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Beyond profitability: Lafarge Africa setting the sustainability pace in Nigeria

Lafarge Africa has over the years seen considerable success in corporate performance – not just in numbers but in social and environmental impacts.

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Lafarge Africa Plc, being a good corporate citizen has successfully and consistently balanced its duty to shareholders and responsibility to society. A member of the Swiss building materials multinational LafargeHolcim, Lafarge Africa recently released its 2019 Sustainability Report and a look into the document reinforces the cement giant’s standing.

While maintaining a drive for strong financial performance, Lafarge Africa has in recent years doubled down on efforts to operate in an environmentally friendly manner while creating shared value and promoting inclusive prosperity for all stakeholders.

Operating in an energy-intensive industry with major environmental, health, and safety implications, Lafarge has a longstanding commitment to minimise the impacts of its operations on the environment to the barest minimum, just like its parent company. In 2020, LafargeHolcim became the first global building solutions company to sign the “Business Ambition for 1.5°C” pledge with the Science-Based Targets initiative (SBTi), collaborating towards a net-zero pathway. Under the commitment, LafargeHolcim has lowered its target for CO2 intensity in cement by 2030.

Lafarge Africa’s success in incorporating sustainability practices into its corporate culture and excelling at it is down to a conscious effort enabled by a sound strategy that focuses on four thematic areas – Climate and Energy, Circular Economy, Environment, and Community – and mapped with 14 of the 17 United Nations (UN) Sustainable Development Goals (SDGs).

In Nigeria, Lafarge has significantly reduced carbon emissions (1.3% since 2018) and in 2019, recorded a 34% decrease in total specific dust emission compared to the previous year. This was achieved through several measures, including the installation of modern dust control equipment in its plants. Between 2018 and 2019, Lafarge improved its Ewekoro plant, replacing and overhauling some components to ensure that dust emissions are within statutory limits.

The company is also pioneering the recycling of waste as a source of energy and is solving the challenge of waste through its circular business model – Geocycle. In 2019, Lafarge derived 12% of its energy from waste and other biomass with over 300 farmers impacted through buying their agricultural waste. The company recently signed an agreement with the Food and Beverages Recycling Alliance (FBRA).

Additionally, Lafarge leads research in the use of alternative energy and the progressive substitution of carbon-emitting clinker with cleaner minerals in Nigeria and has also significantly reduced the risk of polluting water, often sharing and/or investing in providing safe water for the communities in which it operates.

This environmental commitment has informed biodiversity investment in several projects as well. In Ogun State, the IléDotun Project focuses on achieving land degradation neutrality (SDG 2015-2030 under the UN Convention to Combat Desertification) by restoring 108,000 hectares of degraded land belonging to forest and games reserves of Imẹko and Aworo in the state. Trees are carbon emission absorbers hence leveraging biodiversity to enable healthy ecosystems is fundamental to life on the planet.

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Similarly, a five-year project is ongoing to improve the management of the Maiganga Coal Mine water via distribution and discharge through a constructed wetland system in several communities in Akko and Billiri Local Government Areas of Gombe State. The first of its kind in Nigeria, the project is being implemented to improve acid mine drainage and entrench a biodiversity hotspot in an arid area. The Magainga wetland will also deliver concrete economic benefits to over 2,000 residents with an irrigation system that will enable all-year-round farming, growing of economic crops such as mangoes and cashew, and improved access to water for over 1000 livestock.

Furthermore, Lafarge Africa’s sustainability teams from Ewekoro, Sagamu, Mfamosing, and Ashaka cement plants have embarked on intervention programmes directed towards healthcare, education, and infrastructure in their host communities. In 2019, Lafarge expanded its engagement with communities through 51 Community Relations Council (CRC) meetings, which culminated in Community Days where development projects were commissioned with traditional rulers and senior state government delegates in attendance.

Lafarge Africa also invested over N700 million in societal impact initiatives and projects under 4 core pillars; Health and Safety, Education, Shelter/Infrastructure, and Economic/Youth Empowerment, directly impacting over 115,000 beneficiaries within and beyond its host communities. As a testament to its community investments, the company provided fully-equipped medical facilities in Emuren and Olujobi communities while renovating and equipping healthcare centres in several communities – Mfamosing, OwodeEpota, Ajegunle-Ogijo, and Sagamu.

Within the coal mine communities in Ashaka, key projects were implemented including access road construction, provision of rural electrification, drilling of boreholes, construction of blocks of classrooms, construction of fully-equipped clinics and maternity centres, community training on soft skills, and provision of tools such as sewing machines, farm tools, etc.

