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Opinions

The climatic environment after the Coronavirus Pandemic

Gatekeepers must ensure global anthropogenic carbon dioxide emissions from industries are reduced to 5%.

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Lafarge Africa

As Governments and firms around the world consider ways to reduce the the effects of the coronavirus pandemic on the economy, the commitment to protect the environment must not be  overlooked.

This commitment must be at the heart of the corporate strategies and economic policies being designed to stimulate economic growth during and beyond the pandemic.

This is as important for developing countries such as Nigeria that have less resources to grapple with the effects of global warming, such as rising sea levels as it is for richer countries in the West.

People everywhere in the world produce and use a diverse range of building solutions to build the factories where they work, commercial buildings they lease, homes they live in. Thus, critical infrastructure required to support economic activities, increase incomes and reduce poverty.

Evidently population growth and economic development drive the pace of urbanization. It is therefore no gain saying that the construction industry supplies the building blocks for economic growth and improving the quality of lives globally.

However, if we are to sustainably advance economic growth and reduce poverty, we as the gatekeepers of the industry, must also keep working on innovations to reduce the 5% of global anthropogenic carbon dioxide emissions that our industry is responsible for.

The world is suddenly breathing fresh air due to the pandemic-induced decline in economic activities such as transportation and manufacturing.

According to a BBC article on the environmental impact of the new coronavirus, pollution levels in New York halved in March 2020 and satellite images show nitrogen dioxide emissions fading away in industrial areas in Italy, Spain and the United Kingdom.

In China, the Ministry of Ecology and the Environment reports that the number of days in which people enjoy “good quality air” has risen by 11.4%. The question is how can we transform this unintentional progress on protecting our environment into a more  purposeful commitment?

As the global leader in building materials and solutions, our commitment towards taking steps to protect the environment should be highly intentional.

Everywhere in the over 80 countries where LafargeHolcim operates, we are at the forefront of initiatives to reduce the environmental impact of manufacturing. Which is a sector the production of cement and building materials belongs. As well as construction, another massive sector in which LafargeHolcim is also a leader.

Globally, our care for the environment is guided by four strategic pillars of sustainability: Climate & Energy, Circular Economy, Environment and Communities. Our Climate and Energy commitment has seen us reduce CO2 intensity by 27% since 1990. Equivalent to avoiding 40 million tons of CO2 in 2019 compared to 1990 or taking 8.6 million cars off the road.

Our Circular Economy pillar embodies our commitment to recycling waste materials; in 2019 we reused 45 million tons of waste and are targeting to reuse 80 million tons by 2030. When we use waste to generate energy, this means less drilling for fossil fuels and less materials going into highly polluting landfills and incinerators.

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Our Environment Pillar commits us to important actions such as reducing our water usage and air pollution; we avoid the wastage of fresh water and depleting or polluting water in the communities where we operate.

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LafargeHolcim plants also reduce dust emissions by 5% every year. Through the Environment Pillar, we demonstrate to our host communities that we are not only committed to protecting the environment around them but also to their welfare. Since 2015, over 28 million people have benefited from our community investments in healthcare, education and other areas.

Having worked and led LafargeHolcim businesses in Europe and the Middle East and Africa regions, it is evident that our commitment to the environment is non-negotiable in any of our businesses around the world.

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By 2019, 86% of our plants had acquired an environmental management system equivalent to ISO 14001. More and more plants are working towards their own EMS to achieve 100% stringent compliance with our environmental standards all over the world.

Lafarge Africa, has supported Nigeria’s economic growth for over 60 years, and has been a leader in promoting responsible manufacturing which places a premium on the protection of the environment.

We have reduced our dust emissions at kiln stack by 28% and reduced net CO2 per tonne of cementitious material by 1.3% to 535 kg/t (compared to 2018) in Nigeria. We are 100% compliant with the environment Protection Authority Guidelines, and continue to implement our quarry rehabilitation plan.

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Lafarge has developed rehabilitation and reclamation plans for all pit and quarry sites in Nigeria. While it implements biodiversity management plans for all extraction sites to protect the habitats and facilitate conservation for the future.

Lafarge Africa has significantly reduced freshwater withdrawals and supports sustainability of water resources especially by making provisions in water scarce areas. All our dry process plants are built with water recirculation systems to encourage reuse and recycling of processed water.

