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Pakistan, Fatima Fertiliser

Guaranteeing private investment to expand affordable fertiliser production

Pakistan Fatima Fertiliser

Context
Food security is a major concern of the Government of Pakistan and estimates suggest that the country’s agricultural output needs to rise at 5-6% per annum if it is to keep pace with demand whilst reducing levels of poverty. Around 45% of Pakistan’s population is employed in the agricultural sector, 80% of whom are smallhold farmers. If the sector is to develop at the pace required, access to affordable, good quality fertilisers and smallholder training will be essential.

Project
Located in Rhimyar Khan at the centre of Pakistan’s agricultural region, Fatima Fertiliser Company Ltd is Pakistan’s largest manufacturer of Calcium Ammonium Nitrate (CAN) and Nitro Phosphate (NP) fertilisers. With demand rising, the company reached its maximum production capacity in 2013 and required investment to expand. As part of the planned expansion, the installation of a waste gas boiler was key to improving the plant’s energy efficiency and to keeping fertilisers affordable for smallhold farmers. Banks in Pakistan rarely lend beyond 5 years and Fatima Fertiliser Company Ltd struggled to secure a loan to finance the upgrades. By providing a guarantee of US$21m, GuarantCo enabled the company to access a 7 year US$57.1m syndicated loan from Standard Chartered Bank Pakistan and other regional lenders to improve its production processes.

Impact
Based on data for average fertiliser use in Pakistan, it is anticipated that improving the scale and efficiency of Fatima Fertiliser’s operations will provide an ongoing supply for up to 150,000 smallhold farmers. Alongside affordable fertiliser production, the company delivers a successful Farmer Profitability Programme designed to educate local farmers to improve their crop quality, yields and profits. GuarantCo’s work with SCB Pakistan and others has demonstrated the viability of long-tenor lending, strengthening local financial markets and providing a template for future infrastructure lending in the region.