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Last Updated: Wednesday, 19 July 2006, 13:02 GMT 14:02 UK
Hard times for Nigerian oil town
By Mark Gregory
Business Daily, BBC World Service, Port Harcourt, Nigeria

Port Harcourt's traffic
Port Harcourt's economy is heavily reliant on income from oil

With oil prices at a 25-year high, this should be a boom time for Nigeria's oil capital, Port Harcourt - but it isn't.

Instead, the town's business is reeling with militant attacks on oil installations, kidnappings and a general rise in lawlessness.

All this has reduced oil production - and made foreign investors wary of doing business in Port Harcourt and its surrounding areas.

Hard times

In the town's market area, everything seems well on the surface. Vendors and shoppers crowd the stalls, haggling for food and clothes.

Map of the Niger Delta area

But Mr Mohammed, who runs a tailoring business in the market, says times are hard.

"Business is bad, unlike before," says Mr Mohammed.

"Especially all these shootings and killings here have contributed a lot."

It's not just the people in the market who are suffering.

The security issue in neighbouring Delta state is now so bad that it has become impossible to attract foreign companies to work there.

James Ibori, the governor of Delta State, says the threat of violence is hampering economic development.

Business is bad, unlike before. Especially all these shootings and killings here have contributed a lot
Mohammed, tailor in Port Harcourt

"Because of the oil-related activities in the area, very many credible construction companies are not even prepared to go to to the most difficult terrain, that we should be really developing, to work," says Mr Ibori.

"In my state, I have a challenge to build a bridge right now. The first phase of the bridge will cost 15 billion naira (67m; $123m)."

"I was looking for a company that has the capacity and the equipment to work in that terrain," says Mr Ibori.. "They are very reluctant to even accept working."

"It's the case of the chicken or the egg. We want to improve our infrastructure, but we are not able to attract credible companies to deliver the infrastructure."

Poor infrastructure

Militant attacks are not the only problem affecting the economy of Port Harcourt. This used to be a flourishing manufacuturing center for industries such as plastics and textiles.

Attack by militants on Niger Delta oil installation
Militant attacks have had a big impact on the region

But in the last 20 years, many of these businesses have disappeared.

Some people blame the oil industry and its grip on the local economy for the decline in other industries.

One of those is Chief Agu, who is the chairman of the local branch of the Manufacturing Association of Nigeria.

"The existence of oil services may have contributed to the closure of some industries in Port Harcourt," says Chief Agu. "This is because there is competition in the use of facilities. These facilities are very expensive."

"For instance, the rents for industrial sites and for offices for staff are very high. Only those businesses where profit margins are high enough can pay for this and exist in Port Harcourt."

On top of all that, non-oil businesses have been hit by the same problems that make life difficult for people and business in the rest of Nigeria - namely, poor infrastructure.

" A major problem of the manufacturing sector in Nigeria is the infrastructure and utilities. The roads were allowed, in particular, to deteriorate during the military regime," says Chief Agu.

"We have a problem of electricity. Most of the industries are running on public supply and generators and owning a generator is very expensive."

Yet, it's not all gloom for Port Harcourt's people. On one short stretch of road, there were at least 34 evangelical Protestant churches.

It seems that there is one sector, at least, that is booming in Port Harcourt.

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