The Minister of Agriculture and Rural Development, Sabo Nanono, says the federal government will obtain $1 billion from foreign banks to purchase farming equipment for local farmers in the country.

Mr Nanono disclosed this at the inauguration of the committee on the Green Imperative Programme on Friday in Abuja.

The banks are Deutsche Bank(DB), Brazilian Development Bank (BNDES) and Islamic Development Bank. He said the loans will be given at the rate of three per cent interest and will be repaid over a period of 15 years.

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 smallholders 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 funds, the country is expected to purchase 10,000 units of tractors, 50,000 units of assorted implements and equipment for assembly in Nigeria,” he 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.

The new proposed loan will add to Nigeria’s foreign debt which critics includinga former president, Olusegun Obasanjo, have said is becoming unsustainable.

Speaking on Nigeria’s debt portfolio, late last year, Mr Obasanjo said Nigeria is already borrowing to service existing loans.

“As at 2015, total external debt was about $10.32billion. In four years, our external debt grew to N24,947 trillion or $81.274 billion. To service this current level of indebtedness, we must commit at least 50 per cent of our foreign earnings, such a situation tells about an impending bankruptcy because no entity can survive while devoting 50 per cent of its revenue to debt servicing.”

“In 2018, total debt servicing cost took over 60 per cent of government revenue. As if this is not bad enough, we are currently seeking to add another $29.6 billion loan to our already overburdened debt portfolio. ”

“Our current budget, out of which we are spending 25 per cent to service debt is not our total earnings, a lot of it is also borrowing. We are borrowing to service what we have borrowed and yet we are borrowing more,” Mr Obasanjo said, warning that Nigeria risks bankruptcy.

Insurance cover for agric loan

According to the agric minister, 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.