Fertiliser matters. News that Dangote Group of Nigeria plans to build what it reckons could be Africa’s biggest fertiliser plant in the country’s southern Edo state should not be taken lightly. After signing an agreement with Saipem SpA, a large European oil services company, the manufacturing conglomerate said production is scheduled for 2014 and the plant has the capacity to pump out 7,700 metric tons per day of granulated urea.

The company's CEO, Aliko Dangote, said the development would make Nigeria self-sufficient in fertiliser production and the plant would even boast export capacity.

This news is more important than you think. Here's why, from an October 2010 report from the International Food Policy Research Institute: (EmphasisFT Tilt's)

Increased fertilizer usage played a significant role in the success of the green revolution in Latin America and Asia. It helped raise agricultural productivity and farm incomes, thus laying the foundation for broader economic growth. As much as 50 percent of yield growth in these regions could be attributed to increased fertilizer use

Like the operating challenges that have blighted its cement business, it's not clear whether Dangote will be able to deliver on its ambitious claims in a timely fashion. But if anyone can push it through it's probably Aliko Dangote, the energetic founder of West Africa's largest manufacturing conglomerate. Following the listing of Dangote Cement in 2009, his net worth jumped to $13.8bn on Forbe's 2011 list of the World's Billionaires -- from $2.1bn previously.

Aliko Dangote - AFP

Aliko Dangote; Source: AFP

More importantly, don't forget the bigger picture: a competitive price for fertiliser -- and its widespread distribution -- is key to boosting Nigeria's low agricultural productivity and food security prospects. At present, Nigerian farmland is woefully underdeveloped while financing of the agricultural sector is minimal. For example, agriculture comprised 33 per cent of Nigeria's GDP in 2009 but lending to the sector typically represents just 1 per cent of bank loans.

Meanwhile, government input subsidy programs are costly for the fiscal authorities, poorly targeted, and barely cover farming household fertiliser needs. As a result, the use of fertilizers in Nigerian farmland is estimated at 13 kg/ha in 2009 by the Federal Ministry of Agriculture and Rural Development, which is far lower than the 200 kg/ha recommended by the United Nations Food and Agriculture Organization (FAO), observes the International Food Policy Research Institute (IFPRI).

As a result, Friday's announcement that Nigeria could become self-sufficient in the ammonia-urea fertiliser production -- though the claim is not yet verified by analysts -- in three years could be a game-changer in its journey to develop the agricultural sector, which employs 70 per cent of the population.

Download this handy report from the IFPRI for everything you wanted to know about fertilizer usage trends in Nigeria, but were too afraid to ask. It's not boring, it's important.

See also:
Coverage of Dangote Group - FT Tilt
Coverage of Nigerian listed companies - FT Tilt