The African Development Bank (AfDB) has approved $1.13bn in funding for 24 African countries to help address food shortages and inflation that have been perpetuated by Russia’ war in Ukraine.
This first round of approved funding is part of the $1.5bn African Emergency Food Production Facility established in May 2022. It will support 20 million smallholder African farmers with the aim to boost food production and reduce reliance on imports from Russia and Ukraine.
The continent faces a deficit of at least 30 million metric tonnes of food as a result of the Russia–Ukraine war, according to AfDB. The conflict has perpetuated pressures on food supplies caused by climate change and supply chain disruption associated with the Covid-19 pandemic.
Robert Lisinge, the head of the energy, infrastructure and services section at the UN’s Economic Commission for Africa, told fDi in March 2022 that the war has given African countries an opportunity to work together to address food supply chain issues.
“We see this crisis helping us to leapfrog the ability to optimise on the opportunities for agrofoods, fertiliser production and energy sourcing within the continent,” he said.
The AfDB’s emergency food production facility will provide farmers with much needed access to climate-adapted seeds and affordable fertiliser aimed at increasing yields in staple foods like wheat, maize, rice and soybeans.
Global food crisis
Prices for the three major fertiliser groups have doubled over the past 12 months, according to World Bank data, significantly hampering the ability of African countries to grow food.
The UN has warned in June of an ‘explosion of child deaths’ in Somalia and the wider Horn of Africa, which between March and May 2022 saw one of its driest seasons in 40 years. As of 2022, an estimated 60 million children are acutely malnourished worldwide, according to the UN.
Meanwhile Egypt, which is the world's largest importer of wheat, has faced severe food inflation since supplies have narrowed after Russia invaded Ukraine. In recent years, Russia and Ukraine combined accounted for around 80% of Egypt's wheat supplies, according to the US Department of Agriculture.
Over the next two years, the AfDB expects successful implementation of the $1.5bn of funding will enable farmers to produce about 38 million tons of additional food. This food is worth an estimated $12bn and would exceed current imports from Russia and Ukraine.
Beth Dunford, the AfDB’s vice president for agriculture, human and social development, said in a statement released on July 19, that the programs will also “usher in policy reforms” to enable the agricultural sector to supply solutions to challenges faced across the region.
These policy reforms are hoped to encourage greater investment in Africa’s agricultural sector. The number of foreign direct investment (FDI) projects announced in Africa’s broadly defined agribusiness sector have fallen sharply since 2019, according to fDi Markets data.
Africa’s share of global agribusiness FDI projects fell to just 3.6% last year from a high of 9.3% in 2019. A similar decline has occurred in other developing regions like the Middle East, Latin America and the Caribbean.
However, African business leaders have cited “tremendous” opportunities to produce fertiliser on the continent by connecting investors to leverage deposits of phosphate in countries like Morocco and Namibia.
Mansur Ahmed, a group executive director at Dangote Group, Africa’s largest conglomerate, said back in March 2022 that there is an opportunity to create a “more comprehensive fertiliser business” which will be able to supply both African and export markets.
In March 2022, Dangote Group began operations at its $2.5bn fertiliser plant in Nigeria’s economic capital, Lagos. At full capacity, the plant will be able to produce three million tonnes of urea and ammonia products per year.
This could help to alleviate pressure caused by a cut off in supplies from Russia, which is one of the world’s largest producers of fertilisers. In 2021, Russia accounts for about 16% of global urea exports, and 12% of exports for both di-ammonium phosphate (DAP) and monoammonium phosphate (MAP) fertilisers, according to the World Bank.