Africa needs more, not less, fertilizer

Russia’s war in Ukraine has exacerbated food shortages—already worsened by the COVID-19 pandemic—and shed light on global agriculture’s massive nutrient and energy needs. Most fertilizers are made from coal or natural gas, and Western sanctions on Russia, which is the world’s top fertilizer exporter, have further increased natural gas and fertilizer prices. In June, the cost of fertilizer nearly surpassed its August 2008 peak. As a result, farmers could be forced to reduce global fertilizer use by as much as 7 percent next season—the largest decline since 2008. Use is projected to fall the most in sub-Saharan Africa. In May, the president of the African Development Bank warned that fertilizer shortages could lead to a 20 percent decline in food production on the continent.

These fertilizer shortages are a burgeoning crisis: Reduced access to fertilizer can dramatically cut food output and devastate a national economy. After Sri Lanka suddenly banned the import and use of synthetic fertilizers in favor of organic alternatives in April 2021, its domestic rice production fell by at least 40 percent during the growing season that ended this March, and its domestic production of tea—the country’s largest export—fell by 15 percent between January and March, to its lowest level since 2009. The government removed the ban in November 2021 but not before it had undermined the next year’s crop. It has spent hundreds of millions of dollars to compensate farmers for their losses.

Some global efforts have approached this challenge head on. The United States has spearheaded the $500 million Global Fertilizer Challenge to spur investment in food security while seeking to lower agricultural carbon emissions, but far more is needed. Meanwhile, other actors have hesitated. The European Commission has opposed a plan to support expanding fertilizer production in Africa because it would clash with the European Union’s climate goals. (Fertilizer production and use account for about 5 percent of greenhouse gas emissions.) But as EU countries expand domestic and overseas fossil fuel infrastructure to reduce reliance on Russian energy, it is hypocritical to limit the agricultural potential of other countries to meet green goals.

Restricting aid to African countries for fertilizer production because it conflicts with climate goals, while also demanding natural gas from the continent, is absurd and unfair. Supporting these countries through a crisis requires increased financing for fertilizer production, getting back to the bread-and-butter business of development: large-scale resource and industrial development. Africa has untapped potential in both energy and agriculture, but without increasing fertilizer production, its food output will continue to lag behind other regions.

No innovation contributed more to the dramatic growth in crop production in the second half of the 20th century than synthetic fertilizer, which liberated farmers from depending on naturally occurring nitrogen in soil and animal manure. Increased fertilizer use has been largely responsible for crop yield increases in developing countries in Asia since the 1960s, leading to higher labor productivity and higher incomes. Growing staple crop yields can shift labor from agriculture to other sectors, ultimately increasing GDP per capita.

The agriculture sector in much of Africa continues to be characterized by low fertilizer use—and low crop yields. Global average fertilizer use was 137 kilograms per hectare in 2018; in many countries in sub-Saharan Africa, the figure was less than 20 kilograms per hectare. (Egypt is an outlier on the continent; it is one of the largest fertilizer consumers in the world, in part due to national agricultural policy.) There are several reasons for low fertilizer use in Africa, including high costs, low supply, and a lack of production infrastructure. But demand is growing: From 2020 to 2022, the demand for nitrogen fertilizer increased the fastest in Africa compared with other regions.

Russia’s war in Ukraine and the ensuing Western sanctions delivered a devastating blow to food security and fertilizer availability in many African countries. Before the conflict began, Ghana, Ivory Coast, and Mauritania purchased between 20 and 50 percent of their fertilizer supply from Russia; it’s not surprising these countries felt the drastic effect of Western sanctions almost immediately. As Russia restricted natural gas to Europe and prices went up, European fertilizer producers were forced to consider cutting output. Facilities in Africa that import nutrients to produce finished fertilizers also reduced their output, further restricting supply for local farmers.

