African authorities are seeking innovative methods to enhance funding for the agriculture industry in the continent and to improve the price and accessibility of fertilizers. This urgency arises from the recognition of the deteriorating condition of arable land in Africa.

Recent studies indicate that over 65% of agricultural land in Africa is currently experiencing degradation as a result of insufficient fertilizer utilization, soil erosion, and acidification. This alarming situation has raised concerns among leaders, as it poses a significant existential danger to the foundation of the continent’s economies, namely agriculture.

The Heads of State and government, along with the leaders participating in the Africa Fertiliser and Soil Health Summit in Nairobi this week, believe that increased funding and intra-Africa trade in fertilisers will be essential for sustaining agriculture across the continent.

The extent of land degradation in sub-Saharan Africa is a topic of ongoing debate. Conflicting perspectives exist regarding its regional and local scales, methodologies and reliability of indicators, and the effects of past and current degradation on food security, rural livelihoods, and the future of Africa.

“Fertiliser access and affordability must be improved. Financing tools such as trade credit guarantees, working capital, and targeted subsidies must be consolidated to reduce market distortions, reduce costs and strengthen input supply chains,” said the leaders in the Nairobi Declaration published on May 9.

“The need for regional cooperation on the issue of fertiliser and soil health is greater than ever before as opportunities for investment and great inter- and intra-regional trade are now significantly enhanced by AU member states’ adoption of the Africa Continental Free Trade Area (AfCFTA).”

“The majority of Member States are still over-dependent on imported fertilisers, especially non-phosphate-based fertilizers which expose Africa to external market shocks and price volatility,” they explained.

Based on data from the African Union, fertilizer utilization in Africa is significantly lower compared to other regions globally. The global average for fertiliser use is 135kg per hectare, however, in Africa, it is just 18kg. This is far lower than the aim of 50kg/ha set in 2006 at a conference in Abuja.

What’s more, “the recent global fertiliser crisis has disproportionately affected Africa, with a year-on-year decline of 25 percent in fertiliser consumption in 2022,” said the declaration.

“Recent global economic crises, compounded by supply chain disruptions from the Covid-19 pandemic and geopolitical dynamics, have worsened fertiliser affordability and availability, and disrupted agriculture, resulting in reduced acreage and lower yields,” Kenyan President William Ruto said in his address at the summit.

“We call upon the private sector to increase investments in Africa’s fertiliser industry and promote sustainable soil management practices.”

Private sector entities operating in agricultural production and fertiliser manufacturing assert that reducing the price of fertilisers to ensure accessibility for small-scale farmers is vital, although it is a challenge that they are unable to do single-handedly.

“Governments should relook tax policy for fertilisers and could remove some items to lower overall costs,” said William Ngeno, country representative in Kenya and Uganda for fertiliser manufacturer Yara International.

“Partnership in the building last mile access to fertiliser with private sector is crucial. Farmers need to access the fertiliser as close to them as possible.”

The International Monetary Fund (IMF) has stated that President Bola Tinubu’s administration’s quiet return of petrol subsidy is anticipated to consume about 50% of its estimated oil earnings for this year.

Based on the IMF’s assessment, Africa’s largest producer of crude oil is expected to incur an implicit subsidy of around N8.43tn ($5.9bn), which will reduce its projected N17.7tn of oil earnings. This advice was stated in the most recent IMF staff country report for Nigeria.

The Bank of America estimated that Nigeria may incur a cost of $7 billion to $10 billion this year if it imported a quantity of gasoline ranging from 18 billion to 25 billion litres. Tatonga Rusike, an economist specializing in sub-Saharan Africa at Bank of America, stated in a written communication.

This recent comment was made about a year after the President, during his inaugural speech, publicly halted the disbursement of subsidies.

“Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care, and jobs that will materially improve the lives of millions. Petrol subsidy is gone,” Tinubu had declared.

The President’s declaration resulted in a surge in petrol prices, which rose from N197 to a range of N480 to N570. The pump price was then increased to N617 per litre and is currently being sold for prices ranging from N620 to N700 per litre.

The report read, “Fuel subsidies were reformed in June 2023, however, adequate compensatory measures for the poor were not scaled up promptly and subsequently paused over corruption concerns.”

“The devaluation of the naira days later, which was aimed at creating a free-floating currency, led fuel prices to more than triple, fanning inflation and protests.

“To help Nigerians cope, authorities started capping fuel pump prices below cost, reintroducing implicit subsidies by end-2023,” the IMF said.

The currency has experienced a depreciation of around 70% against the dollar since last June. Nigeria, although it is the biggest oil producer in Africa, relies on imports for most of its gasoline requirements due to insufficient refining capacity to satisfy domestic demand.

The International Monetary Fund (IMF) stated that it anticipates the elimination of the fuel subsidy to be fully implemented within two years. This will occur as the government expands its cash transfer program, which is specifically aimed at assisting the most impoverished individuals in the country.