a heavy duty equipment could be seen moving at the back of the building. A careful observation shows clearly that billions of Naira have been spent in bringing the factory up to that level of completion from the initial hills, trees, stumps and shrubs that occupied the area. These could still be seen in the adjourning landscape.
On my visit, I met over 300 shortlisted applicants who had been invited for interview for employment at the garment factory. Present also were some appointees of government; special advisers and commissioners. Everyone was in high spirit and excited about the opportunity the garment factory portends even as the governor was expected to flag off the screening process later that morning.
There was a little rain that morning but that did not stop the Commissioner of Commerce and Industry, Peter Egba, from coming down from his car to join the applicants and guests under the canopy set up at the car park. We shook hands as we exchanged pleasantries. I immediately got to the business that brought me to the factory.
Even as I was fascinated by what I had seen at the Cross River Garment factory, there were a few questions which I needed answers to and I am sure many Cross Riverians also needed answers to these questions too.
The first question was, who owns the Cross River Garment Factory? Is it owned by the Cross River State Government or an individual? The commissioner answered the question very clearly. “The factory is a property of the Cross River State Government.”
He said, “The Cross River State Government registered a Special Purpose Vehicle SPV to drive the project and achieve expected objectives and outcomes for the factory considering the peculiar challenges of government owning and running businesses in Nigeria.”
I heaved a sigh of relief as that was the most important question of concern to me. Even though I was happy to hear this, another concern cropped up quickly on my mind. I however let the commissioner go on with his explanation.
He explained further that “the Ministry of Finance Incorporated (MOFI) owns majority shares in the company with three million allotted share capital. Making Cross River State the effective owner of the project.(documents attached)
Two prominent and respected Cross Riverians, Edward Obi Akatcha, the former provost of College of Education, Akamkpa and Barr. Emmanuel Ubua, the former Nigeria Bar Association NBA Chairman in Ogoja branch were also made shareholders and One million five hundred thousand shares were allotted to each of them.”
“Four million shares were left unallotted in order to perfect the opportunity for Public Private Partnership through Foreign Direct Investment FDI or Local Direct Investment LDI in the project”, he added. This concept could be a little confusing for a layman but just follow me as I seek to get more answers.
At this point I asked the commissioner to throw more light on the wisdom in using prominent Cross Riverians at the level of incorporation of the garment factory. His response was plausible.
Here is what he said:
“The plan of Government was informed by the poor perception that foreign investors do not see an SPV that is wholly owned by government as a serious going concern because they feel government is the worst entity to do business with.”
“So the state adopted a model of having patriotic Cross Riverians of integrity to hold sway and promote the company until it is set up. Moreso that commissioners had not been appointed at the time of incorporation and you know that the Governor immediately after inauguration hit the ground in search of investors and had to sell the prospects in the state and called for partnerships along public private models.”
He then added that “The two private directors had prior to their engagement given commitment in writing that as soon as the company is set up, their shares were going to be relinquished to the state but they shall remain non executive directors of the company and be allotted one share each.”
“More so, the office of the chief economic adviser has since January 2016 commenced the procurement process of CEOs who will manage the company.”
At this point I interrupted the commissioner to ask the question which had been bothering my mind. If government owns the garment factory, can it manage and run the factory successfully?
The commissioner must have been expecting this question as he smiled and began to explain. “This is the reason the Special Purpose Vehicle SPV was set up.”
“The SPV will enable government own the factory but have a private management in place to run the company successfully. The Special Purpose Vehicle is thus surely an innovative strategy to enable the state successfully drive this initiative.”
To help us understand this, I will try to explain what a Special Purpose Vehicle SPV is and why the Cross River State Government chose to use this vehicle to drive its vision for this project and many others.
A Special Purpose Vehicle is defined by the Business Dictionary as a legal entity created solely to serve a particular function, such as the facilitation of a financial arrangement or creation of a financial instrument.
An SPV has an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt. With such structure the state government can actualize its vision and overcome the challenges related to government-owned businesses.
The next issue I sought to know was, is it true that N2.7 billion appropriated was embezzled? The commissioner laughed long and hard and after that spoke very calmly. “If the N2.7 billion appropriated for the garment factory was embezzled, would you see this edifice standing here?” he asked.
“Yes N2.7 billion was appropriated for the Cross River Garment Factory in the 2016 appropriation act but a budget is just a proposition. Because of the challenging economic climate in the nation, the Cross River State government has not been able to meet up its revenue projections and its commitment on the garment factory.”
He continued that “The state had only been able to pay thirty percent of the sum appropriated for the garment factory to the contractors. This amounts to the sum of seven hundred and seventy million Naira only.”
“Governor Ben Ayade however because of his commitment to the completion of the garment factory has pushed the contractors to source for funds elsewhere to complete the construction of the factory pending when government would pay them.”
He concluded that “the Cross River State government was thus still indebted to the contractors who worked in the garment factory.”
I was not yet done with the commissioner as there was one critical issue that all Cross Riverians wanted to know about, including me. Your guess is as good as mine. I asked him what was the role of Dr. Frank Ayade, the governor’s brother, in Cross River Garment Factory project?
The commissioner looked me in the eyes and said without hesitation. “There are 8 contractors who handled various aspects of the construction of the factory. None of these companies belong to Dr. Frank Ayade. The governor’s brother thus has no official role when it comes to the construction of the garment factory.”
These information provided by the commissioner of commerce and industry helped to clarify a lot of issues surrounding the garment factory. I however asked him to do two more things for me. These were, grant me access to some of the contractors that handled work at the garment factory, so we could chat a little and provide documents backing these truths he had just presented to me.