Awareness programmes are also organised for indigenes of host communities such as health awareness sessions in Ashaka and Mfamosing and environmental awareness sessions in Ewekoro. These help to educate residents on issues around using safe and non-toxic building supplies, conserving water and energy, recycling and activism.

Lafarge Africa has over the years seen considerable success in corporate performance – not just in numbers but in social and environmental impacts. This, the company has achieved, by following through with a strategy that allows it to engrain sustainability into business decisions, processes, and practices. Further setting the precedence in sustainability leadership in Nigeria remains a top priority for the company.

 

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Written by Michael Afonce

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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Tasks before the AfCFTA dispute settlement body

The success of the AfCFTA will depend largely on the willingness of the member states to adhere to the agreement.

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The Dispute Settlement Body (DSB) of the African Continental Free Trade Area (AfCFTA) held its inaugural meeting on 26 April 2021 at the AfCFTA Secretariat in Accra Ghana. The DSB is composed of the representatives of the State Parties and shall have the power to establish Dispute Settlement Panels and an Appellate Body responsible for settlement of disputes between the member States.

The mandate of the DSB also extends to adopting the reports of the Panels and Appeal Body as well as monitoring and ensuring the implementation of the ensuing decisions. In carrying out its mandates, the DSB will work with the AfCFTA Secretariat while maintaining its independence in the area of dispute settlement.

The inaugural meeting signals the readiness of the AfCFTA dispute settlement infrastructure to take up any disputes that may arise in the course of trading amongst the member States. Disputes are inevitable in any free trade area and when any such disputes arise under the AfCFTA, the resolution is to be in line with the Protocol on Rules and Procedures on the Settlement of Disputes which forms part of Phase I Negotiation.

Recognizing its importance to the success of the trade deal itself, the Protocol proclaims that “the dispute settlement mechanism of the AfCFTA is a central element in providing security and predictability of the system” and “shall preserve the rights and obligations of State Parties under the Agreement and clarify the existing provisions of the Agreement in accordance with customary rules of interpretation of public international law.”

Though inspired by the World Trade Organization (WTO)’s dispute settlement architecture, the AfCFTA framework is meant to address some of the lapses in the WTO. In an exclusive opinion piece for “The Africa Report”, Mr Wamkele Mene, Secretary-General of the AfCFTA, explained how the AfCFTA will work in order to avoid the pitfalls of other trading blocs. As noted in the report:

The WTO’s tribunal of final instance for global trade disputes, the Appellate Body, has been reduced to irrelevance over disagreements on its composition. The paralysis of both the WTO’s negotiating and dispute settlement arms means that trade disputes between China and the United States, two of the WTO’s largest members, have flared into open hostility.”

Drawing from the WTO experience, the African States in negotiating the free trade treaty cherry-picked the aspects of the WTO’s dispute settlement system that have worked and jettisoned the problematic parts.

At the Virtual Press Conference held on 04 May 2021 to update the public on the status of the implementation of the AfCFTA and the progress made so far, the AfCFTA Secretary-General re-echoed the importance of the dispute settlement mechanism to the success of the AfCFTA while answering questions from journalists across Africa. Commenting on the milestone achievement recorded with the inaugural meeting of the DSB, he noted that:

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“The dispute settlement is really the mechanism and is at the heart of the African Continental Free Trade Area. And it is at the heart of what we mean by a rule-based trading system. And at the heart of what we mean by market certainty and predictability. For the first time on the African continent, there is a dispute settlement body that will have oversight over all the disputes that arise under the agreement whether there are investments related, trade in goods, trade in services, market access related disputes. This body will have oversight over all of that.”

All eyes are now on the AfCFTA DSB as it shoulders the task of ensuring that disputes between member States are resolved in an efficient, transparent, fair and impartial manner. The starting point is to ensure that persons appointed to be members of the Dispute Settlement Panels and Appellate Body have the expertise and experience in the subject matter of the dispute and are chosen strictly on the basis of objectivity.

There is an even more important corresponding duty on the State Parties when nominating persons to be included on the indicative list or roster of individuals to serve as Panelists to ensure that nomination is based on merit and proven expertise on the subject matter. The member States should eschew any nepotistic or tribal considerations in nominating State representatives. The Nigerian government should resist the temptation to premise its nominations on Federal Character or other ethnic or religious considerations as we’ve seen in recent appointments.

Recent events such as the reported discriminatory measures against Nigerian traders in Ghana, the closure of the Nigerian border with Benin Republic, the Xenophobic attacks in South Africa on African businesses and the retaliatory attack on South African-owned businesses present examples of the kind of disputes that may come up before the AfCFTA DSB assuming that similar issues arise in the future. Others may include disputes over conflicting public policies, tariffs and non-tariff barriers, rules of origin, dumping, regulatory excessiveness, standardization, trans-shipment, taxation, market access, and consumer protection etc.

