Mr Amos Omotosho is a tractor service provider based in Ijale Ketu in Ogun State. Each farming season he provides land preparation services to over 200 farmers in communities in Yewa North local council, and other parts of the state, in south west Nigeria. For over 28 years, owning a brand new tractor remained a far-fetched dream, as it was impossible for him to buy one due to its high costs. “I bought my first tractor, a ‘second hand’ tractor – 20 years ago for ₦13,000 (£52) and repaired it with an additional ₦20,000 (£800) before I could use it for ploughing the farm”, disclosed Amos recently. For Amos and others in the business of tractor service provision to farmers for a fee, it was far-fetched dream to buy or own a brand new tractor, they were more used to buying ‘second hand’ tractors resold to them by public sector agencies.
Amos explained that it was a nightmare working with an old, ‘used’, second-hand tractor as it broke down more often and led to loss of revenue and down time. He was also unable to meet demands, and farmers were made to wait for weeks without tractor services. It meant more downtime and less productive time on farm. But all this changed when Amos was able to purchase a brand new Mahindra tractor through the First Bank Plc., an innovative product, FirstTrac tractor lease finance. “I was elated when I learnt about the tractor leasing scheme at our meeting in 2009. I made up my mind to participate because it was an opportunity to purchase a brand new tractor for first time in 20 years as a tractor operator.” Amos became a proud owner of a brand new tractor giving him more productive time to work on his clients’ farms and more income. The product allowed him a repayment period spread over 24 months.
The product offer worked in partnership with Springfield Agro Ltd, the Nigerian distributors of Mahindra tractors brand, the Tractor Owners and Operators Association of Nigeria (TOOAN), a business membership organisation and the Central Bank of Nigeria (CBN) providing guarantee. Propcom Mai-karfi, a UKAid funded programme in Nigeria, facilitated the relationship between the partners in a bid to support a private sector led tractor market in Nigeria.
For the 10% equity contribution of ₦745,000 (£3,000) to qualify for the loan, Amos raised money by selling-off his ‘second hand’ old-used tractor, with additional funds from savings from the sale of maize and cassava from his farm. “I thought this was an opportunity to invest in a new tractor business, because it comes with greater dividends. I was convinced that a new tractor was a good investment and repayment was possible with discipline and commitment. I knew I would repay my loans”, says Amos. He works as a tractor mechanic and farmer in addition to a tractor operator to augment his income.
Amos was motivated by two factors to pay off his loan: (i) the desire to assume full ownership of the tractor, and (ii) his desire to see other tractor operators access the loans. “I was determined to repay my loan because I wanted to become the real owner of the tractor, and see others benefit from the leasing scheme if I am able repay my loan on schedule. I am happy that I am now a proud owner of a brand new tractor. It has enabled me to provider more efficient services to farmers I work with. There is a difference with owning a brand new tractor; it is not comparable with ‘second hand’ that frequently breaks down and stalls work.”
Moving from being the owner of a used tractor to a brand new tractor has changed the Amos’ business model; he can now provide more services to more people than ever before. “I am able to provide better service to more farmers as result of my brand new tractor. For instance in one hour, I am able to plough 1 hectare of farm land. It is better now than with an old tractor.”