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Last Updated: Monday, 19 March 2007, 08:26 GMT
Firms struggle in crumbling Nigeria
By Kieran Cooke
Lagos, Nigeria

Fruitful Bridals
Mr and Mrs Irhiuwoba say running a business here is hard

John-Mark Irhiuwoba is putting the final touches to the bouquets. Pauline, his wife, is busy sewing up a bridesmaid's' dress.

"When a big wedding is coming up we work round the clock looking after every detail from the beads in the bride's hair to how much food is needed at the reception," says Mr Irhiuwoba.

Mr and Mrs Irhiuwoba are the joint founders of Fruitful Bridals, a small business located up a narrow alleyway in Lagos, Nigeria's chaotic, sprawling, densely populated premier city.

The lights go off in the 14 by 12 sq ft workshop come showroom.

Mrs Irhiuwoba's sewing machine falls silent.

The power generator has run out of diesel.

"Nigeria is one of the world's biggest oil producers, yet the government can't provide anything like a normal power supply to its people," says Mr Irhiuwoba.

"The politicians make all sorts of promises, but the situation is getting worse by the day.

"I really do wonder why we bother trying to run a business. The problems are endless."

Crumbling infrastructure

Many other Nigerian businesspeople - from small traders to those running large conglomerates - share Mr Irhiuwoba's frustrations.

Road in Nigeria
Poor people and poor infrastructure cause despair

National elections are due to be held at the end of April and politicians have been busy announcing their plans for tackling the nation's economic woes.

Many voters are sceptical.

Despite many billions of dollars spent on power generation and other infrastructure development over the years, the electricity supply in much of this country of more than 140m is more off than on.

The majority of the population does not have access to piped water and roads are often pot holed death traps.

After a series of fatal accidents, the government has recently stopped operations of some airline companies.

"I had to pay 300,000 Naira ($2,400; 1,235) for a second-hand generator," says Mr Irhiuwoba.

"Then I have to buy the diesel and as well as that I have to pay the state company for the electricity connection, for a power supply that we can never depend on."

Early payment

Due to a shortage of commercial properties in Lagos and other cities and towns, business rents are high and have to be paid up front.

"I have a good landlord who only asks for two years in advance," says Mr Irhiuwoba.

Plane in Nigeria
Corruption pays for foreign flights for politicians

"Others have to pay five years.

"Meanwhile, the banks are not interested in small business. They only lend to the oil companies and the government.

"If it wasn't for the help of family and friends we'd be lost."

Corruption and mismanagement

Nigeria has considerable economic potential.

Not only does it have vast oil and gas reserve. It also has substantial mineral wealth and rich agricultural resources.

Yet the majority of people live on less than $1 a day, while health, education and other development indices show continuing declines.

Both local and international bodies say corruption, plus chronic financial mismanagement, are to blame.

The Economic and Financial Crimes Commission (EFCC), set up in 2002 by the government to fight corruption, estimates that in the period from Nigeria's independence in 1960 to when the present government of President Olusegun Obasanjo came to power in 1999, some $380bn (195bn) was lost from state coffers due to corruption and mismanagement.

Basic necessities

Mr Obasanjo, due to retire after the coming elections, promised when coming to office to "turn Nigeria from a pond of corruption to an island of integrity".

School children in Nigeria
Growing up in Nigeria is difficult

But although a greater degree of transparency in national accounts has been achieved in recent years, corruption is still rife.

The EFCC recently brought corruption charges against 15 of the country's state governors.

Human Rights Watch, the US non governmental body, recently issued a report detailing what it called the "devastating" scale of corruption in Rivers State, one of Nigeria's main oil producing areas.

Politicians, said Human Rights Watch, were siphoning off millions of Naira for foreign travel, jets and fleets of cars while infrastructure crumbled and schools could not operate for want of basic necessities such as chalk for writing on blackboards.

No payment

"Corruption is the central issue in the economy" says Nosa Igiebor, editor in chief of Tell, one of Nigeria's most respected business magazines.

"To produce our magazine we have to pay millions of Naira each year to power our generators.

Then the cost of everything else - paper, printing, communications - is higher than it should be due to various "extra" charges.

What's so painful is that this country has a huge latent entrepreneurial spirit - yet how can it progress and businesses develop if all these handicaps are in the way?"

The government argues that progress is being made.

Over the past two years more than $500m of funds looted from the country's exchequer by Sani Abacha, the former ruler and military dictator, has been repatriated from bank accounts in Switzerland.

Last April Nigeria became the first country in Africa to settle debts with official lenders, paying off nearly $5bn.

Yet local contractors employed by the government say they have not been paid for years.

While Nigeria benefited last year from a surge in international oil prices, continuing violence and kidnappings of oil workers in the Niger Delta area has resulted in a more than 20% cut in oil and gas earnings, which account for the bulk of Federal Government revenues.

Meanwhile, as the elections approach, people are concerned about violence and intimidation.

"The politicians are going round making big speeches and giving their promises," says Mr Irhiuwoba as he fetches more diesel for the Fruitful Bridals generator.

"It's all words, no action.

"Sometimes I think the only thing to do is go into politics myself: at least there would be a chance of making some money."

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