Online Reporter
Business Reporter
THE Government is seeking investment to boost domestic fertiliser production to cut dependence on imports, amid revelations the country is sitting on nearly half its installed capacity due to funding constraints.
Agriculture contributes about 12 percent to the country’s gross domestic product (GDP), making adequate local production for one of agriculture’s key inputs critical.
The sector is also Zimbabwe’s largest employer, while agriculture generates a significant amount of exports.
Fertiliser is critical in ensuring optimal agricultural performance across various crops.
As such, the Government is exploring ways to recapitalise the sector.
The country has a combined production capacity of 1,5 million tonnes of fertiliser, but can only produce up to a fifth of this capacity.
Zimbabwe’s fertiliser industry is made up of phosphate mining and the manufacturing of various fertilisers.
The sector faces several operational challenges, chief among them being funding challenges, which have constrained capacity, leading to reliance on imports, as well as raw materials like potash and components of sulphuric acid.
Key players such as Zimbabwe Fertiliser Company produce a range of fertilisers, but financial limitations have resulted in the company shifting from being an exporter to a net importer of some of the products.
Zimbabwe’s annual demand for fertiliser stands at 630 000 tonnes (t), including compounds, blends and top dressing, with 330 000t being compounds and blends, while the balance is made up of top dressing variants.
The country’s strong demand for fertiliser includes significant requirements for the Government’s Presidential input and cotton schemes.
Due to reliance on imports, fertiliser costs account for a significant portion of cereal production expenses, estimated at 40 percent of total production costs.
This substantial expenditure highlights the importance of fertilisers in crop yields and national food security.
Addressing the fourth Zimbabwe Investment and Development Agency (ZIDA) stakeholders’ engagement forum last week, Industry and Commerce Permanent Secretary Dr Thomas Utete Wushe said the fertiliser industry is of central importance to Zimbabwe’s economy.
He noted that the sector significantly contributes to agriculture, which in turn produces 63 percent of raw materials for agro-based industries, thereby enhancing the manufacturing sector.
“We have sectors that need an extra effort to drive investors into (committing capital). The fertiliser sector is one such, as it talks to our food security,” he said.
“The fertiliser sector is very important to us as a ministry and we would like to go out of our way to get investors into that sector so that we can drive the cost of food production significantly down.
“Because farmers are arguing that fertiliser costs up to 40 percent of cereal production, I would like to call on foreign investors and domestic investors to consider this opportunity.”
Zimbabwe was once self-sufficient and a fertiliser exporter in the Southern African Development Community, but its capacity and ability to meet domestic demand declined, especially following the imposition of illegal sanctions by Western countries, leading to reliance on imports.
In the recent past, the Government introduced the Five-Year Fertiliser Import Substitution Road Map (2020-2024), seeking to accelerate local fertiliser production.
The aim was to increase local production of phosphates and ammonium nitrate.
To achieve this, the Industrial Development Corporation of Zimbabwe (IDCZ) made some investments in some fertiliser value chains, including phosphate extraction and granulation of basal fertilisers.
The corporation is modernising operations at its subsidiaries, Dorowa Minerals and Zimphos, to boost production, while Sable Chemicals secured a loan from the African Export-Import Bank (Afreximbank) for plant and equipment refurbishment, and the purchase of rail tank cars.
Economist Mr Lancaster Gwende said fertiliser self-sufficiency would be beneficial for Zimbabwe’s economy, considering that agriculture remains its mainstay.
“Zimbabwe is currently importing over 75 percent of its basal fertiliser requirements, gobbling up foreign currency of over US$400 million annually,” he said.
“This is not something good for our economy. We need to value-add natural endowments, supply our own farmers and earn more from exports if possible.”
Agricultural value chains are a key priority in the National Development Strategy 1 (2021-2025) as Zimbabwe seeks to to increase manufactured value-added products, structurally transforming from a commodity-based economy.
Against this background, Polyserve Fertiliser and Chemical Group of Egypt has shown keen interest in investing in Zimbabwe’s fertiliser sector.
Significant investments in boosting production would help reduce and stabilise fertiliser prices.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube is on record saying the Government will continue to restructure and strengthen the existing 78 agro-based value chains, including growing domestic production of fertiliser and other agricultural inputs.
He said there were plans to develop local content thresholds for all products and services in which the country has a comparative advantage, including pharmaceutical, fertiliser and packaging sub-sectors.
