Florence Ugbem | May 30, 2022
Iorkumba Terfa owns several milling machines which he bought through a loan he received from the Adikpo Rice Millers Cooperative, of which he is a member. Members of the co-operative include those who own milling machines and those who sell milled rice in Adikpo. Mr. Terfa says that the rice millers must make daily, weekly, or monthly contributions equal to 30 per cent of their loans and rice sellers 35 per cent of the amount they intend to borrow from the co-operative. Co-operative members are strongly discouraged from defaulting on loans and encouraged to use the loan for the intended purpose. Members who receive loans must provide collateral and a two-month grace period to ensure they pay back the loans over time. Mr. Terfa says that the loan he acquired from the co-operative has opened a new chapter in his life because he is now able to support his family with the income from his rice mills.
It’s Thursday morning and Iorkumba Terfa has already opened the stall at his rice mill for business. The whir of rice mills and the sounds of heavy-duty vehicles transporting rice bran fill the air, forcing people to speak at the top of their voices.
It’s a busy day, and even the sand-filled harmattan winds cannot interfere with the activities at the rice mill. Local rice is especially popular because of an increase in the price of imported rice—which benefits the mill.
Mr. Terfa lives in Adikpo, about 150 kilometres from Makurdi in Nigeria’s Benue State. He has been a rice miller for over 22 years. He says, “Patronage has been very high at the rice mill because we’re in the Christmas season. We usually don’t witness this.”
Mr. Terfa owns several milling machines which he bought with a loan from the Adikpo Rice Millers Cooperative, of which he is a member. He explains, “Accessing loans from the co-operative has enabled me to acquire rice processing equipment such as the de-stoner, polisher, and packaging machines.”
He says: “We operate a revolving fund year-round in our co-operative. We make contributions so that members can access loans to help them boost their businesses. I have benefitted a lot because I used the loan to purchase rice milling machines.”
Members of the co-operative include those who own milling machines and those who sell milled rice in Adikpo. The milling machine owners and those who sell rice have their own separate associations, but one can choose to belong to both.
Mr. Terfa explains: “To be part of the co-operative and access loans, one can belong to any of the associations. He or she must also provide the name of a person who will be held responsible if the borrower defaults.” This person is called a “guarantor.”
Mr. Terfa says the rice millers must make daily, weekly, or monthly contributions equal to 30 per cent of their loans and rice sellers 35 per cent of the amount they intend to borrow from the co-operative.
He says, “You must specify what you want to invest in with the money before you are given the loan. Loans can be used to boost your business or to purchase milling machines.”
Co-operative members are strongly discouraged from defaulting on their loans and encouraged to use the loan for the intended purpose. The executive members of the co-operative supervise and monitor borrowers to make sure the loan is used wisely.
Members must also provide collateral to receive a loan. This could be land documents or other assets. If the borrower fails to pay back the loan, the collateral can be used to repay it. Sometimes this means that the borrower’s properties are confiscated and sold.
Mr. Terfa explains: “After purchasing the milling equipment, the borrower must submit the receipt for the equipment they purchased, and this receipt is returned only after the debt is cleared. Members must begin to repay the loan at an interest of 10 per cent after a one-month grace period.”
According to Mr. Terfa, in 2021, the co-operative provided loans to five members to purchase milling machines. The co-op also contributed money towards community services such as maintaining access roads in the area, which are used to transport rice.
Terundu Iorngurum is another rice miller in Adikpo and the chairperson of the Adikpo Rice Millers Association. The 52-year-old has more than 10 years’ experience in rice milling and has also benefitted from the co-operative’s loans.
Mrs. Iorngurum also sells rice. She says, “We sell a tin of rice at 7,000 Nigerian Naira (US $17). In a day, I sell about 300 tins. Three tins make a 50-kilogram bag of rice.”
Members repay loans in monthly installments. The co-operative gives those who receive loans a two-month grace period to ensure they pay back the loans. After that, they are considered to be in default. To ensure transparency and fairness for the members, co-operative executives are not allowed to access loans for themselves until they have served in their role for one year.
Mr. Terfa says that the loan he acquired from the co-operative has opened a new chapter in his life because he is now able to support his family with the income from his rice mills. He explains, “I have now completed building my house. I also pay my children’s tuition fees without any struggles.”
This resource was produced with support from Alliance for a Green Revolution in Africa (AGRA) as part of the Partnership for Inclusive Agricultural Transformation in Africa (PIATA).
Photo: Farmers use a rice miller to mill rice in the Dandume Rice Milling Cluster in Katsina, Nigeria. Credit: ©IFPRI/Ian Masias.