A total of 26,000 tree seedlings were planted in our Sagamu, Ewekoro, Mfamosing, Maiganga and Ashaka quarries this year and so far 397,500 indigenous trees have been planted across our quarry sites in the country from 2011 till date.

For us at Lafarge Africa, sustainable development means enhancing the economy’s capacity to meet more of the needs of people today without jeopardising the needs and welfare of people tomorrow.

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While we think of enhancing the resilience of our communities and the economy amidst the economic turbulence unleashed by the new coronavirus pandemic, our actions as individuals and corporate organisations must be geared towards a better future for humanity and the environment – the earth, humans and animals alike.

And as we invite other manufacturing companies to join us in this commitment, we must emphasize the importance of protecting and handing over a more habitable planet to future generations.

Article was written by Khalid El Dokani Country CEO, Lafarge Africa.

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform.To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

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Columnists

AfCFTA: The underlying principles, objectives and benefits

The fears around the issue of dumping and border security should not outweigh the huge benefits that AfCFTA offers to the member-states.

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The Agreement (the “Agreement”) establishing the African Continental Free Trade Area (the “AfCFTA”) has continued to generate discussions following the commencement of trading under the new economic bloc. The Agreement was signed on 21 March 2018 at the Extra-Ordinary Summit of the African Union held in Kigali Rwanda and came into force on 30 May 2019 after the Gambia became the 22nd State to ratify it.

Nigeria signed the Agreement on 7th July 2019 and after initial dilly-dallying, ratified it in November 2020 leading to the formal deposit of the Instrument of ratification before the 05 December 2020 submission deadline. Paradoxically, Nigeria (34th member State to ratify the treaty) who was at the forefront of developing and negotiating the AfCFTA Agreement later became jittery at the point of ratification. The initial hesitation has been explained on the basis that prior consultation with the manufacturing community and other stakeholders was needed before ratification.

COVID-19 pandemic delayed the phase 2 negotiations and commencement of trading under AfCFTA which was earlier scheduled to start on 1st of July 2020. Trading eventually kicked off on 1st January 2021 and it is too early to assess the impact of trading yet particularly as some countries are yet to ratify the treaty. The AfCFTA has been lauded as a game-changer and ambitious project capable of lifting over 30 million people out of poverty on the continent, through trade liberalization and economic integration in line with the Pan African Vision (Agenda 2063) of an integrated, prosperous and peaceful Africa.

In terms of structure, the main Agreement is divided into 7 Parts and 30 Articles. In addition, there are Protocols, Annexes and Appendices which equally form part of the AfCFTA Agreement. Three of these Protocols are (i) the Protocol on Trade in Goods (ii) the Protocol on Trade in Services, and (iii) the Protocol on Rules and Procedures on the Settlement of Disputes. Article 8 of the Agreement is to the effect that the Protocols, Annexes and Appendices shall, upon adoption, form integral of the Agreement.

Read Also: AfCFTA: NESG advises FG to strengthen domestic value chains

The Phase Two Negotiations for both Trade in Goods and Trade in Services include (i) the Protocol on Investment (ii) the Protocol on Intellectual Property and (iii) the Protocol on Competition Policy as well as the associated Annexes and Appendices. As common with most treaties, the AfCFTA Agreement is expected to be organic as future amendments and updates are possible, provided that any additional instruments deemed necessary are to be concluded in furtherance of the objectives of AfCFTA and shall upon adoption, form an integral part of the Agreement.

Modelled after the principles of the World Trade Organization/General Agreement on Tariffs and Trade and General Agreement on Trade in Services (WTO/GATT/GATS), the AfCFTA has some of the trappings of custom union and common market even though one of the AfCFTA objectives is the creation of Continental Customs Union at a later stage. Conceptually, economic integration is broadly classified into five stages, viz: free trade area, Custom union, Common market, Economic union (single market) and Political union.

One key feature of Custom Union being the acceptance of a unified external common tariff against non-members. The European Union presents a unique example of the Customs Union through the instrumentality of the Union Customs Code which applies a uniform tariff system for imports from outside the EU. Unlike the Custom Union, the AfCFTA under its rules on Most-Favoured-Nation Treatment allows member States to conclude or maintain preferential trade arrangements including different tariff arrangements with Third Parties provided that such trade arrangements do not impede or frustrate the objectives of the Protocol on Trade in Goods. By default, WTO member countries trade based on conditions laid down under GATT.  It is in a bid to address the tariff and non-tariff barriers existing under the WTO, that some regions have opted for more favourable trade deals as seen in Europe, Asia, North America and now Africa.

