‘Mechanisation has been slowed down by high interest rate’
Elesa Bitrus Yakubu is the national president of Tractor Owners and Operators Association of Nigeria (TOOAN). Yakubu in this interview, tells JOSEPHINE OKOJIE that double digit interest rate is obstructing the development of mechanisation and it is only through mechanisation the youth can find agriculture attractive.
What is your assessment of FG’s agric policies since 1999 till date and how do they affect agric mechanisation?
There have been several changes that have affected agric mechanisation since 1999. They include the direct purchase of tractors by both Federal and State Governments, and selling them to farmers at between 25 percent and 50 percent subsidised rate. Most of these tractors never provided mechanisation services to ordinary Nigerian farmers. They were paid for and retained by privileged few. The few that some State Governments provided for tractor hiring services were abused and mis-managed by some officials. Federal Government provided tractors for mechanisation services under the Public Private Partnership (PPP) arrangement. The tractors were to be subsidised by both Federal and State Government at 25 percent and 10 percent respectively, and the service provider to make 10 percent down payment, while the machinery vendor would recover the balance of 55 percent in 3 years. It wasn’t successful since the vendors only provided tractors worth the 25 percent mobilization paid to them by Federal Government. Recently there is a private sector driven mechanisation service provision to Nigerian farmers under the Agricultural Equipment Hiring Enterprises (AEHEs). The private sector is expected to deposit 20 percent cost of equipment for AEHE centres (this comprises 5 tractors, 5 ploughs, 5 horrows, 2 disc ridgers, 2 tipping trailers, 5 power tillers, 2 maize shellers, 1 rice thresher and 2 mini combine rice harvesters) estimated at N35million, while the Federal Government will provide 35 percent loan with 2 years moratorium, with the Bank of Agriculture (BoA) and the vendor providing the balance of 35 percent and 10 percent of the loan component respectively. The loan will be repaid in 4 years at 7.5 percent interest rate.
Do tractors and other agric equipment sellers benefit from the different intervention funds meant for the players in the agric sector?
Yes, tractor sellers have been benefiting from intervention funds such as rice levy, Mechanisation Intervention Funds, the PPP programme and the AEHE scheme. Other equipment sellers (such as maize sellers, rice reapers and threshers, power tillers, water pumps etc.) are also benefiting from the intervention funds.
How mechanised is the Nigerian agric sector?
Nigerian agricultural sector is very low on mechanisation scale. Nigerian mechanisation status is less than 0.025Hp per Ha as against the FAO recommended 1.5Hp per Ha for Africa and other developing countries. In Nigeria, more than 70 percent of farm labour is provided by human power; over 20 percent is provided with draft animal power and less than 10 percent by mechanical power.
What are the challenges tractors operators and owners in Nigeria face?
Tractor owners and operators in Nigeria face numerous challenges which include: poor after sales service such as inadequate availability of spare parts, lack of skilled manpower to effectively operate, repairing and maintaining the farm machinery.
How true is the report that there are sub standard tractors and agric equipment in Nigeria and what can be done to stop this menace?
Despite the policy that requires first, the certification of all agricultural equipment and machinery imported into the country, before their suitability for operations in the country by the National Centre for Agricultural Mechanization (NCAM) in Ilorin, many state governments and individual farms and organisations have flouted this policy and went ahead to import inferior tractors and other equipment into Nigeria.
What can the government do to achieve industrialisation in the agric sector?
Government must in the interim, partner with at least 2 reputable tractor manufacturers to establish Complete Knocked Down (CKD) assembly plants, but in the long term encourage the design and manufacturing of indigenous tractors; implement the use of local tractors and other equipment.
What policy can the government formulate to attract youth into mechanised agriculture?
For youths to find agriculture attractive, the government needs to develop the agricultural mechanisation policy that will properly address all the issues related to machinery importation, local manufacturing, training, research and development, funding mechanisation activities from manufacture to the end user and easy access to mechanisation services.
The government is talking about diversification, what role can agriculture play in this process?
Agriculture holds great potential for the diversification of our economy, as it has abundant raw materials to boost industrial development in Nigeria and these include raw materials for foods and beverages, textiles, pharmaceutical industries, breweries and leather industries.
The Central Bank of Nigeria (CBN) has maintained a double digit Monetary Policy Rate (MPR) for sometime now, what impact is the CBN stance having on tractor operators’ ability to get loans from deposit money banks?
The Central Bank of Nigeria (CBN) double digit Monetary Policy Rate (MPR) is a big challenge to the development of mechanisation in Nigeria. It makes the cost of financing mechanisation very high and difficult to break even within normal operating period, despite the 40 percent Interest Draw Back (IDB) by The Nigerian Incentive Based Risk Sharing System for Agriculture (NIRSAL).
What can the Federal Government do to raise the bar in the agricultural sector?
Federal Government should provide Special Agric Mechanisation Intervention Fund (SAMIF) to be domiciled in deposit money banks that will also provide matching funds to provide loans at single digit interest rate for mechanisation. Government must create an environment that is conducive for farm machinery manufacturers to partner with Nigerian government in order to establish assembly plants and also provide special funds to institutions (Universities, Polytechnics and local manufacturers) to undertake research and development for local manufacture of agricultural machinery and implements.
What is the future outlook for agriculture in 2016 and beyond?
The fall of oil price can be seen as a wake up call for our government to diversify, and agriculture has a very high potential to raise the GDP, generate employment and reduce poverty. I see agriculture as the major income earner for Nigerian economy from 2016 and beyond.
JOSEPHINE OKOJIE