World Bank member, the International Finance Corporation (IFC) announced it has committed $10 million to fertilizer company, Kenya-based Fertiplant East Africa Ltd to fund the building of a new plant in Kenya.
Sixty-five percent of Kenya’s population depends on agriculture for a living, however 80 percent of the food supplied to the country is generated on smallholder farms of less than two hectares in size. High costs, lack of knowledge regarding usage, and incompatibility between fertilizer and crop type have resulted in low yields for the country and surrounding region. These and other challenges have also led to fertilizer use in sub-Saharan Africa being as low as 10 percent of recommended levels.
“IFC’s investment in Fertiplant is part of our strategy to promote development and competitiveness of East Africa’s agricultural sector,” said Hans Peter Lankes, vice president for development economics with IFC. “Responsible fertilizer companies like Fertiplant can support farmers, create jobs and increase food security in the region.”
Africa accounted for 3 percent of the world’s fertilizer usage in 2013, according to the UN’s Food and Agriculture Organization. Broken down, the expected growth rate in demand for nitrogen is expected to be 3.2 percent; the growth rate for demand for phosphate is expected to be 2.7 percent; and for potash, 7.8 percent between 2014 and 2018.
To help meet this growing demand, this new plant, which will be located in Nakuru in Kenya’s Central Rift Valley, will produce 100,000 tons of fertilizer per year and have a positive social benefit through the generation of hundreds of jobs through construction and operation.
“The partnership with IFC is the culmination of MEA Fertilizers’ forty-year journey to transform and make regional agriculture rewarding and sustainable,” said Titus Gitau, executive director of Fertiplant. ” We believe that profitable agriculture is the only way to sustain rural Africa and the Fertiplant factory through employing modern technology and advising on modern farming practices. It is our hope that by using our tailor-made fertilizers and other modern practices like mechanization and seed development, farmers will boost their crop yields and close the gap between actual and attainable yields.”
Investors and large scale global companies have begun to realize the potential for return on investment and significant production improvements that can be achieved through making connections between the agricultural yield gap in Africa and the lack of affordable fertilizers.
In 2014 Yara International ASA, the world’s largest publicly traded nitrogen fertilizer producer announced plans to build a $2.5 billion plant in either east or west Africa toward the end of the decade, reports Bloomberg.
That same year Morocco and Gabon signed a $2.3 billion joint venture to build fertilizer factories to serve the growing African agricultural market as part of Morocco’s expansion of its investments south of the Sahara. Production capacity for the project will reach 2 million tons per year by 2018, of which all will be destined for the sub-Saharan African market. Of the two plants to be built in Gabon, one will produce ammonia from natural gas and the second will then turn it into fertilizer in Port Gentil. Two plants in Morocco will produce phosphoric acid and an additional plant will produce fertilizer.
-Lynda Kiernan
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com
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