Nigeria’s fertiliser imports drop 31% as investments hit $7.5bn

Nigeria has seen its global fertiliser imports decline by 31 percent on the back of the Presidential Fertiliser Initiative (PFI) instituted in 2016.

Data from the International Trade Centre (ITC) shows that since the initiative kick-started in 2016, Nigeria’s import of fertilisers has been on a steady decline, reaching $149 million in 2018 from $226 million worth imported in 2016.

Similarly, the value of the country’s import of fertilisers dropped from $214 million in 2017 to $149 million in 2018, indicating a 31 percent year-on-year decrease.

The initiative, which is also part of the Nigeria-Morocco fertiliser deal, is in its third stage of implementation and has improved the country’s local capacity to blend and produce fertilisers, thus ensuring timely supply of product to farmers and conserving foreign exchange it would have spent on importing the product.

It has also attracted lots of investments into the sector from fertiliser heavyweights such as Indorama, Dangote, Notore and OCP Africa. Currently, the investments into the industry have reached an all-time high of an estimated $7.5 billion (N2.7 trillion).

“Massive investment has come into the sector since the Federal Government liberalised the fertiliser industry. We now produce the NPK that we need for our local consumption and this has seen imports constantly reduce since the PFI started three years ago,” Gideon Negedu, executive secretary, Fertilisers Producers Suppliers Association of Nigerian (FEPSAN), told BusinessDay in a response to question.

“From 11 blending plants that we started with, now we have 24 blending plants. Private sector is taking the lead in the industry with the government providing the necessary support,” Negedu said.

The initiative was to disrupt the importation of blended fertiliser status-quo by directly negotiating discounted contracts to procure the four constituent raw materials for NPK fertiliser – urea, limestone granules (LSG) which are sourced locally; Diammonium Phosphate (DAP) imported from Morocco, and Muriate of Potash (MOP) sourced from Europe – and blending these locally to produce NPK at reduced cost.

According to the PFI document seen by BusinessDay, the fertiliser industry possesses a blending capacity of 4 million tonnes of NPK annually and 2 million tonnes production capacity for urea, with the capacity to employ over 250,000 people in both direct and indirect jobs across the country.

But before the initiative, the country’s local blending capacity utilisation was 10 percent of the annual 6 million tonnes of both urea and NPK.

Experts estimated the current capacity utilisation of the industry to reach 45 percent with the 24 blending plants in operation.

Now, farmers buy a bag of fertilisers at N5,500, as against N8,000-N9, 000 of imported brands, according to the PFI document.

BusinessDay spoke with some farmers across the six geo-political zones and found out that the cost per bag of fertilisers is between N5,000 and N5,500.

“We used to import huge amount of fertiliser but now that has changed since the government deal with the Moroccan government,” Ibrahim Kabiru, national president, All Farmers Association of Nigeria (AFAN), said.

“Fertilisers are readily available for farmers now and we buy between N5,000 and N5,500 per bag because we are now blending locally. Prior to the initiative, we were buying per bag between N9,000 and N12,000,” he added.

Under the initiative, the government worked with FEPSAN to identify the problems in the industry and how to address them, experts say.

“With the price of fertilisers at N5,500, farmers will be able to use enough quantity needed for optimum yield per hectare,” said Abiodun Olorundenro, manager, Aquashoot Limited.

“Farmers usually do not use sufficient fertilisers because of the high cost of fertilisers in the country. But with the deal which has brought down the price to N5,500, they may start applying enough,” said Olorundenro.

He noted that farmers are expected to use a minimum of eight to10 bags of fertilisers per hectare going by basic agronomy practice.

In March 2019, the Senate passed the Fertiliser Quality Control Bill (FQCB) which is to safeguard the interest of farmers against adulteration, nutrient deficiencies and short weight and create an enabling environment for private sector players interested in investing in the sector.

 

Josephine Okojie & Bunmi Bailey