Market Imperfections For Tractor Service Provision In Nigeria: International Perspectives And Empirical Evidence

Agricultural mechanization often accompanies agricultural transformation. In some countries in Africa south of Sahara (SSA), such as Nigeria, the mechanization process appears slow despite the declining share of the agricultural sector in the economy and employment. Knowledge gaps exist regarding this slow mechanization process, and filling these knowledge gaps is important in identifying appropriate policies on agricultural mechanization in Nigeria. In Nigeria, despite the scarcity of tractors, average horsepower and prices of tractors appear high. These patterns are different from the experiences in other parts of the world where initially tractor horsepower was often smaller, such as Asia, or farmers were better endowed with land and wealth, such as Latin America. In Nigeria, joint ownership of tractors is rare, and formal loans are often unavailable due to high transactions costs. IFPRI’s survey in Kaduna and Nasarawa states in 2013 suggested that the spatial mobility of tractors is generally low and the use of tractors is highly seasonal. There do not seem to be plausible explanations for the seeming dominance of large tractor use based on available information on prices and soils. Nevertheless, these patterns seem driven by the own initiative of the private sector rather than by government policies.