$1.1Bn Nig-Brazil tractor deal may destroy local tractor manufacturing drive


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By Codratus Godson

The FG may be happy over its $1.1Bn deal with Brazil for an agric mechanization revolution but they may not know the deal may rather wipe off the build-up of the local manufacturing capacity.


The recent deal opening the Nigerian tractor market to Brazilian manufacturers in a $1.1Bn loan deal has created panic within the Nigerian manufacturers who said the investments in recent years may be wiped off.

The manufacturers said they took loans to invest in local manufacture, taking cue from the encouragements from the Muhammadu Buhari presidency, only to be faced with a deal that would favour only foreign manufacturers. They fear that by the time Brazil dumps over 10,000 tractors in Nigeria with a loan facility of about three per cent interest, the ones produced in Nigeria without subsidy would crash and become an economic waste.

The manufacturers said the Buhari administration in the last tenure encouraged them with assurances of expanded markets. They say they expected the FG to work with local investors and manufacturers before bringing foreign products if there is any gap to fill.

Speaking in an interview in Port Harcourt, the president of the Rivers Entrepreneurs and Investors Forum (REIF), Ibifiri Bobmanuel, who is the CEO of BobTrack Tractors Nigeria Limited, regretted that the change of tone by the Buhari administration in the agric mechanization sub-sector, would spell doom for local players.

The tractor manufacturer said the mechanization revolution concept by the FG is laudable but argued that the team should have worked with local manufacturers to know what is needed and what the local industry can offer and how the government can boost the supply of tractors to know if foreign help and how much of it was needed.

Bobmanul warned that if local players are not incorporated into the deal, failure would still greet Nigeria in few years to come. He explained, saying if spares and other accessories are not readily available, the tractors would become idle and perish thereafter.

He urged the planners of the scheme which he described as laudable to broaden the scope for local players to come in, saying they would come in with local expertise to help the scheme. “Let the local players be part of the tractor to be acquired.”

Bobmanuel pointed to the Nigerian Content regulation and executive order that stipulated that such schemes must satisfy certain clauses which insist that attention must start with Nigerian manufacturers. “The reason why Africa fails repeatedly is because we forget the home solution in anything we want to do. We do not start any scheme from what we have and bring in what we do not have. Instead, we create a brand new scheme and dump it on the local resources and kill the local effort. When the foreign one crashes, the economy would have none of both.’

For instance, he said, a FG agency once brought in 500 tractors. “Ask for them now and you will find that these tractors have evaporated. This is because only 4-wheel tractors can survive in Nigeria, not 2-wheel ones which the FG agency flooded Nigeria with. We must understand that climates are not the same. Bobtrack has over $50m investment facility which runs in three phases’.

BusinessDay however gathered the FG may not have intended to harm the local manufacturing base in the deal with Brazil. The deal would secure cheap loans with which the Brazilians would set up local assembly in Bauchi, Nigeria, and flood the country with tractors backed with training of personnel.

The cache however is that the foreign funded tractors would lead to dumping and crash of the local tractor market. It would also dump foreign brands and designs that have usually failed in the past while destroying the locally manufactured ones that took over three years of research to come up with to suit Nigeria’s climate and soil.

Sources at the FG level however hinted that the local manufacturers may be included in any arrangement or bond that would allow them to also supply to the same pool and for integration that could make both brands to work well for the country. Others sources say the FG may not be happy to go ahead with a deal that is likely to dampen local manufacturing enthusiasm and investments.