Kenya faces competition in its ambition to control the $578 million East Africa fertiliser market from Tanzania and Uganda, which are bidding to construct their own fertiliser plants.
The East African Community has intensified talks with international financiers to back jointly-owned plants in the two countries just days after Kenya embarked on the search for a strategic international investor for its own plant planned to begin in March this year.
“A proposal for a feasibility study on regional fertiliser production has been developed and submitted to the African Development Bank (AfDB) for consideration,” said EAC Council of Ministers chairman Shem Bagaine.
The proposal for jointly-owned plants to be built in Uganda and Tanzania has been on the cards over the last five years, but partners are yet to agree on capital contribution and the ownership structure.
Under the African Union’s African Fertiliser Financing Mechanism framework, multilateral financiers like the World Bank and AfDB are encouraged to put their money in ventures jointly owned by states as opposed to national ones.
Similarly, Article 105 of the EAC Treaty requires member states to cooperate in boosting food security and agricultural production within the bloc.
Apart from the AfDB, the bloc has been holding talks with the European Union, African Green Revolution Alliance, USaid and the Australian Government, the council of ministers said.
The financiers see shared plants as a way of compelling governments to pool raw materials, jointly guarantee heavy capital investment and provide ready markets to manufactured fertiliser.
The region had chosen Tanzania and Uganda as the bases for the plants due to their large reserves of phosphate rocks and natural gas, the two key ingredients in fertiliser making.
Reacting to questions raised by Christophe Bazivamo and Patricia Hajabakiga, both representing Rwanda in the regional assembly, Mr Bagaine appeared to suggest that Kenya has the green light of the ministers to build its own plant.
“Republic of Kenya is at an advance stage of preparations to construct a fertiliser production plant from the year 2013 to be completed in the year 2015,” he said.
Having been hit most by the cycle of food shortage in the region, Kenya has opted to seek strategic partners to help raise the $312 million required for the plant.
Friday, Kenyan government officials maintained the country has not walked out of the regional plant.