NSIA Begins Implementation of Presidential Fertiliser Initiative

By Tony Obiechna, Abuja 

The Nigeria Sovereign Investment Authority, (NSIA) has begun implementing the directive for the restructuring of the Presidential Fertiliser Initiative (“PFI”).

According to a statement from the agency on Tuesday the in a bid to make the program more sustainable and following its notable successes and transformative impact over the past 4 years, approved the restructuring of the PFI program starting in the 2021 cycle with the following major modifications.

The role of NSIA under PFI transitions to an upstream player thereby limiting its involvement to importation, storage and the wholesale of raw materials to blenders. The NSIA subsidiary NAIC-NPK Limited will be spun off to the Ministry of Finance Incorporated (MoFI).

Blenders will no longer be paid blending fees by NAIC-NPK, they will recover their costs directly from selling the fertilizer to the market. This will balance the incentives of the business and ensure the blenders build the right capacity to actively participate in the local supply sub-sector. Blending plants to provide of bank guarantees to cover requisitioned raw materials demand appropriated for their respective production volumes.

As part of the new structure and in line with the Presidential directive, the of Finance and National Planning (FMFBNP) and the Central Bank of Nigeria (CBN), are expected to engage commercial banks to facilitate lines of concessionary credits to blending plants for the purchase of raw materials.

It is also expected that the CBN will ensure that the foreign exchange needed for the program is provided as and when needed to cover some raw materials.

The approval, which takes effect immediately, was communicated in a letter through the Office of the Chief of Staff to the President (OCOS) which was issued in November of 2020. 

Under the new arrangement, blenders will be responsible for bulk of the activities in the Fertilizer production value chain such as transporting the raw materials, sourcing filler, blending the fertilizer, and selling to off-takers. 

Also, the of Agriculture and Rural Development (FMARD) will perform its statutory monitoring and quality control role over blender activities. The benefits of this new approach include but are not limited to: Unlocking of more development finance (loans and investments) into the local fertilizer blending value chain of Nigeria. 

Strengthening of market systems and encouraging actor participation. This will lead potentially to mergers and acquisition and innovation and growth across the industry which will benefit farmers.Further reduction of food price inflation in the market as the availability of fertilizer will drive down the price or cost of food product.

Reduction of the high rate of unemployment as more people will become engaged in the production process.

In his comment, the Chairman, Implementing Committee of the PFI and Executive Governor of Jigawa State, HE. Governor Mohammed Abubakar Badaru said, “The programme has in many ways served to augment the Administration’s policy-driven programmes to diversify the Nigerian economy. In the main, the programme has bolstered Nigeria’s industrial base, resuscitated, and strengthened domestic production capacity for fertiliser, eliminated to the huge fertiliser subsidy burden placed on Federal Government, created thousands of direct and indirect jobs and alleviated the plight of the domestic farmer by ensuring availability of fertiliser. Clearly, the programme is a strong value proposition for the nation in the agriculture space given the variety of socio-economic benefits it presents. We are grateful to Mr. President for creating this programme and look forwards to supporting the next phase as it evolves.”  

Speaking on the development, the Managing Director and Chief Executive Office of NSIA said, “With the support of Mr. President, the programme has accomplished its principal objectives. Having fulfilled the establishment, stabilization, and market discipline phase of PFI, the primary objective of which was to revive the blending plants and create a viable domestic blending industry, we believe the PFI should gradually evolve into the next phase, which is a tactical withdrawal of intervention in the industry and the emergence of a self-sufficient, sustainable, and efficiently operated market. NSIA is pleased with the Government’s decision and looks forward to seeing the innovation and creativity which will characterize the open market in the sector”.

Mr. Thomas Etuh, Chairman, the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN) said, “The restructuring is a welcome development for FEPSAN. The new approach will afford operators the opportunity to build recognizable and trusted brand while ramping up distribution nationwide”.

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