Agro Business

Governing Council of Africa Fertilizer Financing Mechanism calls for more private sector fertilizer financing

Institutional members of the Africa Fertilizer Financing Mechanism’s Governing Council endorsed plans to attract more private sector financing to the continent’s fertilizer sector. The move came during a meeting of the 13-member council, during which participants also validated the Africa Fertilizer Financing Mechanism’s 2021 Annual Report and endorsed its proposed 2021 work program.

The Africa Fertilizer Financing Mechanism works with African governments, regional institutions, the private sector, development banks, and international donors to study the fertilizer value-added chain. The organization assesses key transnational factors that impede fertilizer use in order to develop comprehensive financing strategies for jump-starting Africa’s agricultural productivity. The African Development Bank manages the African Fertilizer Financing Mechanism.

During the meeting, the Governing Council commended the institution for its impactful projects to deliver trade credit guaranteesin Nigeria and Tanzania. The two projects, which support the implementation of trade credit guarantees to bolster fertilizer value chains.

In Tanzania, $2.3 million in trade credit guarantees provided leverage of 11.2 times, enabling three suppliers to sell fertilizer worth $26.3 million to 570,000 farmers via 28 hub agro-dealers and 966 retail agro-dealers. In Nigeria, the project secured a leverage of 4.6 times the guarantee and facilitated access to financing for fertilizer blenders who traded fertilizer worth $11.2 million.

“The Africa Fertilizer Financing Mechanism has now demonstrated to the development community that trade credit guarantees are an opportunity to tackle financing challenges and facilitate access to fertilizer for agro-dealers and farmers,” said Vincent Castel, regional manager at the agriculture & agro-industry department of the African Development Bank, speaking on behalf of Martin Fregene, Director for Agriculture and Agro-industry.

Council members urged the Africa Fertilizer Financing Mechanism to work with partners to mobilize more resources to support the fertilizer sector. The private sector currently offers a possibility to prepare rapid responses to solve challenges in the sector and achieve better results. Its market-responsive solutions can help take advantage of resources in the fertilizer industry that are already available.

“AFFM is in a unique and strategic position to show value to private sector players looking for leveraging opportunities,” said Council member Abah Ofon, manager for export development at African Export-Import Bank.

During the meeting, Governing Council members also discussed the Africa Fertilizer and Soil Health Summit, which is scheduled to take place in the second quarter of 2023. The event aims to build on progress that has occurred in the fertilizer ecosystem over the past 15 years. The Africa Fertilizer and Soil Health Summit will also pave the way for a new evidence-based, policy-driven, and practical action plan to inform fertilizer development on the continent going forward.

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