Dangote fertilizer’s debut signals boost for economy

BY EMEKA EJERE

The commencement last week of the sale of Dangote urea fertilizer nationwide has put an end to months of speculation, while raising hopes of better days for dealers and users in the fertilizer market.
The urea fertiliser plant, which currently pushes out a minimum of 120 trucks per day across the country, was built to tap into Nigeria’s demand for fertiliser, a critical component of achieving food sufficiency for the country’s over 200 million people..

The new plant at the Lekki Free Zone in Lagos State, designed to manufacture 3 million tonnes of urea annually is expected to significantly reduce the importation of fertilizer in Nigeria and ultimately remove the need for imports.
It also promises the highly import-dependent nation avenue to save about $500 million annually from import substitution, while also recording inflow of $400 million from exports of fertilizer to other countries, according to the company’s projection.
Heavy reliance on import (including petroleum products despite being the seventh largest producer of crude in the world) has left Nigeria’s local currency at the mercy of the US dollar, a situation being worsened by activities of speculators and perpetrators of other forms of currency sabotage.
Analysts have maintained that the situation will continue to defy efforts of the Central Bank of Nigeria (CBN) to shore up the naira until the country embraces productivity.
Fertiliser is among the items which imports the CBN bars from access to foreign exchange as part of a raft of controls aimed at boosting domestic production.
Ready for export
According to a Reuters report, the new fertilizer plant will export its first shipment in late June or early July, to Louisiana, while the majority of exports from the plant are expected to go to Brazil.
“Apart from meeting the domestic demand, we are going to be able to earn quite a lot of money exporting the goods to the South American countries,” president of Dangote Group, Aliko Dangote told a virtual economic forum hosted by Qatar on Tuesday, adding that it will also be able to supply all the major markets in sub-Saharan Africa.
“Brazil has already imported about 205,000 mt of Nigerian urea this year. For all of 2020 it imported 431,000 mt. So you can see that it is on track to increase its imports from Nigeria”, Dan Kubiske, senior international correspondent for Green Markets/Bloomberg, told Business Hallmark while discussing Brazil’s huge market in a chat.
The Group Executive Director (Strategy, Capital Projects & Portfolio Development), Dangote Industries Limited, Devakumar Edwin, reiterated to the press last week that the plant, which has the capacity to turn out more than 4,500 tonnes of urea per day, will conveniently meet the local demand and even produce for exports.
“We have the capacity to turn out 4,500 tonnes of urea every day, this is a bulk application fertiliser…each crop in Nigeria or globally will require nitrogen and this is a rich fertiliser, having 46 per cent nitrogen”, Edwin said.
“The company has the capacity to meet local demand and also export to other countries. Currently, the demand (domestic) is less than 1 million tonnes and we alone can produce 3 million tonnes, so we can easily meet local demand and also produce for export to other West African countries.”
Aside fertiliser production, the company is already working to support the farmers with training on application of the fertiliser and even establish laboratories across the country for proper soil examination, Edwin also revealed,
“The uniqueness of this plant, apart from the fact that we are producing is the focus on farmers’ support, on training, education, development as we are now establishing laboratories across the country and even mobile laboratories where we can go drive around and take soil samples for proper examination to effectively grow the agricultural outputs across the country.”
Farmers at the moment are forced to use whatever fertilizer that is available as they have no choice.
“But we need to know that the fertilizer that will work in one state may not be suitable in another state, as they may not have the same soil type and composition”, Edwin explained.
“The same fertilizer you use for sorghum may not be the fertiliser you will use for sugar cane.”
Many, who blame low crop yields in Africa’s most populous country on insufficient access to fertilizer, see potential reprieve in the Dangote plant.
Nigeria consumed around 20 kg of fertilizer per hectare of arable land in 2018, compared with 73 kg in South Africa and 393 kg in China, according to the World Bank.
A game changer
Little wonder huge excitement was said to have greeted the arrival of more than ten trucks of the newly introduced Dangote fertiliser to Kano market (northwest Nigeria), with marketers and farmers describing it as a game changer and a forecast for the expected agricultural revolution in the country. Kano is the home state of billionaire, Aliko Dangote.
“I have checked the product and have found out that it will have no problem penetrating the market”, chairman of the Kano State Agro Dealers Association, Shuaibu Akarami, reportedly said at the event organised by Dan-Hydro company in Kano to mark the introduction of the fertiliser into the northern market
“With my experience in agro products, I can authoritatively say the product has met our expectations and that has confirmed the confidence we have in Dangote fertiliser and other sister products of the Dangote Group.”
The Dan-Hydro fertilizer company in Kano which took delivery of the first batch of trucks in Kano described the timing and strategy for the introduction of the product as rife.
According to the company, the Dangote fertilizer, which “conforms to all set standard required by the regulatory agencies”, will see the end of the “phenomenon of perennial shortage of the fertiliser product will be over in the country.”
Before now, data from the conglomerate had revealed that between 4, 000 and 5, 000 direct and indirect jobs were created in the cause of the construction of the complex while 500 permanent direct jobs and up to 5,000 indirect jobs are to be created as production kicks off. Several indirect jobs are also expected now that the product is in the market.
For an economy grappling with alarming rate of unemployment and food inflation, the Dangote Fertilizer Ltd may be providing the long awaited answers to so many critical questions.
Data from the National Bureau of Statistics (NBS) saw unemployment jumping from 27.1 per cent in Q2 2020 to 33.3 per cent, the highest in the modern Nigerian economy while food inflation jumped to 21.79 per cent, translating to a month-on-month rise of 1.89 per cent.