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The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), along with its technical partner on agricultural mechanisation – Machines and Equipment Corporation Africa (MECA) has signed an agreement with the World Bank’s FADAMA III-AF programme to guarantee mechanisation of agricultural value chain in Nigeria.
Following the agreement signed on Monday in Abuja, FADAMA III-AF has entrusted its Agricultural Infrastructure, which includes mechanisation equipment, irrigation systems, and storage facilities in the hands of NIRSAL and MECA, through their joint mechanisation programme- the NIRSAL Comprehensive Agricultural Mechanisation Program (NCAMP).
NCAMP, a holistic mechanisation programme designed to address the low agricultural mechanisation was launched by NIRSAL in 2017 to enable it provide up to 75 percent guarantee for banks to release the total amount required to service and repair about 10,000 tractors annually for the next ten years in the country.
The project initiators hope that the project, if well implemented, could catalyse up to N1 trillion agriculture contribution to the nation’s annual GDP.
Speaking at the signing ceremony, Aliyu Abdulhameed, Managing Director/CEO of NIRSAL said FADAMA’s recognition of NIRSAL as a capable partner that would continue with the developmental activities FADAMA was commendable and raised the hope that the project would succeed.
NIRSAL is concerned that there are just approximately 6.5 tractors for every 100 square kilometres of arable land in Nigeria as against the global average of 200 tractors for every 100 square kilometres and is even more worried that most of the tractors which have gone bad are not being repaired despite the fact that the country’s need for mechanised farming.
“In financial terms, repairing 55,000 broken down tractors will cost Nigeria only N30 billion. Compare that with having to buy 55,000 new tractors which will cost Nigeria about N660 billion which is equivalent to $1.8 billion.
“You can see the trade-off here, so the smart thing is to repair what you have and put a lot of your mechanics, agriculture engineering students, operators to work, and you create an ecosystem that will learn how to put back together broken tractors.
“So there is a lot of multiplier involved, and you can imagine the reduction of the pressure of foreign exchange,” NIRSAL MD explained.
NCAMP comprises of 6 unique modules out of which FADAMA has chosen the Agricultural Equipment Repairs, Maintenance and Management Service Scheme (AEMS) which is based on a fee-for-service model. Under this arrangement, mechanisation equipment is also operated on a “rehabilitate/maintain, Operate and Transfer” (ROT) Business model.
The partnership is part of initiatives targeted at achieving sustainability and continuity of FADAMA III projects and infrastructure as the World Bank project approaches its official closing date of December 2019.
“NIRSAL is guaranteeing up to 75% percent of the front end value of every investment of financing under the scheme,” Abdulhameed explained, adding, “at 10,000 tractors per annum, we may have to continue working at that trend for the next 15 years for NIRSAL, for Nigeria to be able to catch up in terms of mechanisation. That 10,000 tractors is not child’s play, especially in a developing economy like ours”
On the farmers that were being targeted, he explained, that “the immediate target is the FADAMA registered farmers of over 300,000 and you can imagine the number of hectares involved.
“As FADAMA has done, so too will NIRSAL continue to support the growth and expansion of the Agricultural Value Chain as its mandate requires.”
Abdulhameed assured farmers under the FADAMA Federated Community Associations (FFCAs) that NIRSAL would continue to support them even beyond the provision of mechanisation services.
Tayo Adewumni, National Project Coordinator, FADAMA III said they had been able to acquire 46 tractors in 14 states and based on their experience in the last one year and lessons learnt, MECA with and NIRSAL can do a lot in building up the capacity of the federated farmers in the utilization of tractors.
“As a result of this, the agricultural practice we adopted will be more productive and at the end of the day there will be profit.
“So the essence is if FADAMA is closing by the end of this year, FADAMA federated community associations will be able to sustain all the investments that we have put in place across the 36 states and the FCT.”
He added that IB Gashinbaki, Global partner/CEO MECA had done the pilot and had successfully refurbished about 50 tractors, adding that they were going to scale to the phase one which is about 10,000 tractors.
“Now those 10,000 tractors, under the approved framework, are going to cost us N30 billion. Compare that to the quantum that we are losing,” he said.
Onyinye Nwachukwu, Abuja