Ethiopia, Dangote strike $2.5B deal to build Gode, Somali Region fertilizer complex

Ethiopia Bets on Homegrown Fertilizer as Dangote Signs $2.5 Billion Deal in Somali Region

For a country where seven in ten people make a living from the land, the announcement landed with the weight of a good rain. Ethiopia will partner with Nigeria’s Dangote Group to build one of the world’s largest urea fertilizer complexes in Gode, in the Somali Regional State—an arid corner better known to many Ethiopians as a frontier than a factory town. The deal, framed as a bid for “food sovereignty,” is also a test of whether East Africa can turn its own natural gas into a steady supply of fertilizer, rather than chasing volatile imports year after year.

A Big Bet on a Simple Ingredient

Urea may not sound glamorous, but it’s the basic nitrogen-rich fertilizer that drives yields of teff, wheat, maize and rice from the Horn of Africa to South Asia. Under the agreement signed in Addis Ababa, Ethiopian Investment Holdings (EIH) will own 40% and Dangote 60% of a complex slated to produce up to three million metric tons of urea annually—putting it among the largest single-site urea operations anywhere. The plant will be fed by a dedicated pipeline from the Calub and Hilala gas fields, long-quoted assets in Ethiopia’s underdeveloped Ogaden Basin.

The symbolism is as striking as the numbers. Prime Minister Abiy Ahmed, presiding over the signing alongside Nigerian industrialist Aliko Dangote, cast the project as a decisive step toward insulating farmers from punishing price swings. He has previously said the factory should open about 40 months after groundbreaking—a brisk timetable for a project of this scale. Dangote, whose name now anchors some of Africa’s biggest industrial ventures, called it a milestone in “industrializing Africa” and meeting the continent’s own food needs.

Why This Matters Now

Global fertilizer prices have see-sawed since 2022, when the war in Ukraine scrambled supplies of natural gas—an essential input for urea—and disrupted flows of ammonia and potash. Even after coming down from their peak, prices remain above pre-pandemic levels in many markets. For countries like Ethiopia, which import most of their fertilizer and struggle with scarce foreign exchange, that volatility wounds twice: supplies get tight just as dollars get dear.

Across Ethiopia’s highlands, farmers have felt it. Cooperative shelves went bare in some districts last season; when fertilizer arrived, it often cost double what it had the year before. A domestic plant is not a cure-all, but it is a powerful lever. Urea made at home, paid for in birr, and shipped inland without transiting a congested Red Sea corridor could be a lifeline for smallholders trying not to miss the planting window.

The Promise—and the Pitfalls

Industrial fertilizer plants are complicated creatures. They turn natural gas and air into ammonia, then into urea pellets, via high-pressure, high-temperature processes that require reliable power, water, skilled workers and tight safety standards. Dangote brings experience—its urea plant near Lagos is among the largest worldwide—but also a mixed record on timelines (its mammoth Nigerian refinery opened years behind schedule). Ethiopia brings a hungry market and long-discussed gas reserves that have frustrated operators for decades.

If it all comes together, the benefits cascade:

• Reduced import dependence, freeing up scarce foreign currency.
• More predictable prices and access for farmers prepping for the rains.
• Potential exports to neighbors from Djibouti to South Sudan and Kenya, if capacity exceeds domestic demand.
• Jobs in a region that has often been on the periphery of Ethiopia’s economic story.

But there are risks worth naming. The Somali Region, while calmer in recent years, has seen recurrent insecurity. A gas pipeline and major industrial site will require sustained protection and community buy-in. Financing must hold steady in an era when Ethiopia is negotiating with the IMF and donors over debt and reforms. Water is precious in Gode; careful planning will be needed to ensure industrial demand doesn’t crowd out local needs, and that emissions and effluents are managed to international standards.

A Region Reimagined

The location matters. Gode sits far from the central highlands, closer to the Somali border than to Addis. Many Ethiopians remember the Ogaden primarily from conflict headlines and from thwarted energy ambitions, such as earlier, unrealized plans to pipe gas to the coast for export. Putting a flagship domestic industry there reframes a periphery as a pivot for national development.

There are echoes of Nigeria’s own strategy: build heavy industry where feedstock and market meet, then scale. Dangote has done it with cement across Africa and with fertilizer at home. The company already runs a cement plant in Ethiopia, giving it a footprint and some familiarity with local operating conditions.

Fertilizer, Food Security, and the Africa Puzzle

The bigger picture is continental. Africa uses far less fertilizer per hectare than global averages, and yields suffer accordingly. For decades, the continent has largely imported nitrogen fertilizer, while Morocco’s OCP has dominated phosphate-based products. Nigeria’s new capacity has started to change the nitrogen balance; Ethiopia’s project, if built, would mark another structural shift, adding production on the eastern flank.

Yet fertilizer is only one part of the yield story. Without advisory services, credit, and distribution to the last mile, bags can sit in warehouses while fields go hungry for nutrients. Soil health also matters—over-reliance on a single nutrient can degrade soils over time. A domestic urea plant should be a springboard to a broader package: agronomy support, blended fertilizers where appropriate, and logistics that reach the smallest kebele before the rains arrive.

What to Watch

There are several signposts that will show whether this promise becomes reality:

• Groundbreaking and contract awards: Who builds the plant and pipeline, and on what timeline?
• Gas supply agreements: Long-term, price-stable commitments from Calub and Hilala are the spine of the project.
• Infrastructure and water: How will power, water and road links be upgraded to support a complex of this size?
• Community engagement and security: What mechanisms will ensure local hiring, training and environmental safeguards—and keep the pipeline safe?
• Market integration: How quickly will domestic distribution systems adapt to absorb locally produced urea at scale, and will export corridors be readied for surplus?

For Ethiopia’s farmers, the question is simpler: Will affordable fertilizer arrive on time, every season? If the answer turns out to be yes, the harvest could be richer than one project’s profit-and-loss statement. It would be a signal that Africa can knit together its own inputs, its own energy, and its own food security without perpetual exposure to shocks half a world away.

Big industrial bets don’t often make for poetic copy. Pipes, reactors, trains of ammonia and urea—these are not the stuff of folklore. But they are, quietly, the means by which a smallholder in Amhara or Oromia decides to plant a little more, risk a little less, and send one more child to school. In that sense, the news from Gode is not just about a plant. It’s about whether Ethiopia can turn its resources and partnerships into something granular, white, and profoundly hopeful.

By Ali Musa
Axadle Times international–Monitoring.