- Africa Development Bank (AfDB) has launched the Africa Fertilizer Financing Mechanisms (AFFM) to boost purchase of the critical farm input across the continent.
- The Food and Agriculture Organization (FAO) warns that Africa is spending less on agriculture development than the rest of the world.
- AFFM has already secured $10.15 million in new funding from the Norwegian Agency for Development Cooperation (NORAD).
Shortage of fertilizer in Africa continues as the war between its main suppliers Russia and Ukraine enters the second year. To increase food productivity and security, African countries need increased access to fertilizer, nut until this dilemma is resolved, food security is off the table.
Access to fertilizer in Africa is very limited, where available, this basic agro-input for increased production is simply too expensive for effective use.
Such shortcomings were meant to be addressed by progressive initiatives such as the Maputo Agreement that was signed in Mozambique in 2003. In that declaration, African countries agreed to dedicate 10 percent of their annual budgets to agricultural development, a progressive forethought that has never been achieved.
It is now two decades down the road and barely a handful of African countries have even come close to, let alone live up to their pledges to invest 10 percent of their annual budgets to improving agriculture. One of the effects is the shortage of affordable fertilizers for their farmers.
Since the sector employs over 80 percent of the population in almost all African countries, the lack of funding to increase fertilizer supply is gravely affecting the majority of Africans.
Read: Amidst sanctions and shortages, Russia’s fertilizer finds its way to Africa
Now the Food and Agriculture Organisation (FAO) warns that rather than increase spending, Africa is actually ‘spending less in agriculture than the rest of the world.’
FAO examined 10 years’ worth of data from 13 sub-Saharan African countries and found that even major agricultural producers like Tanzania and Ethiopia, spend only around six percent of their budgets on agriculture development, a steep shortage below the agreed 10 percent in the 2003 Maputo Declaration.
It is for this basic reason, the need to finance access to fertilizers, that the Africa Development Bank (AfDB) launched the Africa Fertilizer Financing Mechanisms (AFFM).
The AFFM in turn has developed its strategic plan for 2022-2028 in which it prioritizes access to finance through capital investments.
Capital investment facilitates the provision of credit facilities which in turn allows for an affordable and timely supply of agro-inputs to smallholder farmers who otherwise cannot afford them.
For example, AFFM’s credit guarantee programs in Tanzania provided $2.4 million that was used to access $31 million worth of farm inputs.
Notably, along with capital investment, the AFFM also advocated for policy reforms and facilitated the provision of technical assistance to smallholder farmers.
The African Development Bank (AfDB) recognizes AFFM as one of the key instruments needed to achieve the objectives of its Feed Africa Strategy and the bank’s African Emergency Food Production Facility.
So far, the AFFM has afforded trade credit to the tune of $8.8 million and enabled access to an impressive 112,268 tonnes of fertilizer to over 690,000 smallholder farmers spread across four countries.
Over the last year alone, the AFFM investment capital has enabled close to 100 fertilizer-distributing SMEs and more than 130 fertilizer production companies to access financing and increase their supply of fertilizers across the region.
Thanks to these efforts, in the span of the last year (2022/23) more than 20,900 smallholder farmers have access to fertilizer and capacity-building programs.
These are commendable achievements by the AfDB, however, they hardly meet the growing demand for fertilizers across the continent. When you bring into consideration that the two major fertilizer suppliers in the world, Russia and Ukraine are at war, the need to step up such investment initiatives has never been more urgent.
To this end, the 2023 Africa Fertilizer and Soil Health Summit (AFSH) will this year concentrate on increasing fertilizer suppliers to Africa. To achieve this goal, there is a need to increase funding on one hand and reduce trade bottlenecks on the other.
Embargo on Russia
For example, given the trade embargoes placed on Russia, fertilizer from the country is laying idle in almost all major world ports, especially Europe. Despite the fact that the EU and the US all maintain that the embargo on Russia does not include limitations to fertilizers, nonetheless, on the ground, the reality is different.
Africa’s large agro-institutions and financial organizations must step up to the challenge if food production is to increase on the continent. Sustainable production and distribution remain a major challenge whose sole solution is financing.
Financing will help SMEs access fertilizers at affordable rates and in turn, they will be able to supply farmers. Better yet, with the needed funding, fertilizer production can take place on the continent rather than depend on imports from as far out as East Europe.
Read: Strengthen fertilizer value chains- African Development Bank
The Africa Fertilizer Financing Mechanism (AFFM) received $10.15 million in new funding from the Norwegian Agency for Development Cooperation (NORAD) that is meant to provide credit guarantees over the next three years, 2022 to 2025.
The recipient countries are Uganda, Kenya, and Mozambique, where close to a million farmers are expected to get access to over 85,000 metric tons of fertilizer.
Already, the Africa Fertilizer Financing Mechanism has received the initial payment of $8.73 million through the African Emergency Food Production Facility.
Commenting on the funding, the AFFM Coordinator Marie-Claire Kalihangabo, said; “This funding will allow the Africa Fertilizer Financing Mechanism to provide financing and credit guarantees for the large-scale supply of fertilizer to suppliers, to enable access to fertilizer on credit to agro-dealers, and contribute to bridging the supply gap of fertilizer in sub-Saharan Africa.”
It is no surprise that affordable access to fertilizers will be the major agenda at the 2023 Africa Fertilizer and Soil Health Summit (AFSH) later in June of this year. Themed; “Feed Africa: Food Sovereignty and Resilience” The summit will be held through July in Dakar, Senegal and will look at financing access to fertilizer via the Africa Fertilizer Financing Mechanisms (AFFM).
It remains to be seen if the summit will result in the funding of SMEs and new fertilizer production companies. Will the AfDB and partners at the summit be able to sway the international community to allow Russian fertilizer into Africa to bridge the growing gap?
The Russia-Ukraine war has caused a dire shortage of fertilizer globally and as a result, it has caused a huge spike in fertilizer prices. Developed countries that have the capacity to buy and produce fertilizers at whatever costs are not affected, Africa on the other hand can neither produce their own fertilizer nor afford to purchase at the new high rates.
“When the continent’s smallholder farmers have timely access to quality fertilizers, it is possible to double the agricultural productivity and incomes of small-scale food producers,” claims the AfDB, well, the opposite is also true; a shortfall in fertilizer supply results in a worse fall in production and as a result, both farmers and agro SMEs also lose income.
