The Barons of the West African fertiliser trade

This is part 1 of a 5-part series

“You’ll be joining a mafia!” Such was the warning of a specialist in the West African agricultural sector when he heard about our project to produce a series on the leading players in the region’s fertiliser industry.

The issue of input supply, which had been on the back burner for the past few years, was brought to the fore with Russia’s invasion of Ukraine in early 2022. Together with Belarus, the three countries are major global suppliers of fertilisers and the raw materials used in their manufacture.

The conflict initiated by Moscow has put a strain on the market, leading to price hikes and shortages.

Food security

In West Africa, as on the whole continent, the situation is critical for two main reasons. Firstly, local production of inputs is very limited, making the agricultural sector dependent on imports. Secondly, buyers – governments, private agribusinesses, cooperatives and small farmers – have limited budgets and face logistical challenges that make it difficult to access products.

And yet, whether for export or food crops, fertilisers are essential for maintaining a good level of production, which guarantees the food security of the countries and the dynamism of the primary sector, an important contributor to the gross domestic product (GDP) of the region’s economies.

In West Africa, this represents a $2.1bn market, with 3.5m tonnes including all products in 2022, sold at an average of $600 per tonne, according to the International Fertilizer Development Center (IFDC), a non-profit organisation that promotes access to fertilisers and the exchange of information on the sector.

Monopoly market

Today, although the African Union (AU) set an input consumption target of 50kg per year per hectare by 2015, West Africa (and more broadly sub-Saharan Africa) has one of the lowest levels of consumption in the world, averaging 20kg per year per hectare.

This context explains the international mobilisation, under the aegis of the World Food Programme (WFP), to make donations of products. These donations have been made in several countries, including Burkina Faso, Ghana, Senegal and Guinea, by institutions such as the African Development Bank (AfDB), but also by the private giants of the sector, notably the Moroccan group OCP, leader of the continent, and its competitor the Russian Uralchem-Uralchali.

It also highlights the unglamorous but very real characteristics of the West African fertiliser business. “It’s a monopolistic market, where a small number of suppliers have to meet high demand,” says Ollo Sib, WFP’s analyst for Central and West Africa. This market is also dependent on political power, which regulates production and export and, in some countries, issues invitations to tender, via national companies, for the supply of key sectors such as cotton,” adds the researcher. “In other words, it’s a market where competition and transparency remain limited.”

Regional champions

An overview of the players involved confirms this. In West Africa, only two global giants operate – the phosphate behemoths OCP and PhosAgro – alongside a few large traders, including the Swiss company Ameropa, the American group Nitron, the Dubai-based Fertagro and the pan-African conglomerate Export Trading Group (ETG). They act as suppliers to the few local players (importer-distributors) who buy and then resell fertilisers on their national market and, for some, in neighbouring countries.

“As national markets are limited in size, we are seeing the emergence of regional champions such as Indorama, Toguna and Solev,” says Patrice Annequin, IFDC’s representative in Abidjan, not to mention a major player who recently entered the sector by investing in local production, namely Nigerian magnate Aliko Dangote.

As fertiliser prices have started to fall and are now below the 2022 peak but above the pre-Covid-19 level, who is emerging as the winner? Which player has the strongest strategy to establish itself in West Africa? Have today’s champions got what it takes to be the champions of tomorrow? The following four episodes of the series will focus on the kings of West African fertiliser.