Nigeria government seeks $1 billion loan to promote mechanized farming
The Federal government of Nigeria will be obtaining a $1billion loan from Deutsche Bank (DB), Brazilian Development Bank (BNDES) and Islamic Development Bank to promote mechanization of farming in the country.
The loans will attract a three per cent interest, to be repaid over a period of 15 years.
Mr Sabo Nanono, the Minister of Agriculture and Rural Development disclosed this at the inauguration of the Green Imperative Programme committee.
The Green Imperative Programme was launched by Vice President Yemi Osibanjo in January 2019. The programme emanated from the More Food International Programme which was initiated by Brazil to aid agricultural development around the world.
The programme aims at strengthening the productive capacity of smallholder farmers in African countries.
In Nigeria, it seeks to enhance agricultural mechanisation, specialised extension services and agro-processing in the 774 local government areas of the country.
“With this fund, the country is expected to purchase 10,000 units of tractors, 50,000 units of assorted implements and equipment for assembly in Nigeria,” Mr Nanono said.
He listed other expenditure for the loans as, “Training beneficiaries for over a period of 10 years, establishment of 780 service centres to aid smallholder farmers.”.
Mr Nanono said only seven tractors are available per 100 square metres in Nigeria, unlike in Kenya that has 700 tractors per 100 square metres.
The minister said Nigeria should have not less than 60,000 tractors, adding that mechanisation is the top priority for Nigerians.
He said the Central Bank of Nigeria (CBN) will receive the fund from DB and make it available to local banks at concessional rates to cover the working capital needs of the service centres for the first two years.
“It is particularly crucial for the sustainability of the project, it will also ensure the repayment of the loan to the two financing institutions,” he said.
According to Mr.Nanono, the Islamic Cooperation for the Insurance of Investment and Export Credit, (ICIEC) of the Islamic Development Bank and the Brazilian Guarantee and Fund Management Agency (ABGF) will provide insurance for the non-honouring of sovereign financial obligation.
The insurance will cover the total amount provided by the BNDES and other financial institutions. The ProEx Brazil programme credit line could provide interest rate equalisation for total financing that comes from BNDES.