The Chemical Industries Education and Training Authority (CHIETA) welcomes the recent announcement by the African Development Bank to establish a $5.1 billion framework to support the ailing fertilizer sector.
The fertilizer sector is in crisis due to recent geopolitical events leading to rising energy costs, global price volatility, and a significant increase in shipping and logistics costs.
South Africa imports more than 80% of its fertilizer requirements. The ongoing conflict in the Persian Gulf has severely disrupted fertilizer shipments through the Strait of Hormuz. Shipping insurance for fertilizers jumped from 0.25% to 1% of cargo value because of the continued conflict in the Middle East.
“This is a decisive intervention by the African Development Bank during a time of significant stress and uncertainty in the fertilizer sector, a key sector in the chemical industries which CHIETA supports.
We call on more support for our local fertilizer sector by government and other role players to support the sector against further external shocks,” says CHIETA CEO, Yershen Pillay.
According to Pillay, “The fertilizer sector is experiencing a crisis. Fertilizer security is essential for food security. As a country, we should not remain overwhelmingly dependent on imported fertilizer when we have vast renewable energy resources, a strong chemical-industry base, and a growing green hydrogen capability to build our own fertilizer value chain at home. CHIETA’s role is to ensure that as we build this local capability, South Africans have the skills to operate it.”
CHIETA is also supporting the development of enterprises that can participate in the growth of the chemical industries. More than 900 SMMEs were supported by CHIETA in the past year, providing businesses with opportunities to strengthen their capabilities and participate more meaningfully in the economy.
“The fertiliser opportunity extends beyond the large producers. There is an important role for SMMEs, entrepreneurs and emerging businesses across the wider value chain. Supporting these enterprises with the right skills and capabilities can help broaden participation while strengthening the resilience of the sector,” says Yershen Pillay, CEO of CHIETA.
The African Development Bank framework includes measures to secure critical food, energy and fertiliser supply systems, while supporting reforms aimed at developing diversified supply chains and greater long-term resilience.
CHIETA says this creates an opportunity for stronger collaboration between government, industry, development finance institutions, skills development bodies and the private sector to ensure that investment translates into productive capacity, enterprise development, innovation and employment.
CHIETA has continued its drive for more investment into green fertilizer and green ammonia as strategic pathways for fertilizer localization and securitization.
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