Overall market risk: Since early 2022, many African nations have encountered restricted access to international debt markets due to exorbitant interest rates. This situation has prompted Ethiopia to express its intention to restructure its sole overseas bond. Meanwhile, East Africa’s growth forecast has been revised downward by 0.7% to 3.4%, influenced by the civil war in Sudan and the financial pressure on Kenya to repay or refinance a $2 billion bond maturing in June 2024. Southern Africa is expected to exhibit the slowest growth in 2023, at 1.6%, primarily due to persistent power cuts constraining output in South Africa, the region’s largest economy. Notably, countries with less reliance on commodity exports are expected to experience comparatively higher economic growth, offsetting the decline anticipated in commodity-exporting nations. The primary factors affecting fertilizer markets were predominantly macroeconomic, with many countries experiencing significant currency devaluation against the dollar, leading to higher import costs. The cost of credit was also reported as a significant issue across various regions.
Availability and Affordability: In East Africa, the majority of farmers are currently engaged in harvesting crops from the main season. While fertilizer demand is generally low at the moment, importers and distributors are actively seeking products in preparation for the long rain season in March. In the southern region, there is a noticeable increase in demand as farmers prepare for the main planting season in January.
As of December 2023, Kenya has recorded a fertilizer importation of 750,000 metric tons, marking a 15% increase from the previous year. This rise can be attributed to contributions from both the government and the private sector.
In Ethiopia, out of the planned 2.3 million metric tons, the procurement process for 1.48 million metric tons of fertilizer has been successfully concluded, with deliveries ongoing over the next few months.
In Rwanda, as Season A of 2024 concludes, fertilizer importing companies are utilizing the remaining stock to strategize for the upcoming 2024B season, scheduled to commence in February.
Conversely, in Malawi, concerns have arisen regarding a potential shortage of fertilizers for farmers, as the supply for this year is lower. Additionally, the stocks provided in the subsidy program this season amount to 150,000 metric tons, reflecting a 40% decrease from the previous season. Meanwhile, in Mozambique, the government initiated the subsidy program this month, starting with the Manica province.
In Zimbabwe, inventory stocks remain low due to prevailing economic constraints, with high-interest rates for borrowing and limited available funds contributing to the scarcity of stock in retail chains.
Distribution: The Port of Mombasa has announced that it has exceeded the import and export cargo volumes handled last year. This month, there have been reports of vessel diversions from other regional ports, such as Djibouti and Tanzania, due to congestion. Ports Authority (KPA)ging Director of the Kenya Ports Authority (KPA), confirmed these reports and credited the efficient turnaround time to investments in modern technology. In the southern region, Transit has devised a plan to address the backlog at the Durban port. The persistent delays at South Africa’s ports have had adverse effects on importers, retailers, and distributors. Despite these challenges, the importation and distribution of fertilizer appear to be relatively unaffected. Importers are actively positioning their fertilizer products to ensure an ample supply to meet the ongoing demand.