The Managing Director of the Nigeria Sovereign Investment Authority (NSIA), Uche Orji, has on Tuesday confirmed that Nigeria was forced into a potash trade with Canada as the nation’s deal with Russia took a hit with sanctions from the United States.

Driving the news 
The three cargo shipments of Canadian potash arriving in Nigeria next month are a key component in the production of agricultural fertilizers due to its richness in soluble potassium. 

  • The trade deal graced with the efforts of the Canadian High Commission in Nigeria is part of the Nigerian government’s plan to readjust to the implications of the international sanction on Russia. 

Brief background to the story 
Russian company, Uralchem, entered a trade deal in 2019 with the Nigerian government led by President Muhammadu Buhari to supply the West African nation with five cargoes of potash per year. But Russia’s invasion of Ukraine has created a gap in demand and supply between both parties followed by sanctions from the United States and other European countries.

  • As of 2019, Canada, Russia and Belarus handled 79% of the world’s demand for potash. Other countries identified as a global supplier of potash included China and Israel.

State of play 

In 2019, when the Nigerian government entered the trade deal with the Russian company, potash was trading at $275 per tonne. This figure then depreciated to $200 in 2020 as a result of the Covid-19 pandemic. However, the price jumped to $300 per tonne in 2021 and then appreciated by 266% or $1,100 per tonne in March 2022 as Russia faced sanctions for invading Ukraine. 

The big picture 
Belarus is also facing sanctions by the World Powers for supporting Russia actions against Ukraine. This puts the potash global supply on Canada, China and Israel; in 2020 the global demand pegged at 69.2 million tonnes. 

What this means 
Although the NSIA director did not mention the amount paid for the three cargoes of potash, Nigeria reportedly paid more in the Canadian trade than is obtainable in its deal with Russia. This suggests an inflated price of fertilizer which invariably means an increase in the cost of food production in the country. 

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