It’s Time to Expand Fertilizer Manufacturing Across Africa

Synthetic fertilizers have dramatically bolstered agricultural yields across South America and Asia, but in much of Africa, fertilizer use remains low, and low crop yields are stagnating as food demand is rising across the continent. One reason for low fertilizer application in parts of Africa is that synthetic fertilizers are often prohibitively expensive for small-scale producers. Some Western advocates of agroecological practices claim this and other challenges as reasons to eschew synthetic fertilizers and other inputs from African agriculture altogether. However, pragmatically speaking, many African farmers would use and benefit from such fertilizers and inputs if there were affordable access and robust training on how to use them. There is a critical window of opportunity to bring fertilizers within reach of farmers as the continent’s ample raw materials and African Continental Free Trade Area open the door for developmental banks and institutions to invest in fertilizer production across African countries. Scaling up fertilizer manufacturing and increasing fertilizer use would upend the status quo of African agriculture and transform the future of the continent.

Fertilizer use and yields in African countries lag behind other countries across the globe. In 2019, cereal yields in sub-Saharan Africa were 2.1 tons/ha^{Cereal yields reported by FAO in 2019 in Eastern, Western, Middle, and Southern Africa were averaged.} on average, while yields in South America and Asia were 5.2 tons/ha^{FAOSTAT reports cereal yields in hg/ha, which were converted to tons/ha. Cereal yields in South America are 52083 hg/ha.} and 4.3 tons/ha,^{FAOSTAT reports cereal yields in hg/ha, which were converted to tons/ha. Cereal yields in Asia are 42854 hg/ha.} respectively. Average nitrogen fertilizer use was 12-15 kg/hectare in sub-Saharan Africa (Figure 1) in 2016, with significant variation across the region, while the global average was 137 kg/ha. Synthetic fertilizer plays a key role in food security, and unlike organic fertilizer like animal manure, its nutrient content is comparatively high.

Counterintuitively, increasing fertilizer use potentially limits deforestation and greenhouse gas (GHG) emissions. Natural gas is used to manufacture ammonia-based fertilizers and is responsible for about 1% of global GHG emissions. Fertilizer application to crops also emits nitrous oxide (N2O), a very potent GHG, and excess use can contribute to water pollution.

However, raising crop yields, in large part through greater fertilizer use, is necessary to minimize cropland expansion into forests, and to mitigate climate change. If cropland expands as much as projected, agricultural land-use change in Africa could emit more carbon than any other continent.

Though parts of Africa have the raw materials for fertilizer production, most countries are dependent on imported fertilizers. Even though there are substantial natural gas resources to produce nitrogen-based fertilizers, over four-fifths of nitrogen, the primary nutrient used in fertilizers in Africa, was imported in 2016. Many of the raw materials for fertilizer production are exported to other continents.

African governments recognize the need to increase domestic fertilizer production and intra-regional trade, to accelerate progress towards increasing fertilizer application. Most African countries have not met a regional commitment, called the Abuja Declaration, to increase average fertilizer use to 50 kg/ha by 2015.

Increasing regional production of fertilizers is crucial for raising fertilizer use and yields within the continent. Countries with lower distances to fertilizer production tend to have lower fertilizer costs on average and are associated with greater fertilizer use. Reducing fertilizer costs increases its use and raises yields, and is associated with a higher GDP per capita. One of Nigeria’s urea-producing plants, Indorama, demonstrates this; it is associated with increasing farmer’s yields by 30% and providing $2 billion to Nigeria’s GDP. Before this plant, Nigeria imported 80% of its fertilizer, but it then became a net exporter of fertilizers, potentially boosting fertilizer use in other countries.

Now is the perfect opportunity to invest in scaling-up fertilizer production in African countries. A new trade agreement, the African Continent Free Trade Area (AfCFTA), will dramatically reduce tariffs, increase intra-regional trade, and boost regional manufacturing as it is implemented. And, East and West Africa are the fastest-growing markets for fertilizers in the world. Manufacturing fertilizers, within these regions especially, could bring fertilizers closer to farmers and increase use.

Raw Materials

African countries have sufficient raw materials to produce dramatically more nitrogen and phosphate fertilizers. Ammonia or urea are nitrogen-based fertilizers that can be produced from natural gas, while phosphate-based fertilizers could be produced in multiple ways, including treating phosphate rock with acid and adding ammonia salts. Potassium is also a key fertilizer ingredient, but Africa largely lacks potash, a source of this ingredient.