The AfCFTA dispute settlement mechanism is restricted to State-to-State disputes. The treaty is silent on the mechanism for the resolution of disputes between private individuals. Notwithstanding this limitation, the private sector participants such as the SMEs and other business entities will be able to petition their governments to implement the rights and obligations set out in the agreement establishing the AfCFTA. That way, the rights of the private sector can be enforced using the State instrument.

For instance, in a situation where citizens of a member State are being subjected to discriminatory measures in another AfCFTA member country, the affected country may decide to refer the case to the DSB on behalf of its citizens, after exhausting the amicable settlement options such as Good Offices, Consultations, Conciliation and Mediation. It is not yet clear what yardstick will guide such referrals or to what extent such anti-free-trade measures will impact on the citizens of the member state before it decides to challenge the infractions at the DSB. Whatever the case, where a member state fails to protect the rights of its citizens, the affected traders may seek other legal remedies available under the national laws or within any bilateral and multilateral instruments applicable to the disputes.

In relation to investment disputes, the ongoing negotiation of the AfCFTA Protocol on Investment is meant to clarify the uncertainty around the framework for resolving investor-state disputes. The member states in choosing to resolve their disputes within the AfCFTA framework should be aware of the fork-in-road provision under article 3(4) of the Protocol, which precludes a State Party who has invoked the dispute settlement procedure under the Protocol with regards to a specific matter from invoking another forum for dispute settlement on the same matter.  Another area of interest is the enforcement of decisions reached under the AfCFTA dispute settlement process.

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The effectiveness of a dispute resolution mechanism is often measured with the 3 E’s which are efficiency, expertise, and enforceability. Challenges will likely arise in relation to compliance with decisions under the AfCFTA as we have seen under the WTO and other regional trade treaties.  It is hoped that the desire to enhance investors’ confidence and the spirit of amity will spur the AfCFTA members to comply with decisions made by the dispute settlement bodies. In the end, the success of the AfCFTA will depend largely on the willingness of the member states to adhere to the agreement and to eschew any form of self-help when they perceive any breach of the trade deal.

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Insurance Recapitalization: The quest for efficiency

To tap into this, however, would require players to come up with innovative products.

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Recapitalisation: 26 firms get NAICOM's approval

As the phase II deadline for the recapitalization of the Nigerian Insurance Industry draws nearer, cracks are beginning to emerge from the wall. The most recent being the National Insurance Commission’s (NAICOM) revocation of UNIC Insurance Plc’s license with effect from the 25 March 2020. Consequently, the firm was handed over to a receiver/ liquidator to ensure a seamless liquidation process.

According to Mr. Sunday Thomas, the Insurance Commissioner, the company currently manifests every symptom of a business that would not survive the recent wave, and all efforts to resuscitate it are being frustrated by its owner.

Over the years, especially since the last recapitalization in 2007, the industry has been engulfed in a brawl between the laggards and the high-fliers. While the underperforming entities constantly have issues of delay in claims payment, which has created distrust for the general insurance proposition in Nigeria, the “high-fliers” have continued to battle that narrative through increasing levels of efficiency.

READ: Insurance companies to report over N100 billion in claims in 2020

NAICOM has also been coming up with policies to ensure seamless insurance delivery. Recall that in 2019, NAICOM instituted measures to ensure that players in the industry make prompt claims and benefits settlement a priority as part of its quest to restore the eroding public trust for Insurance in Nigeria.

Since the policy of recapitalization was proposed by the regulator, activities have intensified in the industry as players seek to meet the stated deadlines. For instance, we saw a flurry of bonus issuance of shares in December 2020, as firms sought to meet the Phase I deadline by converting retained earnings to paid-up capital as directed by NAICOM. This followed in the track of the series of takeovers that were announced in late 2019 and early 2020. We note that beyond improving underwriting capacity in the industry, the recapitalization exercise would eliminate operationally weak firms that have been a spanner in the wheel of the industry over time.

READ: Econet founder Strive Masiyiwa secures $100m investment in Nigeria data center

In our view, there is enormous potential for the players in the insurance industry in Nigeria given its untapped potentials as insurance penetration remains significantly low. To tap into this, however, would require players to come up with innovative products.

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One of such innovative ideas in our view is developing products targeted at millennials and Gen Z, who are currently excluded from the insurance net in Nigeria; despite constituting a sizeable number of Nigeria’s population. Opportunities in the insurance industry are widely unexplored and a combination of favourable policies from NAICOM and efficient delivery by surviving players can help open more untapped areas.


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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