Ethiopia signs $3bn fertiliser deal with Dangote to curb import

Ethiopia is set to sign a $3 billion agreement with Aliko Dangote to construct a large-scale fertiliser plant in the Somali Regional State, as the country seeks to reduce its reliance on imported agricultural inputs and stabilise local supply chains.

The project, expected to break ground later this year in Gode, marks one of Ethiopia’s largest industrial deals with a private foreign investor. Abiy Ahmed, Ethiopia’s prime minister confirmed the agreement would be formalised in mid-July.

According to reports, the deal comes amid mounting pressure on Ethiopia’s agricultural sector. Fertiliser shortages have disrupted planting seasons and exposed vulnerabilities in Ethiopia’s external supply chains, exacerbated by Red Sea shipping delays and broader geopolitical instability.

Ethiopia’s ministry of Agriculture noted that only 40 percent of the required fertiliser for the 2025 Meher planting season had arrived by April. Ethiopia currently sources most of its fertiliser from suppliers in Morocco and Russia, but foreign currency shortages and logistical constraints have repeatedly delayed distribution.

The proposed plant will manufacture urea and nitrogen-based fertilisers, targeting both domestic demand and export markets in East Africa, according to officials familiar with the plans.

Strategic Location and Industrial Decentralisation
The choice of Gode — located near the Ethiopia–Djibouti logistics corridor—offers streamlined access to ports for both raw material imports and fertiliser exports. It also aligns with the federal government’s push to attract industrial investment into historically underserved regions.

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The government is investing heavily in infrastructure, energy, and road connectivity across eastern Ethiopia to support new manufacturing clusters. Gode has been identified as a priority zone under this initiative.

Dangote Group Expands East African Footprint
The deal reinforces Dangote Group’s long-term strategic positioning in East Africa, where it has operated a cement plant in Ethiopia’s Oromia region since 2015. The group is also active in petrochemicals, energy, and agribusiness across the continent.

Dangote’s $2.5 billion fertiliser facility, launched in 2023, is the largest of its kind in Africa with an annual production capacity of 3 million metric tons. The Ethiopian facility is expected to mirror that capacity and may scale further depending on regional demand.

Reform Agenda and Investor Confidence
The announcement aligns with Ethiopia’s broader Homegrown Economic Reform II (HGER II) agenda, a government-led initiative aimed at liberalising key sectors, modernising agriculture, and attracting foreign direct investments.

The country’s agriculture accounts for roughly one-third of GDP and employs close to 70 percent of Ethiopia’s labor force. Ensuring fertiliser availability is central to improving productivity, reducing inflationary pressures on food prices, and enhancing rural incomes.

The deal is expected to be closely watched by development finance institutions, regional trade partners, and agribusiness investors. If executed effectively, the project could shift Ethiopia from a fertiliser importer to a regional production hub, while insulating its economy from future commodity price swings.