The private sector tractors service business just received a boost in Nigeria, with Sterling Bank Plc. joining the league of banks supporting a wholly private sector-led tractor market. Sterling Bank, one of the leading Nigerian commercial banks launched its new ‘Tractors Finance Acquisition Scheme’ product with 10 brand new tractors handed over to tractor service providers (TSPs) at a presentation ceremony on Thursday, 20 September 2012 in Abeokuta, Ogun State, south-west Nigeria.
The new financing product is targeted at increasing private sector investments in the agricultural mechanisation process in Nigeria. The TSPs provide land preparation services to millions of resource poor farmers in Nigeria, helping to increase farm productivity through reduced drudgery usually experienced when manual labour is deployed on the farm.
Sterling Bank is collaborating with two tractor vendors – SCOA Trac, a division of SCOA Nigeria Plc and sole distributors of the New Holland brand of tractors; and Springfield Agro Ltd., distributors of Mahindra tractors. The Tractors Owners and Operators Association of Nigeria (TOOAN), a trade association which promotes private sector investment in tractor service provision facilitates the scheme, while the Central Bank of Nigeria (through its Agricultural Credit Guarantee Scheme Fund) will provide 75% cover for the first ₦1 million on each tractor. The cost of the tractor is ₦4.9 million while each TSP deposited ₦960,000, representing a 20% down payment. Loan tenor under this scheme is 24 months.
Mr Modupe Ayodele Odunlami, a tractor service provider who received a new tractor at the event expressed his joy, adding that this was a dream come true, as he is now confident of providing farmers with better services. “We are happy that Sterling Bank has rolled out this product, I am happy to be a beneficiary. The new tractors will impact on livelihoods and incomes of farmers in Ogun and Oyo States and it will equally create a competitive market environment for us tractor service providers. More tractors mean timely services for farmers.”
Mr Kayode Komolu, the National Public Relations Officer of TOOAN had this to say: “The new product by Sterling Bank is a signal that Nigerian banks are paying more attention towards supporting private sector agricultural mechanisation process. This will spur TOOAN to strengthen advocacy for other banks for their buy-in into private sector tractors lease finance model to increase food production and farmers’ income. TOOAN is happy for the new partnership with Sterling as the bank is replicating past successes recorded under the pilot phase with PrOpCom. We urge other banks to develop more tractors lease finance products as it holds a huge market and is indeed profitable. We want to assure farmers that they will get better and efficient services with more new tractors available to work in the farms.”
Ogun State was represented at the public presentation by the Programme Manager, Agricultural Development Programme, Mr. Kunle Onasanya. Top officials of Sterling Bank, two tractors supplier companies, members of TOOAN and farmers associations in Ogun and Oyo States also attended.
TOOAN is a partner of Propcom Mai-karfi, having collaborated in First Bank of Nigeria’s FirstTrac scheme in 2010. The association has also worked with an additional two banks, Ecobank Plc and Access Bank Plc., both of whom had also launched products for tractors lease. A total of 72 tractors have so far been presented to the TOOAN members through Propcom Mai-karfi facilitated tractors lease finance.