Overall market risk: East and Southern Africa have shown resilience in the face of economic challenges, including the Ukraine-Russia war and various external shocks. As of August 2023, the region is expected to continue its gradual recovery, with economic growth rates generally positive, albeit potentially at varying paces across different countries. Inflation rates vary across the region. Governments and central banks are implementing prudent monetary policies to keep inflation in check and maintain price stability.
On food security, according to World Food Programme, despite the improved precipitation during the March to May (MAM) season in 2023 and the projected El Niño event later in 2023, the aftermath of the 2020-2023 drought is likely to have a lasting impact. This is because it resulted in the destruction of livelihoods and left 23.4 million people in drought-affected areas facing ongoing food insecurity.
In the fertilizer space, prices have sustained their downward trend for over a year, extending into the first half of August 2023. This decline is linked to the ongoing growth in global production capacity.
Availability and Affordability:Overall, no major fertilizer shortage has been reported. The fertilizer market is exposed to risks associated with fiscal factors such as currency devaluation and operational difficulties. As the short rain season draws near in East Africa, most importers and governments are seen to be positioning different fertilizer products. In Rwanda, importing companies already have the stocks in the country although the demand and sale is still slow due to inadequate and erratic rains. According to Fertilizer Association in Malawi, fertilizer stocks have arrived at the port and its distribution for the season is now dependent on the availability of forex. In Zimbabwe, limited stocks in the retail chain in Q4 have been reported due to high interest on borrowing and due to cash flow constraints arising from the liquidity crunch in the market. In Kenya, stocks of DAP and NPK 17-17-17 with an ETA for September is being reported. At the same time, the government is rolling out the second phase of the subsidy program’s price adjustment. Agrodealers have expressed their plans to refrain from stocking fertilizer inventory during the short rainy season. This decision is primarily influenced by the decreased demand for commercially priced fertilizer compared to the subsidized product. In South Africa, demand for fertilizers is slowly picking up. A shortage of nitrogen fertilizers has been reported. Foskor and Purefert are also working to meet the demand for MAP. For Potash, a lineup of shipments is reported to have been sold out.
Distribution: No major issues have been reported at the ports and border posts in most countries. In Kenya, fuel pump prices remain high although there has not been any further escalation compared to the preceding month. Cargo handling is also set to improve at Mombasa port following the procurement of new Ship-to-Shore gantry cranes (STSs). In Tanzania, ACT Wazalendo in collaboration with the government are developing five plan strategy to improve port deal with DP world.