Nigeria Sovereign Investment authority invests US$294.9m in the fertilizer industry

NIGERIA – The Nigeria Sovereign Investment Authority is set to invest N114 billion (US$294.9m) into the Presidential Fertilizer Initiative (PFI) increasing the authority’s investment in the PFI to N221 billion (US$571.8m) since 2017 when the initiative was established aimed to grow the country’s fertilizer industry.

The Nigeria Sovereign Investment Authority manages the country’s sovereign wealth fund, into which the surplus income produced from Nigeria’s excess oil reserves is deposited.

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This sovereign wealth fund was founded for the purpose of managing and investing these funds on behalf of the government of Nigeria.

One of PFI mandate is to make high quality fertilizer available to Nigerian farmers at the right time and at an affordable price, and to revive the ailing fertilizer blending industry so that Nigeria could achieve food security,.

According to NSIA, which doubles as the PFI programme operator and fund manager, N104 billion (US$269.1m) has been invested in the scheme between 2017 and 2019.

The additional N114 billion (US$294.9m) will be invested to cater for raw materials, logistics, contract blending costs by 3rd party blenders among others, reports Vanguard.

The PFI’s business model involves sourcing for and procurement of four constituent raw materials required for production of NPK 20:10:10 fertilizer.

The raw materials sourced, 37 percent of the inputs, namely DAP and Muriate of Potash (MoP) are imported while the remaining 63 percent, mostly Urea and limestone granules, are sourced locally.

The reports have indicated that the raw materials are blended locally at accredited blending plants nationwide to produce the fertilizer for delivery at a target price of N5,500 (US$14.2) per 50kg bag, recently reduced to N5000 (US$12.9) per bag.

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Prior to the formation of PFI, Nigeria’s fertilizer industry was in comatose, with only five blending plants operating below 10 per cent of installed capacity.

So far PFI has revived the operations of 31 blending plants thereby increasing domestic production capacity by nearly 300 percent and improving the quality of fertilizer available to domestic farmers.

There is an increase in domestic fertilizer production in the region which has led to the actualization of investments in the sector.

In 2016, Moroccan OCP Group (National Moroccan phosphate company), signed an agreement with Nigeria’s Sovereign Investment Authority, to build an NPK fertilizer plant in Ethiopia, which is likely to become operational during 2023-2024.

The plant would be able to supply nearly 2.5 million metric tons of NPK fertilizer blends annually.

According to a report by Mordorintelligence, the global fertilizer market was valued at US$ 155.80 billion in 2019, and it is estimated to register a CAGR of 3.8%, during the forecast period (2020-2025).

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