As with any WTO-based trade treaty, there are key non-exhaustive underlying principles that underpin the AfCFTA. Some of these principles will form the subject of our discussions in subsequent publications. These include (i) the Most-Favoured-Nation Treatment and (ii) the Rules of Origin. Whilst the former mandates the State Parties to accord preferential treatment to one another, the latter spells out criteria for goods that will be eligible for preferential treatment under the AfCFTA. Equally important is the Anti-dumping and Countervailing Measure which provides trade remedies and remedial actions against imports which are detrimental to local industries. In relation to the Trade in Services, the Most-Favoured Nation exemptions afford State Parties a margin of leeway to exclude certain sectors or sub-sectors from their Schedule of Commitments and limit market access to those sectors or sub-sectors.

Read Also: FG outlines steps to be taken by businesses to export to AfCFTA countries

Key Objectives

The overarching objective behind the AfCFTA is the elimination or reduction of tariff and non-tariff barriers amongst the 54 Countries that agreed to be members of the bloc by providing a single market for goods and services, facilitated by movement of persons in order to deepen the economic integration and prosperity of the African continent. This key objective is to be achieved through successive rounds of negotiations that are to be done in phases.

In specific terms, the Agreement also seeks to (i) lay the foundation for the establishment of a Continental Customs Union; (ii) promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties, (iii) enhance the competitiveness of the economies of State Parties within the continent and global market, (iv) promote industrial development through diversification and regional value chain development, agricultural development and food security, and resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes. In order to actualize these noble objectives, Article 4 of the Agreement mandates State Parties to:

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  • Progressively eliminate tariffs and non-tariff barriers to trade in goods;
  • Progressively liberalise trade in services;
  • Cooperate on investment, intellectual property rights and competition policy;
  • Cooperate on all trade-related areas;
  • Cooperate on customs matters and the implementation of trade facilitation measures;
  • Establish a mechanism for the settlement of disputes concerning their rights and obligations; and
  • Establish and maintain an institutional framework for the implementation and administration of the AfCFTA.

There is no doubt that the actualization of these objectives will put Africa on the part of economic posterity and industrialization. It is expected that each State Party should demonstrate commitment, sincerity, and integrity in dealing with other member States. The success of the European Union and other similar regional trade blocs has shown that with the right political will and commitment from member-states, regional trade deals as seen in AfCFTA often contribute to the economic development of the participating region.

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Benefits

The AfCFTA is the world’s largest free trade zone since the establishment of the WTO in 1994 and offers a lot of benefits to member States particularly those with competitive advantage and enabling infrastructures. Africa has a population of 1.3 Billion people and a combined GDP of over $2.6 Trillion (more than 6 times of Nigeria’s GDP). According to the Brookings Institution’s report, intra-African trade accounts for 17 percent of Africa’s exports compared to 59 percent in Asia and 69 percent in Europe.

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The report projected that the removal of tariffs if well implemented could boost intra-regional trade up to 50 percent by 2040, from the current 17 percent. Nigeria has a competitive advantage in a number of sectors and stands in a position to benefit from the newly enlarged market. This will further increase investment in the distribution and logistics supply chain as cross-border trades will spiral up. Nigeria’s increasing unemployment rate of over 30% which has been made worse by the pandemic is expected to reduce when trading starts in commercial quantity.

Read Also: Digital transformations and AfCFTA as critical imperatives for the rebound of African economies

The AfCFTA will progressively reduce trade tariffs by over 90% by 2022 and by extension address the increasing inflation and infrastructural deficits within the continent. Nigeria, being the largest economy in the continent with strong service sector should position itself to benefit from the economies of scale that will follow the localization of industries. Oil refineries, cement, agriculture, food processing, minerals, banking and financial services, aviation, information technology and legal services have been identified as some of the critical sectors where Nigeria has competitive advantage.

