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.
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.
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.
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.
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.
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.
Strong performance from Stanbic IBTC, despite weak retail banking position
Will Stanbic IBTC be able to generate profit from its personal banking division by full year?
Stanbic IBTC made a profit after tax of N45.2billion, growing its profit by 24.7% when compared with this period last year.
The feat is remarkable; given that a majority of financial institutions responded as expected to the economic downturn triggered by inflationary pressures, oil price instability, and lack of notable business activities, necessitated by the corona-virus pandemic that has characterised the 2020 business calendar year.
These other organizations reflected positions worse off than their escapades in 2019. In cases where improvements in bottom-line were seen, it was only marginal.
Stanbic IBTC was not exempted from these economic trials, their immensely diversified business portfolio boosted their numbers on multiple fronts. Robust presence in Asset Management paid off, as commissions and fees represented a massive 62% of general fees and commission income. It’s Corporate and Investment division continues to produce astoundingly, contributing the highest and growing profit after tax of 49.2%.
This focused and efficiently monitored diversification, is turning Stanbic IBTC into world-beaters, reflecting in the expansion of its gross earnings by 7.8%, from N117.4billion in HY’2019 to N126.6billion so far this year.
This position could have appeared even better; had STANBIC been able to demonstrate in its personal and business banking segment, the same excellence, noticeable in its other business segments (Wealth, Corporate and Investment).
It’s Personal banking (generally regarded as Retail banking), encompasses the provision of banking and financial services to individual customers and SME’s (Small and Medium scale enterprises), mortgage lending, leases, card products, transactional and lending activities such as telephone banking, ATM’s, etc. The segment suffered this year, closing with a loss of N3.2billion, despite being responsible for over 58.4% of general staff costs. This poor position was sponsored by a reduction in income levels, especially non-interest income from fees and commission.
Unsurprisingly, given CBN’s policy at the start of the year to implement a much-reduced transfer fee rate, an increase in Non-performing loans is another causal factor for its loss this half-year. STANBIC cannot afford to bask in the euphoria of the massive successes of its Wealth and Corporate segment, at the expense of Retail banking.
Retail banking is fundamental to any bank looking to be a force, or preserve its going-concern status in this critically competitive economic environment. It has been the subject of immense research in the last decade, with many banks devising strategies to acquire a large chunk of the market share in this business segment. The banking landscape is evolving amidst growing competition, such that a bank that generally does well in its retail banking segment, is perceived as strong by the public. This has an underrated capacity to effortlessly attract more customers. Banks need to revisit the drawing board and re-embrace their sacred purpose of serving the basic and pure needs of their individual customers.
Michael Lafferty, Chairman of the Lafferty Group, whilst describing Retail banking said, “Retail banking is the foundation on which global banks are built,” It is a vast retail and consumer banking market, pointing out that the world’s biggest banks built their financial empire from the mass market.
Stanbic IBTC must be conscious in its quest to provide universal banking and find a balance in product and service offerings across its business segment.
A summary of the performance parameters in its financial statement, shows growth in gross earnings, from N117.4billion to N126.6billion, and improvement in earnings per share from 342kobo to 419kobo.
Attention now shifts to the impact of the bank’s new super app, supposedly a one-stop-shop for its diverse offerings, including banking, investing, pensions, trading, and insurance, and how it affects the bottom line in subsequent quarters.
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Lastly, will Stanbic IBTC be able to generate profit from its personal banking division by full year? We await their H2’2020 results.
Has the President erred in stopping CBN from funding food imports?
What implication does the President’s directive to the CBN hold for the economy?
The President of Nigeria, President Muhammadu Buhari, last week said, “I am restating it that nobody importing food or fertilizer should be given foreign exchange from the Central Bank. We will not pay a kobo of our foreign reserves to import food or fertilizer. We will instead empower local farmers and producers.”
Why is the president stopping the CBN from funding food imports? The answer is simple. The CBN Exchange rates are cheaper than autonomous sources. The CBN lists the exchange rate for the Dollar at $1 to N379, however the Naira is being sold on the parallel market at N440. Hence, importers prefer to access CBN funds to import, because it reduces the cost of those imports. In effect, at N379, the CBN is subsidizing those imports via a ‘strong Naira’
The President’s directive is thus in line with his new overall push to eliminate all subsidies especially subsidies funded by the scare US dollar. In this aspect, the President is simply seeking to protect the foreign reserves which are paying for other imports. So, he is right.
Is this a wise strategy?
Nairametrics earlier reported on the NBS recently released report on Nigeria’s total spending, which indicated that about N22.7 trillion was spent on food in 2019. This is 56.7% of the total spending (N40.2 trillion) for that period.
