Port Harcourt, the capital of Rivers State is not just the capital of Nigeria’s bubbling oil and gas industry. It has also become the the most expensive city in the Niger Delta and the second most expensive city in Nigeria after Abuja, the Federal Capital territory, according to statistics.
Although the city hosts some of the world’s popular international oil and gas companies, it has also become known for its expanding youth unemployment, rising restiveness and pockets of crime.
But there is a flavour peculiar to Portharcourt: everyone outside feels everyone who lives in Portharcourt is rich. In as much that is true in a way, the city has become notorious for its over-bloated cost of everything. Civil servants spend salaries on transportation and housing, and not having a personal car means personal frustration.
The oil business has also attracted into the city, more immigrants from other parts of the country and some of the best hotel brands and fast food chains to make life a bit easier for those who can afford it.
Environmental degradation due to oil exploration has also forced youths to migrate into the city from the villages and towns and bloat population in city with diminishing jobs.
However, some of the practices have extinguished the very idea of entrepreneurial struggles among the youth population. Politics takes center stage instead of entrepreneurship and has created a trend where jobs are largely domiciled in government’s hand and that of oil companies or their subsidiaries.
There is also the new burgeoning business of chain stores sprouting out in different parts of the city in what a financial analyst termed “hostile competition”. The thriving business in the city are that of the well known brands who are suited enough financially to weather the storm.
Prices of goods and services in Portharcourt city is at towering heights above other cities with significant oil and gas industrial activities like Warri and Uyo, even when wages are almost the same.
The idea of entrepreneurship has not been given the necessary attention by successive governments who have focused mainly on oil which, of course, is the mainstay of the Nation’s economy.
This has resulted in the city having one of the highest youth unemployment in the country, at over 40%, despite the huge industrial activities going on in the state, according to a recently released data by the Nigerian Bureau of Statistics. Data from the NBS also stated that revenues by the Rivers State government increased by 5 percent during the year in view.
But why is Port Harcourt expensive compared to other cities?
Analysts believe that lack of government’s investment in housing and transportation has left these two key factors in the hands of private operators with little to no regulations.
Transportation for example, has become an all-comers affair controlled by privately owned tax collectors. There are no government issued vehicles like is the case in Warri and Uyo, where government is fully involved in transportation by issuing low-cost vehicles to operators.
This government approach in Uyo and Warri, in turn, has created thousands of jobs and has shut down cost to a reasonable level.
In Portharcourt, a driver plying the Rumuokoro – Mile 1 axis shells out over 500 Naira to local tax collectors who do not remit back to the government, a trend that is not seen in Warri and Uyo.
There is no form of government’s investment or control over transportation in Portharcourt and government has not seen the sector for what it is! A fertile ground for job creation that will boost the internally generated revenue of the state.
Construction of low cost houses by government will equally shut down costs in a city where rent for a two-bedroom apartment goes for 650,000 Naira compared to Warri where it is less than 200,000 Naira.
Investors are prone to multiple taxations by locals and government agencies.
How do these lead to high cost of goods and services?
High cost of goods and services in Portharcourt have been a source of concern to residents, investors and entrepreneurs alike. Increasing housing costs take huge chunk of salaries while transportation costs is also on the increase. The pressure is on the lower class with businesses closing within months or capital diminishing.
The youths rarely go into entrepreneurship to create a business away from oil and gas and government business because it is seen as unfavorable.
There is a quest for high paying jobs that are almost non-existing with very few towing the tough path to financial freedom.
Analysts believe that over taxation by accredited and unaccredited bodies play huge roles in high cost of goods and services, rents and security and the ease with which entrepreneurs close shop within the first 2 years of business.
According to a financial analyst, Jekwu Ozoemena, “there is cost of rent, security, effective tax rate (I hear that SME business are susceptible to about 53 different taxes here and this includes all the stickers, CLO salaries, regular income tax etc)
” You provide a service and anticipate to make a profit, right?
To make a profit, you need to provide sales at a price above your cost of service / cost of goods sold and operating expenses”
“Consequently the higher your operating expenses and cost of service / goods, the higher the cost of your service needs to be to turn a profit”
“Are cost of salaries and wages in those locations the same as what you have in PH?”
A political scientist, Efe Wonogho, believes several reasons can be adduced for the price differentials.
“I think there’s the issue of perception which is at the root of stuff like this. There’s the perception that PH is more of an “Oil City”.
” Particularly, when Warri became notorious for ethnic hostilities and the oil companies were moving out, PH became a destination of choice of sorts”
“There’s also the issue of the nature of the society. There’s more individuality in PH and as such, it’s easier to get away with high cost of goods and services”
“In Lagos, laws were enacted preventing landlords from demanding rent for multiple years. Arbitrary increases was also checked. In PH, it’s an all comers affair. Transportation has very little govt involvement in PH, if any. That’s a problem in itself”
“Also, there are many routes that are uncovered. Hence it’s a field day for transporters”
The government can leverage on these and create more jobs and equally, stabilize the cost of living and doing business in the city.