Posted on May, 13, 2024 at 09:22 am
African leaders are looking for new ways of boosting financing for the continent’s agriculture sector to improve affordability and accessibility of fertilisers as the reality of the increasingly degraded African arable land sets in.
With studies showing that about 65 percent of African agricultural land is now degraded due to low fertiliser use, soil erosion and acidification, leaders are worried the very bedrock of the continent’s economies – agriculture – is facing an existential threat.
Heads of State and government, as well as leaders attending the Africa Fertiliser and Soil Health Summit in Nairobi this week, think that more financing and intra-Africa trade in fertilisers will be crucial to keep agriculture alive on the continent.
“Fertiliser access and affordability must be improved. Financing tools such as trade credit guarantees, working capital, and targeted subsidies must be consolidated to reduce market distortions, reduce costs and strengthen input supply chains,” said the leaders in the Nairobi Declaration published on May 9.
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“The need for regional cooperation on the issue of fertiliser and soil health is greater than ever before as opportunities for investment and great inter- and intra-regional trade are now significantly enhanced by AU member states’ adoption of the Africa Continental Free Trade Area (AfCFTA).”
“The majority of Member States are still over-dependent on imported fertilisers, especially non-phosphate-based fertilizers which expose Africa to external market shocks and price volatility,” they explained.
According to data provided by the African Union, fertiliser use on the continent is extremely low, compared with other parts of the world. While the global average of fertiliser use is 135kg per hectare, in Africa it is 18kg, which is also significantly lower than the 50kg/ha target set in 2006 at a similar conference in Abuja.
What’s more, “the recent global fertiliser crisis has disproportionately affected Africa, with a year-on-year decline of 25 percent in fertiliser consumption in 2022,” said the declaration.
“Recent global economic crises, compounded by supply chain disruptions from the Covid-19 pandemic and geopolitical dynamics, have worsened fertiliser affordability and availability, and disrupted agriculture, resulting in reduced acreage and lower yields,” Kenyan President William Ruto said in his address at the summit.
“We call upon the private sector to increase investments in Africa’s fertiliser industry and promote sustainable soil management practices.”
Private sector players, both in the agricultural production and fertiliser manufacturing, say bringing down the cost of fertiliser to make them affordable to smallholder farmers is a necessity, but a task they cannot complete alone.
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“Governments should relook tax policy for fertilisers and could remove some items to lower overall costs,” said William Ngeno, country representative in Kenya and Uganda for fertiliser manufacturer Yara International.
“Partnership in building last mile access to fertiliser with private sector is crucial. Farmers need to access the fertiliser as close to them as possible.”
Mr Ngeno told The EastAfrican that fertiliser prices have been increased by a host of factors that are outside the control of producers, governments, or farmers.
“Natural gas prices have in the recent past shot up above historic levels. Though currently it has declined it remains unpredictable in the future due to geopolitics or the Russian war,” he argued.
Natural gas is a critical ingredient in the making of some fertilisers, both as a raw material and as an energy source.
The recent currency depreciations across the continent and fuel price increases have also worsened the cost and accessibility of fertilisers, according to Mr Ngeno.
But as the continent’s agriculture sector, which contributes about 17 percent of Africa’s annual output, according to the World Bank, approaches a tipping point, leaders are rallying for collective actions to boost fertiliser access and use.
“The current pace of soil degradation in Africa has attained a threshold which requires proactive attention and action from all. What is clear is that Africa’s agricultural production capacity falls way below global norms,” said African Union Commission Chairperson Moussa Faki.
“Agriculture remains a strategic and key lever for continental industrialisation and the creation of jobs that are so vital for development, stability and prosperity. It is therefore up to us to harness our collective determination and resources in addressing soil health and fertiliser use in a holistic manner if we are to achieve sustainable food systems on our continent.”
Notably, the agriculture sector is underfinanced across the continent, a phenomenon that President Ruto attributed to budgetary constraints, making it hard to make fertilisers affordable through such programmes as subsidies.
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“Budget constraints may not enable us to achieve our purpose. Consequently, it is imperative for our governments to create an enabling environment to attract more private sector investments,” said Dr Ruto.
Leaders from the African Development Bank (AfDB) emphasised the role of channelling more money into fertiliser production and accessibility.
AfDB’s Director for Agriculture and Agro-industry Martin Fregene said that bridging the supply gap of fertilisers will contribute to a “flourishing agricultural landscape.”
The Nairobi Declaration, adopted by the 54 member countries of the African Union has committed governments to invest more in local production of fertilisers and to leverage AfCFTA for more fertiliser tarde.
The leaders committed to invest more in research and support the establishment of small and medium sized businesses to produce and distribute the critical input across the continent.
As the summit closed, the leaders promised to create “a multi-source soil health fund, for research, innovation, capacity building, and start-ups on fertilizer use and soil health actions.”
The fund is to be hosted by the AfDB and will be used for “derisking farmer investments in yield enhancing technologies and soil health”.
Source: The East Africa