The commissioner obliged me and immediately asked one of his aides to take me to one of the contractors available at the factory and after that make photocopies of documents related to the garment factory available to me. Well to be truthful, I did not expect the commissioner would oblige so promptly.
This gave me some amount of reassurance that maybe as opposed to the picture some people where trying to paint, the government was actually more open about the garment factory, its ownership and its funding than we give them credit for.
Soon we met with a man who the commissioner’s aide told me is one of the contractors of the garment factory. He immediately brought out his business card and introduced himself. His name is Prince Olajide Olufemi, CEO, Helix-Gold International Limited.
I shook his hand firmly and introduced myself too and my mission. He nodded to show he understood why I was seeing him. We began to chat as we paced the floor of the garment factory. The interview had started and a team of consultants were interviewing the applicants in sets of three.
I will not bore you with the details of our conversation but suffice it to say that the contractor confirmed what the commissioner had earlier told me. He spoke about their challenges and concluded that he hoped the government would soon pay them the balance of the money for work done.
I was fulfilled for the day having achieved most of what I had set out to do for the day. What was left was to speak with a few applicants, the Commissioner of Finance and a few citizens. On my way out, I went to where the applicants were seated and randomly selected a few to speak with.
I asked them how they heard about the job opportunity at the garment factory, how they applied for it, what they thought about the application process and their chances and generally their thoughts about the garment factory and its potentials for development of the state.
Their answers were basically the same. They were excited about the opportunity of getting jobs at the garment factory. The process was fair the garment factory is a great investment by the Cross River State government.
Just as I finished with the applicants, the aide to the commissioner returned with some documents and handed them over to me. They were photocopies of the registration documents of the garment factory, resolutions made by board of the company and many more.
I entered the car and we drove out of the factory on our way to the ministry of Finance to meet the commissioner. Asuquo Ekpenyong, 30, is the youngest commissioner in Nigeria. Amiable and intelligent, he studied Economics at the University of Reading, United Kingdom and was also awarded a distinction in his M.Sc. in International Banking and Financial Services from the same university.
I looked forward to meeting him again. We had met earlier in 2015 when he had not yet been appointed commissioner. He was then a Non-Executive Director at Ekondo Microfinance Bank Ltd , Calabar, Cross River state.
As I studied the documents while the car was manoeuvring through the traffic in the city, I wondered why there was so much falsehood in the public space about the garment factory and why there was so much antagonism by Cross Riverians about the project that was intended to benefit them even as it is being celebrated by people outside the state.
With the garment factory approved and ratified by the executive Council of the state, appropriated for and completed within record time, why would any person who wishes the state well allege that the entire money appropriated was embezzled and go ahead to suggest albeit falsely that it is a privately owned factory.
Why would one accuse someone who has neither a contract nor official role in the construction of the garment factory of stealing funds meant for the garment factory and then send a false petition to the Economic and Financial Crimes Commission EFCC?
This, according to the EFCC act, is a crime in itself. EFCC findings show clearly that they could not connect both Leophina and Hally Brown, the two companies headed by Dr Frank Ayade to the garment factory but instead they are now retrospectively investigating CR RAMP projects of four years ago when Ayade was not governor
With these documents before me, the truth has been laid bare and I expect that the law must take its course as it relates to the false petition sent to the EFCC. We must find out who sent the false petition and EFCC must invite him or her for further clarification.
We arrived at the Ministry of finance and I made my way up to the commissioners’s office. His secretary let me in as the commissioner had been expecting me. The commissioner was glad we were meeting again and we exchanged a few pleasantries and got the conversation started.
I wanted to know about the financial aspect of the project. How much was budgeted for the project? How much has been released to the contractors? What are government plans to pay contractors now that work at the factory has been completed?
The finance commissioner corroborated all that the commerce and industry commissioner had told me. He said the Cross River State Government was making efforts to pay contractors money owed them. He said the state was applying creative funding strategies to achieve its vision at a time like this when cash flow was challenging.
The commissioner also made available a few documents backing up all he told me. I left his office feeling a sense of appreciation and anger. Appreciation for the governor for being able to achieve such a worthwhile vision at a time that the economy has put so many states in a tight situation and anger towards those who have told lies to the public for personal and political gains.
The last stop on my journey was the Ministry of International Development Cooperation to see the commissioner, this time not on any issue on the garment factory but on the issue of the N600m European Union EU grant. The commissioner reliably informed me that it is still intact because the state government’s counterpart funding of N600m has not been provided which is what is stalling the take off of the projects.
The fund was meant to overhaul the state financial systems to conform with global best practices.
According to the Commissioner Mr. Francis Etta, the EU grant is to fund the establishment of a centralised database/website by the Due Process Bureau in Cross River state as well as to Review the Cross River State Audit law.
The call for proposals from qualified consultants was duly advertised in the Guardian Newspaper of June 23rd, 2016 as required by law and consultants have submitted proposals.
But the inability of the state government to provide the 600m counterpart fund has stalled the process at the moment while the state is still sourcing for her own commitment.
The EU 600m grant is a fund that the state has no control over how is it spent and there is no way anyone in government would have had access to the fund not to talk of embezzling it.
In the end I will like to say that having gone round and discovering that most of the information being peddled around about the garment factory and Dr. Frank Ayade are tissues of half truths and lies, my last word is that our politics should not dovetail into hatred for our state.
Every leader in position of leadership either in the state or at the federal level should realize that the interest and development of the Cross River state is far more paramount than our personal interest and the interest of our various political parties.
We must rise beyond the pettiness of partisanship and collectively harness the opportunities that the Ayade governorship and the numerous Buhari appointments to Cross River presents for the benefit of our state and desist from pulling ourselves down with deliberate misinformation.
God bless Cross River State.
Emmanuel Etim is a development consultant and public affairs commentator based in CALABAR.