Financing remains a critical factor in farm machineryacquisition in Somalia
BY TSI TEAM
As Somalia tries to find its footing in agricultural development, farm mechanisation is proving to be a headache due to the high cost of machinery and lack of appropriate local technology.
One firm, Africa Tractor Company (ATCO), is among the few that have moved in to fill the gap and create a favourable environment for agriculture to thrive.
A dealer in farm machinery like tractors and their spare parts, ATCO started operating in Somalia in 1996 as a parts dealer. The company moved into dealing in second-hand tractors from Europe. Later, it grew into dealing in brand new tractors and spare parts from Turkey. According to Mr Said Abdul Kadir, ATCO’s business development manager, the need for financing is critical in the country’s agricultural sector.
The interest in farm machinery like tractors is high, except that the people in need of the machines cannot afford them.
“Most of the time, four or five farmers come together and purchase one tractor. This is one way of accessing the machinery. The cost is too high considering the purchasing power of the farmers,” he explains.
This hitch can be solved by financial institutions in the country. Banks can step in and offer leases or loans on some of the more expensive farm machinery. And so far, three banks Dahabshil Bank International, Salaam Somali Bank and Premier Bank have started to offer lease services to farmers on expensive machinery.
Things are made worse by the fact that the market for Somalia agricultural products abroad is weak. The security situation, even though improving, still makes agriculture in the country a bit cumbersome.Conditions differ. Areas such as the Lower Shebell are already in good state and are engaged in agriculture. Some regions with agricultural potential are still hindered by poor state of security.
Somalia currently exports very little to other countries. But most of that ‘little’ export is agricultural produce.
Livestock and crop products form the core of goods that are shipped out of Somalia. Marine products also add in, but most revenue comes from agricultural products.
“The reality at the moment is that the agricultural sector in Somalia is ready in many ways. We are experiencing peace, the land is available, the demand for agricultural product is here, and more importantly, the timing in terms of international openness is right,” concludes Abdul Kadir.