Overall market risk: East Africa has emerged as the fastest-growing region in Africa, fuelled by effective domestic policies and strategic investments in key sectors such as agriculture and infrastructure. However, the continent continues to face significant challenges, including inflation, driven by structural issues and disruptions in external supply chains. Inflation in Africa is projected to rise to 17.8% in 2024, up from 17% in 2023, before potentially declining to 12.3% in 2025. While the overall economic outlook is positive, achieving long-term prosperity will require targeted reforms and strategic policy responses to address ongoing economic challenges (African Development Bank- Business News Africa).
On the global fertilizer market, N based fertilizers like Urea continue to elicit stable prices in July against the backdrop of the India tender that sought 1 million MT of Urea. Out of this tonnage only about 50% was off taken, leaving traders and suppliers with uncertainty on committing available tonnages into the market. With Ethiopia also just awarded part (100.000 MT) of its most recent Urea tender of 150,000 MT, the uncertainty is further confirmed for the East Africa region going into August. Phosphates continue to trend upwards as per latest traded deals into the second half of July, and this is expected to continue into August.
Availability and Affordability: Across the region, there have been no major reports of fertilizer shortages. Month on month availability has been moderate in most countries across the East and Southern region. In Eastern areas, farmers are preparing for the short rain season starting in September, which may lead to increased imports. In the Southern region, the winter cropping season has just ended.
In Kenya, traders are gearing up for the short rain-planting season by importing products and increasing domestic distribution. The government continues its fertilizer subsidy program, and the National Cereals and Produce Board (NCPB) has recently closed a tender for 7,500 MT of NPK 25-5-5.
Ethiopia has awarded part of its 150,000 MT Urea tender after two previous cancellations to a trading firm (100, 000 MT) who had previously been awarded some Urea quantities in earlier tenders. An NPS shipment has also arrived at the Port of Djibouti. However, ongoing conflicts, particularly in the Amhara region, are causing disruptions and delays in the delivery of agricultural inputs, including fertilizers.
In Rwanda, 62,000 MT of various fertilizer products have been imported so far. If the current trend continues, total imports for 2024 are expected to be similar to those in 2023.
In Malawi, fertilizer imports are increasing substantially as suppliers prepare for the Q4 planting season. This trend is anticipated to continue through the summer. The Affordable Inputs Program (AIP) tender will guide importers’ procurement plans. The main challenge remains Malawi’s severe forex shortage, although strong tobacco sales may help improve the situation in the latter half of the year.
In Tanzania, sufficient fertilizer inventory is reported across various regions. The government’s Bulk Procurement System (BPS) subsidy program is also positively impacting fertilizer availability and accessibility among farmers.
Distribution: Overall, most ports are reporting normal operations, and in-country transportation is running smoothly. In the first half of this year, Beira port handled a total of 161,000 containers, equivalent to 1.6 million MT. This is an increase compared to the same period last year, where 102,000 containers were handled, corresponding to 1.4 million MT. Mombasa port on the other hand is expecting a total of 1.8 million TEUs from the latest mid-year review. Freight costs to East Africa have ticked up. Rates from the Baltic and Middle East to East Africa have increased to $87/t and $49/t, respectively, while rates to South Africa have dropped to $48/t and $24/t.