Overall market risk: The economies of East and Southern Africa continue to struggle to maintain and advance inclusive economic growth amidst the shocks at both the international and domestic levels. This has been worsened by elevated inflation rates, high debt distress, as well as shortages of foreign currency.
The Kenyan economy is facing tough times with the recent implementation of increased taxes outlined in the finance bill of 2023, which was published in late April. These changes could take a toll on the economy which had already been hit hard by a regional drought and the Russia-Ukraine war that sent inflation soaring and GDP growth dipping. In Rwanda, despite the hike in inflation, IMF projects a positive outlook of GDP to grow by 6.2 percent in 2023 and 7.5 percent in 2024 respectively. In Zimbabwe, the unstable and challenging economic situation has resulted in most farmers being hesitant and unable to finance their agricultural operations. As a result, farmers will have to depend on funding programs. Meanwhile, suppliers face obstacles in augmenting their working capital through bank loans due to exorbitant interest rates.
Overall, in the fertilizer market space, a positive outlook looms as the prices of fertilizers are slowly coming down in the international market.
Availability and Affordability: Most countries in the regions are registering adequate fertilizers stocks to meet the 2022/23 demand. In the southern region where the main season is about to start, suppliers and importers are seen to be positioning their products. In most parts of the eastern region, the main planting season concluded, and farmers are currently doing top-dress for their crops. According to the Fertilizer Association of Malawi (FAM), there is an adequate supply of fertilizers in the country, and the stock levels are anticipated to increase further upon the announcement of subsidy tender awards. In Ethiopia, over 500,000 metric tons of fertilizers have arrived at Djibouti port scheduled for the Ethiopian farming seasons. These fertilizers will be distributed to farmers’ cooperative unions (FCUs) and primary cooperatives (PCs) warehouses. In Mozambique, fertilizer demand is currently low as most farmers are in the harvesting season. The agrodealers on the other hand are managing with carryover stocks from the last season. In Kenya, The Kenya Tea and Development Agency (KTDA) has floated a tender for NPK 26-5-5. In South Africa, concerns are arising regarding the inventory levels in the supply chain despite the commencement of the season. About 240K Metric Tons has been imported between January and April 2023.
Distribution: Most countries are reporting normalcy at the ports and border points. The latest report released by world bank in mid-May 2023 indicated a drop in performance of the port of Mombasa with a rank of 36 out 348 globally. This is attributed to the reduced cargo volume the port cleared in 2022, which was a drop compared to 2021. However, an improvement in cargo handling including fertilizer is expected this year owing to the completion of a second container terminal accommodating at least 450 20 FT containers at a time. In Malawi, in-country distribution is still affected after the destruction caused by cyclone Freddy. Importers relying on the Beira port corridor face issues of unreliability and unpredictability due to the ongoing inefficiencies caused by factors such as high traffic, prioritization of vessel discharge, and tax-related problems.