Stakeholders in the fertilizer value chain have held a two-day workshop to validate four financing models in order to provide better and more sustainable financing for fertilizer value chain actors including importers, blenders, agro-dealers and to farmers, especially smallholders.
There were participants from Nigeria, Burkina Faso, Togo, Cote d'Ivoire, Niger, Senegal, and Ghana.
The workshop, sponsored by the USAID West Africa Fertilizer Programme (WAFP) and in collaboration with ECOWAS was held under the theme: ‘Vetting of Existing Financial Models Suitable for the Fertilizer Value Chain in ECOWAS’.
Noting that commercial banks shy away from lending to agriculture, the fertilizer players are looking at ways of mitigating the problems of agriculture and making sure that agriculture has access to finance.
With presentations and several focus group discussions to debate on the pros and cons of the models presented, the workshop looked at ways to promote access to financing on a platform that is accessible to all stakeholders in the West Africa fertilizer value chain, and to vet the adapted financial models. There is need for credit along the entire value chain, and these four (4) identified financing models can be creatively used to expand quality fertilizer manufacturing, blending and distribution in the sub-region.
Cecilia Khupe, Chief Compliance Officer of the African Fertilizer and Agribusiness Partnership (AFAP), noted that “these 4 financial models being vetted have been successful in African countries and internationally. Today, we want to urge both the financial institutions and the fertilizers stakeholders to fine-tune the best practices from other countries such as benchmark lending at lower rates to agriculture through guarantee facilities and many more, that we can adapt to suit the West African fertilizer value chain actors.”
“In our discussions today, and as try to come up with solutions, we have to continue thinking about the farmer, who based on their demand creates a market for the fertilizer distributor, importer and manufacturer. If these borrow at a high price, it is ultimately the farmer, who buying the bag of fertilizer who will be paying those high rates.
It has to be a win-win situation. If the financial institution is willing to adopt a certain model and the borrower also agrees to that model, which makes it cheaper to borrow; then the farmer benefits and everyone in society benefits,” Ms. Khupe added.
Robin Wheeler, Chief of Party at the USAID West Africa Fertilizer Program (WAFP), added that the project is seeking to improve agricultural productivity in the sub-region through increasing the supply and use of appropriate and affordable fertilizer.
“Financing for value chains is a major constraint to private sector development and leadership in the fertilizer sector, and your agreement on adapted model(s) that could be appropriate for this purpose is the first step in the process to resolving this issue.”
“We certainly do understand and are not expecting you to work out all the details of complete financing schemes in the next 1½ days, but if you can achieve general consensus about which models may be workable, this will provide a critical starting point from which details can be ironed out and such schemes can emerge,” he added.
Through the West Africa Fertilizer Program, the United States supports efforts to improve food security in the sub-region, which includes facilitating the removal of constraints that limit the competitiveness of the fertilizer sector. This work is done in close partnership with ECOWAS, regional institutions and national governments in West Africa. For this reason, the U.S. Government strategy for food security, Feed-the- Future, is aligned with the regional ECOWAS strategy and supports the Comprehensive African Agriculture Development Plan, CAADP, in this sub-region and Africa as a whole.
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