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African Development Bank approves loan for fertilizer production expansion

The loan will be used to support the company’s plans to double its fertilizer production from 1.4 million tpy of urea to 2.8 million tpy of urea. This loan follows a previous loan extended to Indorama in 2013, which was used for the commissioning of a urea fertilizer plant with a capacity of 1.4 million tpy. The completion and exploitation of that plant in 2016 helped transition Nigeria from a net fertilizer importer into a self-sufficient producer, and now a net exporter of fertilizer. Last year, the African Development Bank claims that 700 000 t of urea were exported to West Africa, as well as North and South American markets. Production from the new plant will largely target export markets.

The bank claims that the project will also address the issue of inadequate fertilizer utilisation, which is considered one of the main barriers to agricultural growth and development in Nigeria, as well as the entire African continent.

Abdu Mukhtar, Director for Industrial and Trade Development at the African Development Bank, said: “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.

“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 a key step towards the bank’s aim of significantly changing the African agriculture sector, and making the continent self-sufficient in food.

Although a large proportion of Nigeria’s population are farmers, the country still spends at least US$6 billion/yr on importing food. A contributing factor to low domestic crop yields is low consumption levels of fertilizer in Nigeria and indeed Africa as a whole, which only averages 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 urea exports will be made to South Africa and West Africa (Cote D’Ivoire and Senegal). Regional integration will be further strengthened by the export of increased agricultural production Nigeria.

The bank claims that 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 more than 450 downstream industries; increased crop yields of over 30%; training of 200 000 farmers on the correct 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 cost of the project (US$1.1 billion) will be financed with equity of US$100 million and debt finance of US$1 billion, which will be provided by development finance institutions. All of the financiers have now provided their final board approvals for the project.