African Development Bank Group

11/18/2021 | News release | Distributed by Public on 11/18/2021 03:16

At Fertilizer Financing Forum, participants call for closer stakeholder collaboration and innovative tools to get fertilizers to farmers

Over 400 participants from government, development finance institutions, the fertilizer industry, the banking sector and civil society joined the inaugural East and Southern Africa Fertilizer Financing Forum to emphasize the importance of affordable finance to facilitate access to inputs for thriving agricultural development.

The Africa Fertilizer Financing Mechanism, the African Fertilizer and Agribusiness Partnership (AFAP) and AFRIQOM, a private consulting firm in the sector, jointly organized the virtual event, themed Strengthening regional collaboration to finance fertilizer in the agribusiness value chain.

The discussion touched on a number of challenges, including the impact of the Covid-19 pandemic, which according to Mounir Halim, CEO and Founder of AFRIQOM, had disrupted the fertilizer market, causing prices to spike. Agriculture Ministers from Malawi, Rwanda, Uganda and Zambia echoed those concerns and called for more action in policy and partnerships to avoid a crisis.

"There is a need to embrace good practices in terms of policy and regulatory frameworks," said Dr. Gérardine Mukeshimana, Rwanda's Minister of Agriculture and Animal Resources. "I also want to emphasize the need for strong collaboration between the public and private sectors for sustainable crop productivity growth and food self-sufficiency on our continent."

Representatives of the African Development Bank and the World Bank's International Finance Corporation pointed out that development finance institutions could boost the competitiveness of African fertilizer producers by partnering with regional and global commercial banks to finance large projects.

Participants also discussed the need for innovative financing to help African farmers who cannot afford fertilizers and other inputs. Fertilizer companies pointed out that local financial institutions and partial risk guarantees could help development finance institutions address this issue.

Dr. Beth Dunford, African Development Bank Vice President for Agriculture, Human and Social Development, outlined Bank initiatives to strengthen domestic fertilizer production across Africa. "We're working with major fertilizer companies such as OCP, Indorama and ETG through a multi-year senior loan and by syndicating a multi-billion-dollar debt facility from development financial institutions and commercial lenders," Dunford said.

Marie Claire Kalihangabo, Coordinator of the Africa Fertilizer Financing Mechanism, cited a $2.4 million trade credit guarantee project that AFAP implemented in Tanzania, which has led to about 530,000 smallholder farmers in the country gaining access to fertilizer. Participants also proposed engaging microfinance and warehouse receipts to speed up smallholder farmers' access to financing.

Ambassador Josefa Sacko, Commissioner for Agriculture, Rural Development, Blue Economy & Sustainable Environment at the African Union and Chairperson of the AFFM Governing Council, stressed the need to provide more investment guarantees. Instruments such as credit risk guarantees, especially for supply-side activities could be a solution, she said. She also proposed adopting smart subsidies to make fertilizer more affordable to farmers.