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The fears around the issue of dumping and border security should not outweigh the huge benefits that AfCFTA offers to the member States. Rather, this should be a wake-up call for Nigeria to invest heavily in rail and road transport, port infrastructure, border security, internal security, electricity, education, and other enabling infrastructures. The last border closure was largely attributed to the issue of dumping and security as it was alleged that Nigeria was amongst other things being swamped with fake and sub-standard goods mostly from Asian countries through the Benin Republic.

The AfCFTA Rules of Origin provision is meant to address this, and it is hoped that the AfCFTA member States should demonstrate the political will to ensure strict compliance. While the regime of Trade in Goods appears to be taking shape, particularly with the commencement of trading early this year, the progressive framework for the negotiations of specific commitments by the member-states in the area of Trade in Services, should afford Nigeria the platform to ensure that the service sectors benefit from the huge opportunities provided under the AfCFTA.

 

Prince I. Nwafuru, MCIArb (UK)

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Lagos, Nigeria

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Secret behind MTN’s blistering performance

Despite COVID-19 disruptions, MTN Nigeria’s 2020 financials showed marked improvements compared to its 2019-year-end.

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NCC, MTN’s parent company faults regulator’s recommendation for data price reduction, MTN Nigeria reacts to poor internet as network issues go beyond Nigeria 

MTN Nigeria Communications Plc (MTN Nigeria) released its audited financial results for the financial year ended December 31, 2020.

Despite a challenging 2020 to individuals and businesses caused by COVID-19 disruptions, MTN Nigeria’s financial and non-financial information showed marked improvements compared to its 2019-year-end as well as prior quarters of 2020 results that were impacted by the COVID-19 pandemic.

Indeed, the evolving pandemic which intensified lockdown, remote working, and work-from-home procedures, appeared to have led to increased adoption of MTN Nigeria data and digital services.

Specifically, year-on-year on non-financial information, mobile subscribers increased by 12.2 million to 76.5 million; active data users increased by 7.4 million to 32,6 million while the company’s mobile money business continued to accelerate with a 269.2 % increase in the number of registered agents to over 395,000 and 4.7 million active subscribers from approximately 553,000 in 2019.

Year-on-year on financial information, service revenue increased by 14.7 % to NGN1.3 trillion driven principally by voice (with revenue growth of 5.9 %) and data revenues (rising by 52.2 % led by increased data use and traffic); profit before tax (PBT) grew by 2.6 % to N298.9 billion; profit after tax (PAT) increased by 0.9 % to N205.21 billion; while Earnings per share (EPS) rose by 0.9 % to N10.1 (N9.93, 2019).

Nonetheless, significant increases were noted in its operating expenditure as well as capital expenditure. First, there was a 2.3 % increase in operating expenses arising from the rollout of new sites and the impact of naira currency depreciation affecting the costs of MTN Nigeria lease contracts. Secondly, EBITDA margin declined by 2.5 %age points to 50.9 % (from 53.4 % in 2019) There were also other significant cost rises including a 25.4 % increase in net finance cost, and 19.4 % increase in capital expenditure which had a 11.7 % knock-on increase in depreciation and amortization costs.

On the back of the year-end result, MTN Nigeria has proposed a final dividend per share (DPS) of N5.90 kobo per share to be paid out of distributable income and brings the total dividend for the year to N9.40 kobo per share, representing an increase of 18.7 %. MTN Nigeria paid N4.97 as final dividend for the year ended December 31, 2019. This was in addition to an interim dividend of N2.95, which brought its total 2019 dividend to N7.92 per share.

The proposed dividend implies a yield of 3.4%. Having paid an interim dividend of NGN3.50 in 2020, the proposed dividend, if approved, will bring the total dividend per share to NGN9.40 or c.19% higher compared with 2019.  We expect a positive reaction from the market due to the marked improvement in earnings. However, the market’s reaction may be dampened by negative investor sentiments on equities arising from the uptick in yields on fixed-income securities.

We expect that the introduction of additional customer registration requirements requiring subscriber records are updated with respective National Identity Numbers (NIN), and the continued suspension of the sale and activation of new SIM cards will affect subscriber growth.

MTNN share price remains unchanged at the end of trading yesterday at N174 per share.


 

Tade Fadare PhD, is an economist, and a professionally qualified accountant, banker and stockbroker. He has significant experience working or consulting for financial institutions in Europe, North America, and Africa.

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