The Africa Fertilizer Financing Mechanism (AFFM) has welcomed $10.15 million in new funding from the Norwegian Agency for Development Cooperation (NORAD). The financing will target projects in Uganda, Kenya and Mozambique, which will be receiving AFFM support for the first time.
NORAD’s contribution will enable the Africa Fertilizer Financing Mechanism to provide credit guarantees for up to 36 months in Uganda, Kenya and Mozambique, with the expected leverage of at least ten times the credit guarantee amount, enabling access to at least 85,000 metrics tons of fertilizer for 850,000 smallholder farmers in the three countries.
The NORAD contribution will buttress the African Emergency Food Production Facility, the African Development Bank Group’s rapid response initiative for addressing Africa’s current food crisis, which has been exacerbated by climate change, conflicts, pests and disease.
The Africa Fertilizer Financing Mechanism received a first instalment of $8.73 million through the African Emergency Food Production Facility window, on 27 December 2022.
“This funding will allow the Africa Fertilizer Financing Mechanism to provide financing and credit guarantees for the large-scale supply of fertilizer to suppliers, to enable access to fertilizer on credit to agrodealers, and contribute to bridge the supply gap of fertilizer in sub-Saharan Africa,” said Marie-Claire Kalihangabo, AFFM Coordinator.
NORAD’s financial support comes as the Bank prepares to host the Dakar 2 Africa Food Summit later this month, which will be held under the theme: “Feed Africa: Food Sovereignty and Resilience.” The summit will bring together governments, private sector leaders, representatives from multilateral organizations and NGOs, as well scientists and researchers, to explore ways to meet the escalating challenges of food security in Africa. The event will include discussions on the impact of rising fertilizer prices on African smallholder farmers.
The appropriate use of fertilizer is key to meeting those challenges. The role of the Africa Fertilizer Financing Mechanism is to strategize on innovative financial solutions to foster access to quality and affordable fertilizers in Africa.
The increase in fertilizer prices has deepened the shortfall in fertilizer supply, lowered accessibility, threatening agricultural production across Africa. When the continent’s smallholder farmers have timely access to quality fertilizers, it is possible to double agricultural productivity and incomes of small-scale food producers.
“The agriculture sector can be a motor, and that transformation that Africa needs,” Norway’s Minister of International Development Anne Beathe Tvinnereim said earlier this year in a recorded video with Dr Akinwumi A. Adesina, head of the African Development Bank Group, for the Global Citizen Festival. “We need to make sure that [Africa’s smallholder farmers] can produce enough food to feed themselves, but also enough to feed their neighbors, their communities,” she added.
The interventions in the three countries will replicate the success of the AFFM’s credit guarantee programs in other countries. In Tanzania for example, it used a trade credit guarantee of $2.4 million to facilitate $31 million of farm input supplies, with each dollar of guarantee leveraging fertilizer supplies by more than 15 times.