Posted on October, 13, 2023 at 06:00 am
The Africa Fertilizer Financing Mechanism will extend a $2 million partial trade credit guarantee and an $877,980 grant to the African Fertilizer Agribusiness Partnership(link is external) to support the distribution of 60,000 metric tons of fertilizer to 300,000 smallholder farmers in Mozambique’s Tete, Manica, Sofala and Gaza provinces.
The emergence of large rice, maize, and soybeans out-grower schemes, including in these provinces, has increased the demand and usage of fertilizers for production. Mozambique is, therefore, a growing market, and with the right approach, developing the market over the medium to long term is possible.
This credit guarantee, dubbed the Fertilizer Financing for Sustainable Agriculture Management project, will improve farming productivity by granting easy access and use of fertilizer for smallholder farmers. The project will also train 5% of the target farmers on using improved seeds, balanced crop nutrition and protection packages, and best farming practices, with 40% of women among the beneficiaries.
The fertilizer credit facility aims to reduce the risks that come with suppliers lending fertilizers to wholesalers on credit, which can make it harder for farms to get good fertilizer. “In addition to making fertilizer available via access to finance, the project will also support soil health improvement and increased food production through integrated soil fertility enhancement and restoration, capacity building and community development activities”, said Marie Claire Kalihangabo, the Africa Fertilizer Financing Mechanism Coordinator.
The project will last three years and support two wholesalers to sell fertilizer with a value of up to 15 times that of the fertilizer partial trade credit guarantee. It will also link wholesalers to around 30 hub agro-dealers and 125 retail agro-dealers who will resell the fertilizer to farmers.
The Board of Directors of the African Development Bank approved the Fertilizer Financing for Sustainable Agriculture Management project on 22 September 2023. It aligns with the Bank's Feed Africa Strategy because it will stimulate the private sector’s fertilizer financing in Mozambique, improving food productivity and food security. It builds on the results of the Sustain Africa initiative(link is external), the Bank's Country Strategy Paper for Mozambique 2023–2028, and its Technologies for Africa Agriculture Transformation Programme.
About the Africa Fertilizer Financing Mechanism
In 2006, African leaders mandated the Africa Fertilizer Financing Mechanism to assist African Union Member States in increasing agricultural productivity. The Africa Fertilizer Financing Mechanism was formally created in 2008 and became operational in 2015. The African Development Bank’s Board of Governors extended its lifespan to 2032. The Mechanism’s primary mission is to create an enabling environment for mobilizing the investments needed to achieve the target of 50 kilograms of fertilizer nutrients per hectare, as instructed by the 2006 Abuja Declaration on fertilizer for an African Green Revolution.
Source: AFDB