AfDB boosts expansion of fertilizer production in Nigeria with $100m

The African Development Bank has approved US$100 million senior loan to Nigerian firm, Indorama Eleme Fertilizer & Chemicals Limited, to support the company’s plans to double its fertilizer production from 1.4 million tons of urea to 2.8 million tons per annum.
The Bank’s intervention follows a previous loan extended to Indorama Fertilizer in 2013 for the commissioning of another urea fertilizer plant with a production capacity of 1.4 million tons per annum. The completion and exploitation of that plant in 2016 helped turn Nigeria from a net fertilizer importer to a self-sufficient producer, and now a net exporter of fertilizer. In 2017, 700, 000 tons of urea were exported to West Africa and North and South American markets. Production from the new plant will predominantly target export markets.
The project will also address the problem of inadequate fertilizer utilization, which is considered one of the principal constraints to agricultural growth and development in Nigeria, and the entire African continent.
“This Project will build upon the success of Train-I in increasing the domestic supply of urea fertilizer in Nigeria, making it easily available and leading to cheaper prices for the Nigerian farmer,” said Abdu Mukhtar, Director for Industrial and Trade Development at the African Development Bank. “It will also help further address labour issues in a local region wracked by poverty, inequality and political tension by creating high paying technical jobs and will count towards climate change abatement by reducing amounts of flared gas.”
Fertilizer production support is well aligned with regional and national priorities, as well as the Bank’s assistance strategy in Nigeria, and is an important step towards the Bank’s goal of radically transforming Africa’s agriculture sector and making the continent self-sufficient in food.
Despite a large population of farmers, Nigeria spends at least US$6 billion per year on food imports. A contributing factor to low domestic crop yields is low consumption levels of fertilizer in Nigeria-and indeed Africa as a whole, which averages only 10-15% of global levels.
The project supports the medium term economic recovery and growth plan of the Government of Nigeria and the Bank’s regional strategy to link regional markets in West Africa. 20% of the urea exports will be made to South Africa and West Africa (Cote D’Ivoire & Senegal). Regional integration will be further strengthened by the export of increased agriculture production in Nigeria.
The Indorama Eleme Complex has been a success story of public private partnerships in Nigeria, with several benefits including import substitution of raw materials to over 450 downstream industries; increased crop yields of over 30%; training of 200,000 farmers on the proper use of fertilizers expected to reach 2 million by 2021; creation of 50,000 jobs, and an annual contribution of US$2 billion to Nigeria’s GDP. The estimated US$1.1 billion cost of the Project is to be financed with equity of US$100 million and debt finance of US$1billion which will be provided by development finance institutions. All the financiers have now provided their final Board approvals for the project.