Overall market risk: Looking into the year, African nations anticipate experiencing modest economic progression though they must navigate a complex landscape of both domestic and international challenges. The UN World Economic Situation and Prospects (WESP) 2024 predicts a slight acceleration in the continent’s economic growth, with an anticipated average GDP increase of around 3.5 percent. However, uncertainties related to debt sustainability, fiscal pressures, and the impact of climate change persist. This projected growth represents a marginal improvement from the 3.3 percent recorded in 2023.
In the fertilizer space, reports from the different countries indicate a more positive outlook, especially for phosphorus and potash fertilizers. Thanks to lower prices and returning demand from farmers across the continent. Better affordability will mean more applications in 2024. However, the war in the Middle East could affect the supply, not to mention the volatile currency situation across the continent.
Availability and Affordability: Overall, no major fertilizer shortage has been reported in the region with Zimbabwe and Malawi still having some fiscal issues in procuring fertilizers. In East Africa, suppliers are in the process of securing fertilizers ahead of the main planting season starting from February. In Kenya, a donation of 16K tons of Urea was received from the Algerian Government following a G2G agreement. KTDA has also started the procurement process for 97K tons of NPK 26.5.5. In Ethiopia, out of the planned procurement of 2.3 million metric tons, the process for acquiring 1.48 million metric tons of fertilizer has been successfully concluded, which accounts for about 64% of the total estimated requirement for the year 2023-2024. An additional tender was issued at the start of the year with price reduction expectations.
In Rwanda, Rwanda Fertilizer Company (RFC) which has started the production of fertilizer blends will be among the suppliers of fertilizers this season. In the South, the fertilizer demand is slowly decreasing as they have concluded their main season. In South Africa, significant carryover inventories from the previous season have been reported. This has prompted local buyers to purchase small quantities. This is very likely to impact 2024 imports. Throughout January, both D Compound and Urea in Zambia have remained consistently accessible, experiencing heightened demand as manufacturers and suppliers distribute their inventories nationwide. In Malawi, imports are at their lowest and will continue to be so for the rest of Q1 given that the country is now out of the planting season. The forex volatility is poised to continue presenting challenges to the country for the short-midterm. Import may pick up slightly in Q2 to moderate when the winter cropping season approaches.
Distribution: Normal operations are being observed in most ports and border points. Importation and distribution of fertilizer appear to be relatively unaffected. Importers especially in East Africa are actively positioning their fertilizer products to ensure an ample supply to meet the ongoing demand. According to corporation officials (EABC) in Ethiopia, of the 1.4 million tons of fertilizer that is scheduled for procurement, 576,000 metric tons has arrived at Djibouti port and is currently in transit within the country. Operations on Malawi’s regular trade routes are progressing normally with no incidents. Imports traditionally decrease during Q1 and pressure on the ports eases. In Tanzania, Kwala Dry Port in the coast region is set to commence operations this month which would decongest Dar es Salaam seaport. The port will be able to store transit cargo to neighbouring countries of Burundi, Tanzania, DR Congo etc.