Overall market risk: Inflation in East and Southern Africa remains a significant economic concern, although some countries are starting to see signs of stabilization. Across sub-Saharan Africa, inflation is expected to decrease, thanks to factors like the normalization of global supply chains, falling commodity prices, and monetary tightening. It, however, remains above pre-pandemic levels in most of the region, driven by high food and energy costs, which account for a large part of household spending in these countries. Countries like Zimbabwe, Malawi, and Ethiopia continue to experience some of the highest inflation rates on the continent, with Zimbabwe leading the pack. The region’s inflation challenges are further compounded by currency depreciation and public debt, making it essential for governments to manage monetary policy carefully to avoid stalling growth(Business Insider Africa) (World Bank).
In Southern Africa, six countries declared a state of emergency linked to severe drought including Botswana, Lesotho, Namibia, Malawi, Zambia, and Zimbabwe. These El Niño-induced weather conditions have led to widespread crop failure, water shortages, and livestock deaths. More than half of the annual harvest has been destroyed, leading to rapidly depleting stocks and increasing food prices (Relief Web,2024). This could affect the demand and consumption of fertilizers in the region.
In the global fertilizer market, India and Ethiopia tenders continue to exert pressure in the nitrogen and phosphates markets. India recently closed a tender of over 1 million for Urea and surprisingly opened another one. This resulted in a rise in Urea prices. For Phosphates, with India seeking DAP from any available supply and Ethiopia seeking 360,000 MT of the same, there is an anticipated rise in DAP prices. The potash market largely remains unchanged.
Availability and Affordability: In East Africa, the short rain season is ongoing. Traders and suppliers are busy procuring fertilizers for farmers.
In Kenya, Urea shipment for One Acre Fund and DAP from Maaden are set to arrive in early October. KTDA’s second shipment of NPK 26-5-5 is also set for arrival this October.
In Tanzania, adequate stocks of fertilizers have been reported. Over 500,000 MT of different fertilizers have been imported into the country as of September.
In Ethiopia, the Ministry of Agriculture (MoA) and EABC have initiated procurement of fertilizers early for the 2025 crop year. Currently, they are in the process of seeking for 250,000 MT of Urea and 360,000 MT of DAP.
In Rwanda, the country is well serviced with 75% of its annual requirement already sourced and delivered in the country. For the 2025A season, it is expected that Rwanda’s government will increase its budget allocation to ensure affordable fertilizers to farmers through partnerships with input suppliers.
In Zambia, adequate stocks of Urea and D-Compound have been registered. The Government’s Sustainable Agricultural Financing Facility (SAFF) has continued in the 2024/25 Farming season with applications ongoing in September.
Malawi is also reporting increased importation of Urea and NPK as the planting season approaches. So far, over 100,000 MT of fertilizers has been brought into the country.
In South Africa, there is an expected increase in demand for MAP as the season approaches.
Distribution: Normal in-country and cross-border operations are ongoing at most ports and border points. Mombasa port in Kenya has announced plans to expand the old terminal. This comes with the anticipation of an increase in container handling in 2024. Freight costs to East Africa have slightly dropped. Month-over-month, rates from the Baltic and the Middle East to East Africa have decreased to $80 per MT and $24 per MT, respectively, while rates to South Africa have dropped to $46 per MT and $22 per MT.