12 Wednesday 11 April 2018 BUSINESS DAY C002D5556 EDITORIAL PUBLISHER/CEO Frank Aigbogun Ending herdsmen-farmer conflict is a national priority EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi HEAD OF SALES, CONFERENCES Rerhe Idonije SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North) Bashir Ibrahim Hassan GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan While the deadly clashes between herdsmen and farmers continue to escalate around the country and especially in the North-Central states, the government continues to pretend to be helpless in resolving the problem. But the necessity of resolving the conflict is even more urgent as the conflicts threaten not only food and agriculture security, but the unity, peaceful coexistence and harmony of the country. There have been several studies carried out on how to permanently resolve these conflicts. Some of these reports were commissioned by successive governments while some have been produced by independent groups. One of such non-commissioned report is one done by the International Crisis Group, a transnational non-profit, non-governmental organization that carries out field research on violent conflicts and advances policies to prevent, mitigate or resolve them, has done a good job of tracing the root causes, evolution, impact and implications of these conflicts as well as recommending measures to end them. The report, ‘Herders against Farmers: Nigeria’s Expanding Deadly Conflict’, produced in September 2017, “is based on interviews conducted in September 2016 and July 2017 with a range of actors and stakeholders, including leaders and representatives of pastoralist and farmer organisations, officials of federal and state governments, security officers, leaders of civil society organisations and local vigilante groups, as well as victims of the violence in Adamawa, Benue, Borno, Ekiti, Enugu, Kaduna and Nasarawa states”. Regarding the principal causes and aggravating factors behind the escalating conflicts, the Group identifies climatic changes (frequent droughts and desertification); population growth (loss of northern grazing lands to the expansion of human settlements); technological and economic changes (new livestock and farming practices); crime (rural banditry and cattle rustling); political and ethnic strife (intensified by the spread of illicit firearms); and cultural changes (the collapse of traditional conflict management mechanisms), but also a dysfunctional legal regime that has allowed crime to go unpunished and, consequently, has encouraged both farmers and herders to take laws into their own hands. To resolve these conflicts, the International Crisis Group suggests five steps which include, in the short term: “Strengthen security arrangements for herders and farming communities especially in the northcentral zone: this will require that governments and security agencies sustain campaigns against cattle rustling and rural banditry; improve early-warning systems; maintain operational readiness of rural-based police and other security units; encourage communication and collaboration with local authorities; and tighten control of production, circulation and possession of illicit firearms and ammunition, especially automatic rifles, including by strengthening cross-border cooperation with neighbouring countries’ security forces; “Establish or strengthen conflict mediation, resolution, reconciliation and peacebuilding mechanisms: this should be done at state and local government levels, and also within rural communities particularly in areas that have been most affected by conflict;“Establish grazing reserves in consenting states and improve livestock production and management in order to minimise contacts and friction between herders and farmers: this will entail developing grazing reserves in the ten northern states where governments have already earmarked lands for this purpose; formulating and implementing the ten-year National Ranch Development Plan proposed by a stakeholders forum facilitated by the UN Food and Agriculture Organization (FAO) in April 2017; and encouraging livestock producers’ buy-in through easier access to credit from financial institutions.” In the longer term, it suggests the federal and state governments should consider the following: “Address environmental factors that are driving herders’ migration to the south: this will require stepping up implementation of programs under the Great Green Wall Initiative for the Sahara and the Sahel, a trans- African project designed to restore drought-and-desert degraded environments and livelihoods including in Nigeria’s far northern belt; and developing strategies for mitigating climate change impact in the far northern states; “Coordinate with neighbours to stem cross-border movement of non-Nigerian armed herders: Nigeria should work with Cameroon, Chad and Niger (the Lake Chad basin countries) to regulate movements across borders, particularly of cattle rustlers, armed herders and others that have been identified as aggravating internal tension and insecurity in Nigeria.” These recommendations contain no ambiguity. The government should put them in a basket, together with other such recommendations, like the report of the Gabriel Suswamled Committee on Grazing Reserves set up by former President Goodluck Jonathan’s government in April 2014, and even by committees set up by the Buhari government, weigh them, sieve the chaff and implement the substance. 