Association seeks single digit interest rate, extension of repayment plan on tractor loans
Abuja, April 9, 2019 Tractor Owners and Hiring Facilities Association of Nigeria (TOHFAN) has appealed to financial institutions to reduce to single digit, interest rates on tractor loans and extend its repayment period.
The National Chairman of the association, Alhaji Danladi Garba, made the appeal in an interview with the News Agency of Nigeria in Abuja on Tuesday.
He said that the commercial interest rate charged on tractor loans by most financial institutions currently stood at between 20 and 25 per cent while the repayment period was for three years.
Garba appealed for a repayment loan extension period of four to five years to enable tractor owners sustainably manage their businesses and repay the loans.
“Most of the financial institutions are charging us a commercial interest rate which is about 20 to 25 per cent rate and the tenure for the repayment is short, three years.
“This will not let us repay easily. The high interest and the cash flow that the tractor generates will not be sustainable for the business to continue.
“We are asking financial institutions to give us loan at a single digit and with four to five years repayment plan,’’ he said.
The national chairman said that the government through the Federal Ministry of Agriculture and Rural Development would support the association to procure and manage 400 tractors.
Garba noted that the support would come through a partnership between the Nigerian Agricultural Mechanisation and Equipment Leasing Company (NAMEL), John Deere and the association.
According to him, the procurement of more tractors would enable the association to meet the increasing mechanisation needs of farmers across the country.
“We have a programme with NAMEL, TOHFAN and John Deere for acquiring 1,000 tractors this year but we are starting with 400.
“We are to bring 20 per cent equity contribution and government through Federal Ministry of Agriculture and Rural Development will contribute 35 per cent and bank will bring 40 per cent lump amount with their interest.
“It is a sort of subsidy that is coming into mechanisation,’’.
Garba said the association, which was established in 2003, currently had 552 tractors with 1,423 members across the states.