The Africa Fertilizer Financing Mechanism, a special fund of the Bank, introduced a game-changing trade credit guarantee scheme in partnership with OCP, a leading global fertilizer supplier

Under a vast blue sky, the Atlantic Ocean waves embrace Ivory Coast’s San Pedro city’s shores alongside a warm breeze from the Gulf of Guinea, signaling to Ivorian agro-dealer Ribou Adama that the day is special.

Today, Adama will receive a truckload of significant stock for his family business, which sells fertilizers, phytosanitary products, and agricultural tools. As the old, heavy truck maneuvers towards his store in the southwestern port city, Adama eagerly prepares to unveil his treasure: fertilizers for cocoa trees.

The world’s largest cocoa exporter

Ivory Coast, the world’s largest cocoa exporter, boasts a million cocoa producers, contributing a whopping 40% of the global chocolate supply. The bulk of Ivory Coast cocoa harvest ships out of the San Pedro port, attracting global traders like the Société Africaine de Cacao and the American giant Cargill.

While Cocoa proves to be a lucrative business for industry players, San Pedro’s cocoa farmers have historically faced challenges maximizing profits due to inadequate fertilizer supplies, hampering farm productivity. Fertilizer distributors like Adama have long struggled with limited resources or support from banks to acquire fertilizer in bulk.

“[We were only able to secure] 200 to 300 tons of fertilizers yearly,” Adama says, adding that this volume was sufficient for only two or three cocoa farm cooperatives amid surging demand from at least a dozen co-ops.

An intervention by the African Development Bank came in handy. The Africa Fertilizer Financing Mechanism, a special fund of the Bank, introduced a game-changing trade credit guarantee scheme in partnership with OCP, a leading global fertilizer supplier. The $2 million trade scheme not only facilitates agribusiness contracts with agro-hub dealers like Adama but also provides them with business management training.

Making fertilizers available

The scheme is boosting supplier confidence in making fertilizers available to agro-dealers and cooperatives on credit for the benefit of farmers as the Africa Fertilizer Financing Mechanism shares the transactional credit risk with the supplier. Participating agro-dealers like Adama can then sell the fertilizers on credit to distributors or cooperatives who deliver the product to farmers.

Adama reflects on the scheme’s impact: “With the Africa Fertilizer Financing Mechanism-OCP project, today we reach nearly 2,000 tons [of fertilizer] in a year. We can access areas where we couldn’t before. It positively impacts our business,” noting that he now sells fertilizers to 12 cooperatives, representing nearly 5,000 farmers.

As part of this credit scheme involving Adama and six other San Pedro agro-dealers, OCP recently delivered 3,120 tons of fertilizer to 9,897 local farmers – all within a single planting season.

As Adama observed the offloading of the fertilizer truck on this particular day, cocoa farm cooperative leaders gathered outside his shop, ready to buy.

“Our sales are increasing. We are ready to go even further with this project because we help producers get fertilizers at a lower cost and allow them to pay in several tranches,” Adama says.

The African Fertilizer Financing Mechanism programs in Ivory Coast target importers, blenders, and manufacturers, aiming to assist 180,000 smallholder farmers in gaining access to fertilizer to boost their yields.

Conclusion

The African Development Bank’s credit scheme, implemented through the Africa Fertilizer Financing Mechanism, has revolutionized the fertilizer supply chain for agro-dealers like Ribou Adama in Ivory Coast.

By providing trade credit guarantees and business management training, the scheme has enabled agro-dealers to access larger quantities of fertilizers, expanding their reach to more cooperatives and farmers.

This initiative is not only increasing sales and profitability for the agro-dealers but also benefiting the cocoa farmers by providing them with affordable fertilizers and flexible payment options. The success of this program demonstrates the positive impact that strategic partnerships and innovative financing mechanisms can have on agricultural development in Africa.