Where does the food Nigerians eat come from? Clearly Nigeria has a large agricultural base, but a significant proportion of Nigeria’s food is imported, and the cost of those imports have risen, as the value of the Naira has depreciated in relation to the US dollar.
According to data from the NBS, Nigeria’s spending on food and drink importation increased from $2.9bn in 2015 to $4.1bn in 2017, but dipped in 2018.
Have these imports plus local production met local demand on a consistent basis? The answer is no. Take rice for instance, the BBC reports that, “Between 2015, when the foreign exchange restrictions for rice came into effect, and early 2017, the price of a 50kg bag of rice went from $24 to $82 and fell in mid-2017 to $34, but in June 2019, the price stood at $49.”
The law of supply in economics, states that when the price of a commodity increases, its supply also increases. Hence, there is a direct relationship between price and supply of a commodity. In other words, if the price of rice goes up, more suppliers will enter the market to supply rice.
However, In Nigeria, as the price of food is rising, the NBS in the latest Inflation report, says the composite food index rose by 15.48% in July 2020 compared to 15.18% in June 2020. This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Oils and fats, and Fish. (essentially everything). The NBS says, the average price of 1kg of rice (imported high quality sold loose) increased year-on-year by 37.72%.
So why has the supply of rice not risen to correspond with rise in prices? Well, because the supply of rice and other foodstuff have indeed risen, but the problem remains logistics processing & storage.
In Nigeria, you only eat corn during corn season, same with mangoes, and tomatoes. Prices fall during harvest, then rise after harvest. The problem is not just with the harvest, but getting that harvest to market, storing the excess, and processing its supplies all year round. Therefore, imports are needed to plug supply holes.
Nigerians in 2019 alone spent N1.9trillion or 4.7% of their budget on rice alone. When the President banned food importers from getting the CBN dollar at N379; he simply pushed them to import rice at N440; a N61 difference that will be added to the cost of imports, and will fuel imported inflation.
Where the president got it wrong is trying to fix a local logistics problem with a foreign exchange fix.
The solution is to go back to the various food supply value chains, de-risk and de-cost them. If food is cheap and plentiful, there will be no need for imports and inflation will fall.
Can Agriculture replace Oil in Nigeria?
To truly diversify from oil and create proper value, agriculture must give birth to an industry.
Over the years, Nigerians have clamored for a diversified economy, that is not over-reliant on crude oil. Recently there have been several talks about agriculture being on the front-burner of our exports.
But the reality is that there is a gulf in difference between the revenue agriculture can bring in and what Oil currently generates. Despite the steady growth in the value of Nigeria’s agricultural exports over three years (2016 to 2018), the country’s agricultural exports to total exports remained below 2%.
During the period of independence, Nigeria was a major exporter of food to West African nations; Unfortunately, she has morphed into a net importer. With the advent of oil in the 1970s, fiscal and economic policy was one-sided, and the country’s domestic and foreign investments were on oil, at the expense of other sectors of the economy. Inadvertently, Government revenue has increasingly come from oil and remains hostage to volatile oil prices.
In a recent report, the National Bureau of Statistics (NBS) claimed that Nigeria earned close to N289.3 billion from the exportation of the top 10 agricultural produce between April 2019 and March 2020. The report asserted that both commodities (sesamum seeds and cocoa) accounted for over 60% of the country’s exports as they are the most sought after internationally. Comparatively, the top 10 agricultural produce made N289.3 billion across three quarters. These figures are relatively low compared with the Q2, 2020 proceeds of crude oil which stands at N1.6 trillion.
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From the above diagram, Oil generated N1.6 trillion in Q2 2020, while the other commodities combined to record about N612 billion in Q2 2020. One trillion naira lesser (considering Oil prices were significantly low during that quarter). A 2018 report from PWC showed that oil revenue accounts for more than 80% of total value of annual Nigerian exports. Ironically, the agriculture industry contributed an estimate of 25% to total GDP in 2018, while the oil’s share of GDP was 8.6% over the same period. Since the agriculture sector is the largest contributor to Nigeria’s GDP, it has potentials to contribute a larger percentage of our annual export revenue.
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Agriculture toppling Crude oil as our main export might be a tall order, but if we want to truly diversify from oil and create proper value, agriculture must give birth to an industry.
If agriculture currently employs, say, one million Nigerians; the agro-allied industry can employ five million in the value chain. In a monetary context, if Nigeria produces cocoa beans, which recorded over N30billion revenue in 2018, an industry that processes cocoa to chocolates & beverages would produce double the revenue or more.
Oil would be the main commodity for a long time, but it is possible to create more financial values from other commodities.