The ongoing crisis is a blow to farmers, but it also presents an opportunity for parts of the continent to foster local industrial fertilizer production. Several African countries have the raw materials to produce more fertilizer to satisfy growing local and regional demand. Algeria, Mozambique, and Nigeria are sitting on reserves of natural gas, used to produce nitrogen-based fertilizers, while Morocco, South Africa, Tanzania, and others have substantial amounts of phosphate rock, used in phosphate-based fertilizers. However, few countries currently have the specialized processing and manufacturing infrastructure to convert raw materials into finished products.

In addition to meeting local and regional demand, expanding fertilizer production could generate valuable export income. Resource-rich Africa has long exported raw commodities such as crude oil and coffee beans for value-added production elsewhere—a lingering effect of colonialism. In recent years, African banks have launched initiatives to scale up specialized processing infrastructure to capture greater value from commodities. For example, the African Export-Import Bank provided financing to improve cocoa processing capacity and integrate Ivory Coast into global supply chains, allowing it to compete with the Netherlands. A similar model could be applied to fertilizers to foster greater prosperity, in turn narrowing the global gap in wealth and food security.

Nigeria, which exports urea—a low-cost nitrogen-based fertilizer—to Brazil, India, and the United States, presents a model that could be replicated elsewhere. The Dangote Group, a Nigerian conglomerate, opened the world’s second-largest fertilizer production facility on the outskirts of Lagos in March. It shares a complex with the world’s largest petroleum refining operation and can produce an annual 3 million metric tons of urea fertilizer. To put that into perspective, Africa consumes just over 5 million metric tons of nitrogen fertilizer annually. The Dangote plant is also expected to rake in $400 million in foreign currency.

Meanwhile, the OCP Group, a Moroccan state-owned monopoly and one of the largest producers of phosphate fertilizers in the world, has partnered with government and financial stakeholders to build fertilizer plants across Africa. By 2023, it plans to bring online a $2.4 billion fertilizer facility using Ethiopian natural gas. The plant is expected to have a maximum production capacity roughly four times larger than Ethiopia’s fertilizer consumption in 2014 and 2015. In Ghana and Nigeria, OCP is investing in fertilizer plants worth over $1 billion to serve the West African markets.

For other countries, establishing an industrial fertilizer facility using local raw materials may be out of reach. Instead, countries including Ivory Coast, Malawi, and Zambia have invested in fertilizer blending and granulation facilities, which use both imported and local materials. Such facilities can require capital investments ranging from $2 million to $40 million. Furthermore, investments in road and rail infrastructure would connect fragmented markets—natural gas from Mozambique could go by rail to a fertilizer plant elsewhere in southern Africa, for example. Across Africa, bad roads, tolls, taxes, and security checks result in extra costs and slow delivery. But a recent continental free trade agreement aims to reduce tariffs and boost investment in regional manufacturing; it should increase returns on investment from fertilizer projects.

African institutions are already channeling funding toward a food-secure future: African banks, for instance, have backed capital-intensive projects such as the Dangote facility, but they need greater support. International donors, including bilateral development finance institutions and multilateral development banks, should help countries create or expand fertilizer manufacturing facilities to increase supply in Africa and beyond. It might take several years to construct a fertilizer plant, along with long-term investments in energy and transportation infrastructure such as gas pipelines, petroleum refineries, ammonia production, and better roads and railways. But both African countries and donors would benefit from the economic returns.

Meeting these capital requirements requires coordinated action from financial institutions, governments, and the private sector. Financing of the Dangote complex involved billions of dollars in loans and equity from 12 international and Nigerian banks. But its success and that of a $1 billion expansion of another urea production plant near Port Harcourt, Nigeria, demonstrate the potential that such a funding arrangement can unlock: These loans helped transform Nigeria into a net exporter of fertilizer, allowing the country to increase crop yields and serve markets in West Africa and the Americas.

Scaling up fertilizer production is a key step in strengthening regional input and agricultural value chains so that African countries can become more food-secure. In the long term, investing in production facilities, local and regional suppliers, and natural gas infrastructure would reduce dependence on imported fertilizers from Russia, China, and elsewhere—making the continent more resilient to a crisis like the one it now faces.