Nigeria and Mozambique have the most potential to increase nitrogen-based fertilizer production. Though Nigeria is a key producer of urea fertilizers, the country could still surpass India, the world’s largest urea producer in 2018. Nigeria has the largest natural gas reserves in the continent, or an 80%^{India’s reserves had 47 tcf of natural gas, while Nigeria has 200 tcf of natural gas according to EIA in 2020.} larger resource capacity than that of India. Mozambique’s natural gas reserves almost rival Nigeria’s. If trade barriers are lowered — as the AfCFTA does — Mozambique would have the potential to supply fertilizers to the South African Development Community, a regional economic entity including 16 countries, with its domestic natural gas resources.

In North Africa, Morocco’s state-owned phosphate rock miner, OCP, leads global and African phosphate fertilizer production and sales. OCP accounts for 61% of the continent’s sale of phosphate-based fertilizers and their efforts to sell custom fertilizers and inform farmers has increased demand for fertilizers and yields in Africa.

Still, phosphate use is low across the continent (Figure 2). Efforts by OCP and others to support building fertilizer plants in Nigeria, Ghana, and Ethiopia would ramp up fertilizer supply chains. Uganda and southern African countries have the potential to process and export their phosphate resources to the Ethiopian market — a top consumer in East Africa. In West Africa, Togo and Senegal have appreciable phosphate reserves, but currently only export small amounts of phosphate rock and phosphate fertilizer to nearby countries. Likewise, Tanzania and Angola have appreciable natural gas and phosphate resources, to increase fertilizer supply both for themselves and for growing agricultural producers like Cameroon^{FOFA 2040 fertilizer consumption for Cameroon is 761309.194 tons nutrients, or 47.9% of Central Africa’s future fertilizer consumption.} in Central Africa, and Ethiopia.^{FOFA 2040 fertilizer consumption for Ethiopia is 1471003.98 tons nutrients, or 28.2% of East Africa’s future fertilizer consumption.}

Challenges

A major challenge to scaling up fertilizer manufacturing is that establishing a plant costs at least hundreds of millions of dollars (USD). Such an investment is hard to justify in a given country if fertilizer resources are abundant but overall demand is low and vise versa. In Malawi, 75% of farmers use fertilizers, but there are very little raw materials for fertilizers. In contrast, Tanzania has natural gas and phosphate resources, but only one in five farmers use fertilizers. Despite growing fertilizer demand in many countries, there have historically been substantial barriers to export and import fertilizer across most countries, making it difficult to access key fertilizer markets, further depressing the incentive to invest in new manufacturing.

However, the African Continental Free Trade Area (AfCFTA), launched in January, will decrease these barriers and stimulate fertilizer trade. Countries with access to raw materials and a good business environment, which entails access to capital and energy, for example, could gain access to more markets and scale up production. For instance, Zambia has sizable phosphate rock resources and a better business environment than most African countries; with the AfCFTA, it could supply more fertilizers to the growing East African market. Central African countries, which have some of the lowest fertilizer use across Africa, would be better connected to fertilizer-producing countries, like Nigeria, due to AfCFTA. Ultimately, farmers in many countries would benefit from greater fertilizer trade within the continent.

Still, investment and financing from multilateral banks, governments, and the private sector within Africa and from abroad are needed. The Abuja Declaration established the Africa Fertilizer and Financing Mechanism to provide funding for fertilizer plants, but the funding from member countries was a mere ~14.5M USD in 2018. Far more funding is needed. Nigeria’s Indorama plant was able to expand production when awarded $850M million in loans from development and commercial banks from Africa and beyond. At the same time, investments in road and rail infrastructure are needed to reduce transport costs and increase access for small- and medium-sized farmers. In Nigeria, transporting fertilizer from the port city of Lagos to the inland capital Abuja adds $50 to each ton of fertilizer.

Traditional and agroecological farming practices alone have limited potential to transform African agriculture. Some proponents of these practices cite inadequate productivity increases from inputs like synthetic fertilizers as one of the reasons to abandon them. But African farmers sorely need and want more choice, not less. Greater investment in fertilizer production is crucial to increasing fertilizer use and yields and ultimately to prosperous and sustainable development across Africa.