African Development Bank: Africa Fertilizer Financing Mechanism to boost farmers’ access to fertilizers in Mozambique and Uganda

Mozambique: Africa Fertilizer Financing Mechanism extends $2 million guarantee and $877,980 grant to improve farmers’ access to fertilizers

Porters offload a fertilizer truck at a fertilizer wholesaler’s warehouse in Mozambique

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 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, the Bank's Country Strategy Paper for Mozambique 2023–2028, and its Technologies for Africa Agriculture Transformation Programme.

Uganda: Africa Fertilizer Financing Mechanism to boost farmers’ access to fertilizers with nearly $2.9 million in credit guarantees and grant funding

Africa Fertilizer Financing Mechanism’s team during a field visit to a local fertilizer shop in Uganda.

The Board of Directors of the African Development Bank Group has approved a project to provide 60,000 metric tons of fertilizer to 400,000 smallholder farmers in Uganda.

Under the Fertilizer Financing for Sustainable Agriculture Management project, the Africa Fertilizer Financing Mechanism will provide $2 million in partial trade credit guarantees and a grant of $877,842 grant to the African Fertilizer and Agribusiness Partnership. 

Over a three-year duration, the project will support two wholesalers to sell fertilizer with a value of up to fifteen times the value of the $2 million partial trade credit guarantee. It will also link wholesalers to around twenty-five hub agro-dealers and 125 retail agro-dealers who will on-sell the fertilizer to farmers.

The credit facility will reduce the risks associated with suppliers lending fertilizers to wholesalers on credit.  The project is expected to boost yields and will also provide training to 3.4% targeted farmers—40% of them women— on using improved seeds, balancing crop nutrition and best farming practices.

Marie Claire Kalihangabo, Africa Fertilizer Financing Mechanism Coordinator, said, ″In Uganda, the fertilizer consumption is about 2.5 kg/ha. The project will help to make fertilizer more accessible and appropriately used by farmers, which would in turn boost agricultural productivity and help to improve food security in Uganda.″  

The project will advance the Bank’s Feed Africa Strategy by increasing food productivity and security. It builds on the results of the Sustain Africa initiative, the Bank’s Country Strategy Paper for Uganda 2023–2026, and its Technologies for African Agricultural Transformation Programme. The project was approved on 22 September 2023.

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.

About the African Fertilizer and Agribusiness Partnership

The African Fertilizer and Agribusiness Partnership is a non-profit social enterprise that collaborates with public and private sector partners to develop and strengthen inputs value-chains and, in particular, to deepen and broaden fertilizer markets across Africa. The African Fertilizer and Agribusiness Partnership is dedicated to designing and executing sustainable development projects that support policy and regulatory reforms, capacity building, financial credit provision, and data collection and market intelligence dissemination. By providing innovative and market-oriented business solutions, the African Fertilizer and Agribusiness Partnership promotes the growth of the agricultural inputs and agribusiness value chain sectors.