African Fertilizer Financing Mechanism: African Development Bank Board of Directors Approves 2022 Annual Report

Jul 05, 2023

The Board of Directors of the African Development Bank has validated the 2022 African Fertilizer Financing Mechanism (AFFM) Annual Report. As of 31 December 2022, the Facility had received contributions of $23.96 million out of total commitments of $31.82 million, or 75.3% of what has been pledged. AFFM had allocated $11.42 million to ongoing or completed programmes and had a balance of $12.54 million for future projects.

Agriculture and the fertilizer sector had a challenging year in 2022 due to Russia's invasion of Ukraine, which caused a severe global food crisis. The conflict substantially impacted the availability of and access to fertilizers and thus agricultural productivity. Several African countries faced a sharp increase in the prices of essential food commodities, including wheat, maize, sunflower oil and barley. In May 2021, the African Development Bank launched the $1.5 billion African Emergency Food Facility to avert an acute food crisis. Meanwhile, the Africa Fertiliser Financing Mechanism, established in 2007 and managed by the African Development Bank, has secured new funding, accelerating its activities and meeting 2022 targets.

Key achievements

AFFM aims to increase agricultural productivity by boosting the use of fertilizers in Africa, with a target of at least 50 kilograms of fertilizer per hectare. According to the report approved by the Board of Directors in 2022, the Facility carried out key activities to help farmers access affordable fertilizers and apply them correctly. It continued to work with partners, such as the African Fertiliser and Agribusiness Partnership, to bring the commercial credit guarantee projects in Tanzania and Nigeria to a successful conclusion in July 2022. Both projects achieved excellent results, including a tenfold leverage of $4.8 million in credit guarantees, which provided 98,042 tonnes of fertilizer to 636,433 smallholder farmers.

In 2022, the Facility also continued to monitor the implementation of another $2 million commercial credit guarantee project with Office Chérifien des Phosphates (OCP Africa) in Ghana and Côte d’Ivoire. The programme, launched in October 2021, provided 1,725 tonnes of fertilizer to 9,752 smallholder farmers, trained 76 organisers and field agents, and 30,783 smallholders.

In Ghana, another trade credit guarantee worth $2 million with Export Trading Group - Inputs (ETG) Ghana targeted farmers in the Upper East, Savannah, North East and Northern regions. The project provided 12,500 tonnes of fertilizer to 44,710 smallholder farmers.

In March 2022, AFFM launched a call for projects to increase its investment in commercial credit guarantees in Tanzania and to initiate similar projects in Malawi and Mozambique.

Resource mobilisation

AFFM has submitted various proposals to potential donors to mobilise funds for investment in new credit guarantee projects supporting the African Emergency Food Facility. The Norwegian Agency for Development Cooperation (NORAD) agreed to contribute $10.15 million to implement credit guarantee projects in Uganda, Kenya and Mozambique. It has already contributed $8.7 million (86% of the total contribution). The US Agency for International Development (USAID) has pledged a $15 million grant.

In October 2022, the AFFM organised the third Africa Fertilizer Financing Forum in Casablanca, Morocco, jointly with the Office Chérifien des Phosphates (OCP Africa) and is preparing the next African Union Commission's African Fertilizer and Soil Health Summit in Senegal in July 2023. AFFM and OCP Africa are also co-funding studies in Eastern, Southern, Central and Northern Africa as part of the Fertiliser Financing Working Group in preparation for the African Fertiliser and Soil Health Summit.

AFFM Coordinator Marie Claire Kalihangabo said: "We are pleased that the Board of Directors adopted the 2022 activity report and approved our 2023 work plan and budget. The African continent experienced a sharp increase in the price of fertilizers and other agricultural inputs in 2022. From 2023 onwards, project design will incorporate the lessons learned, considering all country specificities in the initial phase and conducting periodic reviews to adjust activities according to the changing operating environment."

Romaric OLLO HIEN | Communication and External Relations Department | African Development Bank Group | [email protected]