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Wednesday 11 April 2018 COMPANIES & MARKETS Company news analysis and insight BUSINESS DAY 13 FCMB Opens Flexx Hub at LASPOTECH, Hands-over Reconstructed School Gate Pg. 14 Lafarge Africa’s alarming leverage responsible for first loss in 5 years BALA AUGIE lion, which represents a 145.05 percent surge from N104.70 billion it incurred the previous year. Lafarge Africa is making frantic efforts toward reducing financial leverage as it plans to raise N131.97 billion in rights issue to refinance debt and fund its expansion plans. Analysts at Cordros Capital have reiterated their SELL rating on the stocks of the cement maker as they expect investors to react to the delayed results. Cost of sales ratio stood at 83.03 percent in the period under review, the highest in five years since Business- Day started compiling data. Cost of sales increased by 38.72 percent to N248.78 billion in the period under review. This means the company is spending more on input cost to produce each unit of product. The surge in cost of sales or production cost was due to a N19.20 billion impairment of property plant and equipment incurred in the fourth quarter of the year A breakdown of the PPE shows the sum of N12.4 billion involves cost of the evacuation road under construction at UNICEM and N3.3 billion cost of ASHAKACEM kiln preheater project, according to notes to the financial statement. Because PPE is a one off event that is not expected to recur, Lafarge Africa could see an improvement in cost of sales ratio. Gross profit margin, a measure of efficiency, fell to 16.96 percent in December 2017 from 18.50 percent Lafarge Africa Plc is grappling with spiralling cost of production as rising interest on borrowing wiped out all of earnings, leaving the cement maker in a loss position. For the year ended December 2017, Lafarge Africa’s posted a loss after tax of N34.60 billon from a profit position of N16.89 billion the previous year, the worst results in five years since BusinessDay started compiling data. A N43.02 billion finance costs or interest expense in the income statement in the period under review swallowed all of operating profit of N7.88 billion, which inevitable resulted in the loss. It is glaring that Lafarge Africa is exposed to financial risk as its debt pile has resulted in increased interest payment hence suppressing bottom line (profit). Consequently, risk of stockholders return is increased. Times interest coverage is 0.18 times operating profit in the period under review, which means the cement maker’s ability to meet interest expenses are questionable. The margin of safety for times coverage ratio is 1.50 times, a figure lower than this signals amber light. Total debt in the balance sheet stood at N256.54 bilas at December 2017. A higher ratio means a firm is efficient. Sales moved increased by 36.13 percent to N299.15 billion in the period under review to N219.74 billon as at December 2017. Lafarge Africa shares have gained 2 percent, underperforming the NSE ASI Index. Foreign reserve may hit $50bn by year end — CBN The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, on Monday expressed optimism that the nation’s foreign reserves would grow to 50 billion dollars before the end of the year. Emefiele said this at the 25th Seminar for finance correspondents and business editors with the theme: “Sustaining Economic Growth Beyond Recession”, in Uyo. Emefiele, represented by Mr Edward Adamu, Deputy Governor, Corporate Services, said the reserves would continue to grow following the recent accretion the nation had recorded. He said that the economic recovery would consolidate as the sentiments improved in the macro economy and supported by proactive monetary, trade, industrial and fiscal policies. The governor also said the apex bank expected a continued uptick in Gross Domestic Product (GDP) growth with a positive spillover to improved unemployment rate. On the foreign exchange market, he said the rate stability would continue. “As we entrench and sustain the transparency in the FX market, as foreign FX reserves accretion continues, market confidence and improved sentiments remain. “We expect that the exchange rate will not only be stable but would begin to appreciate against major currencies. “The adverse competitiveness outcome which such appreciation may entail will be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined.” According to him, there is also need for strong policy coordination. “Finally, we expect a redoubling of strong policy coordination, collaboration and cooperation which flourished during the very difficult times,” he added. He said that the need was greater now than ever for a robust policy coordination between the key aspects of economic policymak- ing space to sustain the recovery. This, he said, would include fiscal, monetary, exchange and trade policies, which must be targeted at protecting farmers to boost agricultural outputs and support local companies. Emefiele said it would also enhance manufacturing and industrial capacities, to diversify the economy away from oil and fossil fuels.