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About AFFM

In June 2006, Agricultural Ministers of the African Union Member States met at the Conference for an African Green Revolution in Abuja, Nigeria. The Ministers and senior officials attending this multilateral Summit agreed to establish the Africa Fertilizer Financing Mechanism (AFFM), which seeks to enhance pan-African agricultural productivity by promoting the use of fertilizers. The Summit charged the African Development Bank with the responsibility for establishing the AFFM by 2007 and hosting it.

In proposing the establishment of the AFFM, the Abuja Summit recognized two critical facts. First was the stagnation of Africa’s agricultural performance over the last decades; Africa’s agriculture sector has remained the least performing in the developing world, with productivity increases quite below the population growth. Second, a principal cause of Africa’s meagre agricultural productivity was that African farmers apply only five to ten percent of the fertilizer amounts used by their counterparts in other developing regions, such as Asia.

The Abuja Declaration represented the steadfast commitment of African states to work together in boosting the production and availability of fertilizers throughout the continent, and in scaling up the demand for fertilizer at the farm-gate. The specific target of the Declaration was to achieve at least a six-fold increase (50kg/ha of nutrients) in average fertilizer utilization in Africa by 2015.

The AFFM is a vehicle for financing the various activities agreed upon at the Abuja Summit. Specifically, it:

  1. helps the African public and private sectors to conduct feasibility assessments and secure financing for promising fertilizer production ventures;
  2. improves the “economies-of-scale” of fertilizer production, procurement, and distribution, for example by creating “platforms” to help the private sector be more cost-effective in delivering key agricultural inputs to even the smallest, most remote farm-gates;
  3. boosts fertilizer demand at the wholesale and retail levels by disseminating information about fertilizer’s impact on return on investment (ROI), extending credit guarantees to farmers and suppliers; and iv) exploits other potential “targets of opportunity” in the value-added chain, i.e. by helping to better align transnational customs policies, which currently make cross-border transactions inefficient and costly.

The AFFM works multilaterally – in concert with African governments, regional institutions, the private sector, other development banks, and international donors – to study the fertilizer value-added chain in detail, focusing particular attention on the key transnational factors impeding fertilizer use in order to develop comprehensive strategies for jump-starting Africa’s stagnant agricultural productivity.

Current level of contributions into AFFM:  USD 13.6 million
Contributors:
-   African Development Bank: USD 6.9 million;
-   Federal Republic of Nigeria: USD 5 million, equivalent to 50% of their pledged USD 10 million;
-   AGRA:  USD 1 million;
-   Republic of Tanzania:  USD 200,000, equivalent to 10% of their pledged USD 2 million.

AFFM’s Ultimate Goals

  • Assist RMCs in increasing agricultural productivity within the context of the Africa Food Security Vision,  the SDGs and Africa’s Agenda 2063;
  • Double agricultural productivity and incomes of small-scale food producers, and CAADP’s Pillars II and III;
  • Improve rural infrastructure and market access by achieving 50kg/ha of fertilizer application

Beneficiaries / Targets of AFFM support:

As long as the proposed activities / projects are geared to support fertilizer manufacturing, procurement, distribution and use, the entities eligible to receive AFFM funding are:

  • Any Regional Member Country of the African Development Bank Group, or any geographical or administrative subdivision or agency thereof;
  • Any institution or undertaking in the territory of any Regional Member Country; and
  • Any international, regional or sub-regional agency or institution concerned with development in Africa.

Main activities of the AFFM

Priority areas:

The initial priority areas identified were as follows:

  • Developing Africa’s fertilizer manufacturing capacity
  • Providing credit guarantees for fertilizer importers and distributors
  • Establishing regional fertilizer procurement and distribution facilities
  • Developing policy instruments
  • Institutional, research and capacity-building activities

Based on its Strategy Brief developed in May 2018, AFFM has now re-focused on the following priority areas;

  • Providing credit guarantees and other financial solutions along the value chain to promote smallholder access to fertilizers
  • Supporting regulatory streamlining that boosts the efficiency of the value chain.