Overall market risk: The IMF anticipates a continued economic rebound beyond the present year, with growth estimates poised to reach 4.0 percent by 2025. Furthermore, inflation rates have nearly halved, while public debt ratios have generally stabilized. Notably, several nations have re-entered the Eurobond market this year, marking the end of a two-year hiatus from international financial markets. In other news, the ongoing El Niño phenomenon, which emerged in June 2023, brought about diminished rainfall and exceptionally high temperatures in southern Africa. Its peak intensity occurred between November and January. Consequently, Malawi, Zambia, and Zimbabwe have declared national emergencies due to the drought induced by El Niño, causing significant damage to their food production and decimating staple crops. Meanwhile, Kenya and neighbouring countries are grappling with severe flooding in the East, attributed to El Niño climate patterns. These floods have resulted in extensive devastation, including loss of life, displacement of populations, and destruction of crops.
Availability and Affordability: In the East African region, farmers across most regions have completed planting and are now transitioning to the top-dressing phase. The demand for top-dressing fertilizers like Urea, CAN, and top-dressing blends is gradually increasing. In Kenya, although demand is rising, suppliers and stockists are exercising caution by bringing in products in smaller packages instead of bulk quantities due to government subsidies. Additionally, the Kenya Tea Development Agency (KTDA) is in the process of procuring 96,000 tons of fertilizer for the year.
In Tanzania, approximately 200,000 tons of fertilizer have been imported into the country as of March, with shipments of Urea and CAN scheduled for loading by the end of April. Meanwhile, in Ethiopia, the East Africa Business Council (EABC) has recently initiated the bidding process for the procurement of 244,000 tons of Urea for delivery in May/June. In Southern Africa, the dry season is approaching as farmers gear up for the winter cropping season. In Malawi, importers are exercising caution in the importation and distribution of fertilizers amidst forex challenges. In Zambia, fertilizer availability remains robust, with D-Compound and Urea consistently accessible throughout the month. However, in Mozambique, reported shortages of Urea are likely to adversely affect the horticulture industry. South Africa is experiencing a surge in demand for CAN, Amsul, and Urea.
Distribution: The current shipping crisis in the Red Sea is exerting significant pressure on global trade, regional stability, and economic recovery, amid inflationary concerns and macroeconomic unpredictability. The disruption of the Suez Canal has led to shortages not only in perishable goods but also in regular containers, attributed to prolonged cargo delivery times. Rerouting vessels around the African continent adds approximately 12 days to their journey from Asia to Europe, acting as a detrimental supply shock comparable to a roughly 30% increase in transit times.