- African nations commit to creating a soil health fund to support research, innovation, and capacity building on fertiliser usage.
- AfDB agrees to mobilise financing to ease fertilizer availability, de-risk farmer investments, and support policy reforms across the continent.
- In Nairobi, governments commit to formulating policies that will serve to create a conducive environment for fertilizer and soil health interventions.
Africa fertilizer supply is a multi-billion dollar industry that at the moment, is tapped by Western countries, particularly and ironically, Russia and Ukraine. Just as hard lessons were learnt in the wake of the COVID-19 pandemic, so was the need to invest in fertilizer production and distribution brought to light in the wake of Russia’s war on Ukraine.
The war led to a severe shortage of fertilizers in Africa and now, in an effort to mitigate the challenge African Heads of State have committed to support the full operationalization of the Africa Fertilizer Financing Mechanism.
The financing facility is expected to empower investment in yield-boosting technologies and soil health initiatives, finance infrastructure and logistics. The end goal is to enhance fertilizer availability and to improve market access for Africa’s farmers.
The Africa Fertilizer Financing Mechanism is detailed in the Nairobi Declaration on the Africa Fertilizer and Soil Health Summit which was declared at the Africa Fertilizer and Soil Health Summit in Nairobi earlier this year. To back up the financing facility, African Union member states are now expected to create a Soil Health Fund that will serve to support research, innovation, capacity building, and startups focused on fertilizer use and soil health.
Side by side with the Africa Fertilizer Financing Mechanism and the Soil Health Fund, African Heads of State also adopted a 10-year Action Plan for Fertilizer and Soil Health, and what is known as the Soil Initiative for Africa.
“The African Union Commission and the African Union Development Agency – New Partnership for Africa’s Development will oversee the implementation of these commitments and others set out in the Declaration and report progress to the African Union Assembly in February 2026,” reported a media communique shared by the AfDB.
In his comments, the AfDB’s Vice President for Agriculture, Human and Social Development, Dr. Beth Dunford, said: “As one of the key mechanisms that will support the implementation of the Africa Fertilizer and Soil Health’s 10-year Action Plan, the Bank is committed to scaling up the Africa Fertilizer Financing Mechanism 2.0, with the overall mandate to increase productivity and improve soil health.’
He also said the Bank will finance and mobilize resources from multilateral development banks, bilateral donors, private sector for an effective and capable Africa Fertilizer Financing Mechanism 2.0 to improve fertilizer availability, de-risk farmer investments, and support policy reforms.
Backing the view, Africa Fertilizer Financing Mechanism Coordinator Marie Claire Kalihangabo said; “We are ready to mobilize investments through an enhanced Africa Fertilizer Financing Mechanism and provide innovative financing products to ensure timely access to quality, affordable organic and inorganic fertilizers, promoting their appropriate use by farmers across the continent.”
Similarly, and complimentary to the envisioned financial mechanisms, a call was made for agritech scaling up.
Also Read: Africa’s food security: Is more fertilizer the answer?
Nairobi declaration on the Africa fertilizer and soil health summit
Under this declaration, the Heads of State committed to formulating and implementing policies and regulations that will serve to create a conducive environment for fertilizer and soil health interventions. Several actions were listed as patent to achieving the declaration’s goal; they agreed to develop specific guidelines for the formulation and implementation of relevant and effective fertilizer and soil health policies.
They also agreed to harmonize national and regional policies and regulatory frameworks to ensure coherence and promote regional and continental trade. The declaration also requires African countries to enhance engagement and dialogue with the private sector at all levels and to strengthen public private partnerships to enhance investments in the fertilizer value chain.
The Heads of State also agreed on capacity enhancement to support implementation and committed to developing and promoting systemic national capacity building for what they described as ‘locally relevant fertilizers’ and ‘soil health management practices and technologies.’
To achieve this, they agreed to establish regional research and development networks for the exchange of knowledge and technologies. They also agreed to build, strengthen, and standardize Africa’s fertilizer analysis capacity and the capacity of laboratories as well to be at par with international fertilizer standards.
Fertilizer financing
The AfDB describes the Africa Fertilizer Financing Mechanism as a special fund that is designed to provide innovative financing solutions required to accelerate the use of fertilizers in Africa as the basis to improving agricultural productivity.
There are at least three mechanisms by which the Africa Fertilizer Financing Mechanism hopes to achieve this noble goal. First is the Portfolio Credit Gaurantee, a scheme ideal for mitigating the risk of working capital for stakeholders in the fertilizer distribution chain.
“The portfolio credit guarantees target wholesalers, distributors, agro-dealers and retailers…it gives a participating financial institution permission to attach a partial credit guarantee to any beneficiary meeting the eligibility criteria and for which the partnering Financial Institution has decided to provide a working capital loan or credit facility,” explains the ADfB.
Through this scheme, the Africa Fertilizer Financing Mechanism guarantee covers 50 per cent of the unpaid part of the loan principal, plus interest payable at the moment the guarantee is called by the Financial Institution. Then you have the Partial Credit Guarantee, this scheme targets private importers, blenders, wholesalers and distributing companies in need of investment capital, details the AfDB.
In the partial scheme, the Africa Fertilizer Financing Mechanism, working through its local Implementing partner, chooses whether to provide a commitment agreement for a guarantee to the target beneficiary.
“The commitment agreement offers a confirmation by Africa Fertilizer Financing Mechanism that a portion of a potential loan can be guaranteed. The beneficiary can therefore use it to shop for competitive interest rate at various financial institutions,” explains the AfDB.
Further, once the financing is secured, the Africa Fertilizer Financing Mechanism then provides a partial guarantee to cover up to 50 per cent of the unpaid part of the loan principal, plus interest payable when the guarantee is called by the financial institution.
Finally you have the trade credit guarantee, this model works to provide aid to upstream players at the source of the product as well as credit for downstream players.
“Under this trade credit model, a fertilizer importer, manufacturer or supplier will avail fertilizer to hub agro-dealers on credit and Africa Fertilizer Financing Mechanism will share the credit risk involved in the transaction with the supplier,” details AfDB.
