Africa Fertilizer Financing Mechanism Supports Small Holder Farmers In Ghana With $2m Credit

Posted by Eric Ojo African News, Business News Saturday, June 11th, 2022

(AFRICAN EXAMINER) – The Africa Fertilizer Financing Mechanism (AFFM), a subsidiary of the African Development Bank (AfDB), has approved a $2 million partial trade credit guarantee to support fertilizer delivery to 200,000 Ghanaian smallholder farmers.

The facility which is extended to ETG Inputs Ghana Limited to support delivery of fertilizer to 200,000 smallholder farmers in Ghana’s Upper East, Savannah, Northeast, and Northern Regions. The move will ease the current shortages in supply and boost yields, food security, and incomes of farmers in the designated regions.

The AFFM is hosted by the AfDB. Established in 2007 in compliance to the resolution agreed upon at the Abuja Summit of Agricultural Ministers of the African Union Member States in 2006. It seeks to enhance pan-African agricultural productivity by promoting the use of fertilizers.

The agency seeks to enhance pan-African agricultural productivity by promoting the use of fertilizers, helps the African public and private sectors to conduct feasibility assessments and secure financing for promising fertilizer production ventures as well as boosts fertilizer demand at the wholesale and retail levels and extending credit guarantees to farmers and suppliers.

Meanwhile, the war in Ukraine has contributed to fertilizer shortages, driving prices higher, and reducing supplies. In Ghana, the fertilizer shortage has now affected 60 percent of the supply.

The country has seen the cost of a 50kg bag of a commonly used nitrogen-, phosphorus- and potassium-based fertilizer skyrocket from $26 in November 2021 to $46 in April 2022, according to the Africa Fertilizer initiative, which compiles data, statistics, and information on fertilizers in Africa.

The trend is threatening agricultural production just as many countries head into the planting season. At the same time, imports of food staples into Africa, such as wheat and oilseed, are also being disrupted by the war.

Under the agreement ETG Inputs Ghana Limited, a subsidiary of agricultural conglomerate ETG, will enable delivery of 10,000 metric tons of fertilizer to wholesalers who will distribute it, via retailers, to farmers in the regions.

The credit enhancement mechanism is expected to reduce risks associated with suppliers selling fertilizer to wholesalers on credit, which can result in farmers having limited access to good quality fertilizer.

The project, which will last for one year, will support as many as four wholesalers to sell fertilizer with a value of up to three times that of the partial trade credit guarantee. It will also contribute to linking wholesalers to around 200 retailers who will on-sell the fertilizer to farmers.

AfDB’s Vice President for Agriculture, Human and Social Development, Dr. Beth Dunford said the project with ETG comes at a time when Africa’s farmers, recovering from the economic impacts of the COVID-19 pandemic, now face rising market prices for fertilizer, largely due to Russia’s war in Ukraine.

“This partial trade credit guarantee helps improve access to these inputs at more affordable prices”, he said.

Chief Executive Officer (CEO) of Fertilizers and Agri-Inputs at ETG, Ashish Lakhotia noted that fertilizer production and distribution can be expensive.

“Securing opportunities for risk-sharing is crucial to building an environment of trust that leads to fertilizer availability for smallholder farmers. I’m confident our collaboration with the Africa Fertilizer Financing Mechanism will mitigate potential risks we face when dealing with wholesalers”, he stressed.