Overall market risk: The economic prospects for Sub-Saharan Africa continue to appear gloomy, with the prospect of a sustained growth recovery remaining elusive. The most recent report from the World Bank, “Africa’s Pulse,” highlights that increasing instability, sluggish growth in the region’s major economies, and persistent global economic uncertainties are adversely affecting growth prospects in the region. Governments are exerting significant efforts to tackle these macroeconomic imbalances, as the issue of high inflation persists. Policymakers in this region confront some of the most formidable policy dilemmas on a global scale. They must persevere in upholding macroeconomic stability, all while contending with resource constraints and the imperative to address development priorities, all while enduring frequent shocks and fragility.
According to Relief Web, even though El Nino has been declared, the June-September seasonal rains have performed favourably in Eastern Africa, and this implies the impact this year will be less than during previous events. In Southern Africa however, it is predicted to be disastrous with the greatest impact foreseen in Zimbabwe, Mozambique, and Madagascar. Notwithstanding these challenges, there have been indications of progress in both the import and domestic manufacturing of fertilizers with only minor disruptions. This suggests a more reliable supply of fertilizers, a critical factor in bolstering the agricultural sector and guaranteeing sufficient food production. Fertilizer prices have continued to drop. This decline can be attributed to the reduced costs of raw material inputs like natural gas, urea, and ammonia. The global economy has been able to adapt to the disruptions caused by the war by seeking alternative sources for natural gas and other materials, and also by constructing new production facilities worldwide.
Availability and Affordability: In East Africa, fertilizer demand is slowly picking up as the short rains are finally here. In Ethiopia, EABC is in the process of sourcing for Urea for 2023/24 season. In Tanzania 718,000 MT has so far been imported into the country, a 32% up on total 2022 imports. The situation is quite different in South Africa where overall, imports of urea, potash, and phosphates have been slow with reports of a 47% decline in 2023. So far only 383,000 tonnes have been imported compared to 723,000 tonnes in the same period of 2022. A shortage of MAP has also been reported. In Kenya, the Government is heard to be sourcing for NPK products. KTDA’s shipment for NPK 26-5-5 and other NPKs also arrived in mid-October.
In Malawi, the October stock report from Fertilizer Association of Malawi states that in-country stocks are 86,513MT, and 212,954MT in port (this stock report only tracks NPK and Urea which are the most used fertilizers in Malawi). Availability is likely to pick up in the next few months as the Government has made efforts to source forex for suppliers that were awarded contracts for the subsidy program. In Zambia, no shortage has been reported. The demand for Urea and D compound is high as the main season draws near.
Distribution: The East African economies are currently experiencing a renewed surge in fuel costs following the decision by Saudi Arabia and Russia to extend the removal of 1.3 million barrels of crude oil per day from the global market for another three months. This could see a further increase in freight and local transportation costs. At the ports and borders, no major issues have been reported. Importation and distribution of fertilizers remain unaffected.