ETG Inputs Ghana Limited has received a USD2 million partial trade credit guarantee from the Africa Fertilizer Financing Mechanism (AFFM), which is hosted by the African Development Bank. The funding is intended to help 200,000 smallholder farmers in Ghana's Upper East, Savannah, Northeast, and Northern Regions get fertilizer.
According to the AfDB, the move will alleviate current supply shortages and boost yields, food security, and farmer incomes in the designated regions.
ETG Inputs Ghana Limited, a subsidiary of agricultural conglomerate ETG, will deliver 10,000 metric tonnes of fertilizer to wholesalers, who will distribute it to farmers in the regions via retailers.
The credit enhancement mechanism is intended to reduce the risks associated with suppliers selling fertilizer on credit to wholesalers, which can result in farmers having limited access to high-quality fertilizer.
"This project with ETG comes at a time when Africa's farmers—recovering from the economic effects of the Covid-19 pandemic—are now facing rising market prices for fertilizer, largely due to Russia's war in Ukraine," said Dr. Beth Dunford, Vice President for Agriculture, Human and Social Development at the African Development Bank. "This partial trade credit guarantee facilitates more affordable access to these inputs."
The Ukraine conflict has exacerbated fertilizer shortages, raising prices and reducing supplies. The fertilizer shortage in Ghana has now affected 60% of the supply. According to the Africa Fertilizer initiative, which compiles data, statistics, and information on fertilizers in Africa, the cost of a 50kg bag of commonly used nitrogen-, phosphorus-, and potassium-based fertilizer in the country has risen from USD 26 in November 2021 to US$46 in April 2022.
The trend is jeopardizing agricultural production as many countries prepare for the planting season. At the same time, the war is disrupting imports of food staples into Africa, such as wheat and oilseed.
"Securing opportunities for risk-sharing is critical to building an environment of trust that leads to fertilizer availability for smallholder farmers," said Ashish Lakhotia, CEO of ETG's Fertilizers and Agri-Inputs.
"I am confident that our collaboration with the Africa Fertilizer Financing Mechanism will reduce the risks we face when dealing with wholesalers." The one-year project will assist up to four wholesalers in selling fertilizer with a value up to three times that of the partial trade credit guarantee.
It will also help to connect wholesalers with around 200 retailers who will resell fertiliser to farmers. The Africa Fertilizer Financing Mechanism, which was established in 2007, aims to increase pan-African agricultural productivity by encouraging the use of fertilisers.
