Nigeria set to mechanize agriculture with US$1.2bn loan financing

NIGERIA – The Federal Executive Council (FEC) of Nigeria has approved a loan facility of US$1.2 billion to finance the mechanisation of agriculture in 632 local governments in the country.

This was revealed by the Minister of Agriculture and Rural Development, Sabo Nanono, but he did not provide details of the source of the financing and conditions.

ADVERT

However, the finance minister and the debt management office had earlier said Nigeria would utilise more internal borrowings, rather than external borrowings, due to the impact of COVID-19 on the global economy, reports Premium Times.

“Today, we presented a joint memo with the Federal Ministry of Finance in which we seek the approval for a loan facility of about 950 million Euros translated approximately to 1.2 billion US dollars,” said Mr Nanono.

“This is going to be a major revolution in the agriculture sector, that we have never seen before,” he said.

According to Mr Nanono, the funding will be utilized to establish 632 tractor serving centres across the country.

These serving centres will constitute tractor hiring skill, IT and admin office and a chemical workshop and store for storing inputs for agriculture and even output arising from the production.

Every tractor will have a tracking system that will enhance seamless identification of the area it has covered and how much revenue it is generating.

These serving centres are going to be privately owned by the indigenes of the local government areas on a loan basis where they will be sited and will be selected through a competitive bid based on ones experience in agriculture, financial position, investments of between N10m (US$25,000) to N70m (US$180,000).

ADVERT

“Because you may probably be handed an asset of over N150 million (US$387,000), so we will not take that chance,” Mr Nanono said, adding that the revenue which will be generated by these service centres which will also be in charge of repayment of the loans.

It will take a period of three to four years for beneficiaries to conclude payment of the loans, after which the N150 million (US$387,000) worth assets becomes their personal property.

Nigeria has about 7 tractors per 100 square kilometers as against 27 tractors owned by Kenya to cover similar kilometres of farm land.

Pointing out the need of Agri-mechanization in Nigeria Mr Nanono highlighted that, “In fact the standard is 127 tractors per 100 square kilometers. In most developed countries it is about 1000 tractors per 100 square kilometers.”

“We anticipate seven million direct jobs from this and 20 million indirect jobs. So that is the essence of this. There will be 140 agro processing plants attached to these service centres across the 36 states of the federation,” he said.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.