Affordable irrigation systems

Affordable irrigation systems
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Affordable irrigation systems
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Food and Agriculture
Business Model Description

Develop and provide low cost solar pump-based irrigation systems for smallholder farmers using a farmer-led irrigation model.

Expected Impact

Improved yields, increased cultivation and productivity, higher revenues and reduced risks are direct benefits, which ultimately lead to an intensified agricultural production.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
15% - 20% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
National potential for irrigation reaches almost 600,000 ha
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Clean water and sanitation (SDG 6) Life on Land (SDG 15)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12)
Country
Regions
  • Rwanda: Eastern Province
  • Rwanda: Western Province
  • Rwanda: Kigali
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
FB

Development need: According to latest data, half of Rwanda's working age population (49.3%) is employed in the agriculture sector.(1) Additionally the sector provides 91% of the food supply, 70% of export revenues and contributes to 32.7% of the country's gross domestic product (GDP).(2)

Policy priority: Rwanda's Strategic Plan for Agriculture Transformation 4 (PSTA 4) 2018-2024 identifies agriculture to be the backbone for sustained economic growth and a major factor in transforming Rwanda from a low income to a knowledge‐based, middle income economy.(3)

Gender inequalities and marginalization issues: Two-thirds (67.7%) of all professionally active females and less than half (43.2%) of men work in agriculture in Rwanda. 61% of men and women working in agricultural sector are engaged in subsistence agriculture. Only 39% of this group is engaged in market-oriented agriculture; fewer women (34.5%) than men (45.1%) are involved in market-oriented agriculture.(1)

Investment opportunities introduction: According to sectoral studies, cold storage can provide a return on investment in a short period. The studies suggest the probabilities of making profits are high in first four years (50%, 75%, 90%, 97% each year respectively).(4)

Key bottlenecks introduction: Rwanda’s agricultural land expansion is limited by severe constraints, and the growing population adds pressure on agricultural incomes and increases the risk of accelerating land fragmentation and soil degradation. It is crucial to accelerate industrialization and commercialization of agriculture, as well as improve land use.(5)

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
FB.1

Gender inequalities and marginalization issues: Providing modern inputs and information about appropriate post-harvest practices can increase women's economic empowerment. It is particularly important because women constitute 66% of all agricultural workers, yet have much lower access to technology and inputs than men.(9)

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Agricultural Products
FB-AG
Investment Opportunity Area

Affordable irrigation systems

Business Model

Develop and provide low cost solar pump-based irrigation systems for smallholder farmers using a farmer-led irrigation model.

Critical IOA UnitDescribes a complementary market sizing measure exemplifying the opportunities with the IOA.
National potential for irrigation reaches almost 600,000 ha

A national assessment of Rwanda's irrigation potential shows that the national potential for irrigation includes: runoff for small reservoirs (125,627 ha), runoff for dams (31,204 ha), direct river and flood water (80,974 ha), lake water resources (100,153 ha), groundwater resources (36,434 ha), marshlands (222,418 ha) (6).

Out of the average 5 plots per household, either none or only 1 plot is usually cultivated during dry seasons.(7) This signals the need for irrigation to cultivate all crops, increasing productivity, efficiency and ensuring food security.

Approximately 2.4 million farms have potential for irrigation (assuming the average household owns 5 plots of approximately 0.05 ha each, calculations based on references (7), (6)). The government’s target for land under small-scale irrigation is 2,000 ha per year.(8)

IRRDescribes an expected annual rate of growth of the IOA investment.
15% - 20%

Small-scale irrigation projects can achieve an internal rate of return (IRR) of 17% - 32%, while dam construction has an IRR of around 12%.(12)

Small-scale irrigation generally has a higher IRR than dam construction due to higher potential.(11)

Regional examples from Kenya suggest small-scale irrigation constructions achieve an IRR of approximately 30%, while dam constructions achieve a 7% IRR.(11)

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)

The median payback period is 9.5 years, based on 8 solar-powered irrigation pump projects in developing countries.(10)

Stakeholders indicated an investment timeframe for small-scale irrigation systems of 7 - 10 years.(14)

Depending on the size of the investment and the type of crops where the irrigation systems will be used, an investor in Rwanda indicated it is possible to generate revenue after 4 years.(15),(16)

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Capital - CapEx Intensive
Large construction and maintenance costs (9)
Market - Volatile
Market failures limit technology adoption, most commonly through experimental manipulation of markets for risk, credit, and information.(9)
Business - Supply Chain Constraints
Land and labor market failures reduce agricultural productivity by generating inefficient allocations of labor and land across farms. Thin labor markets may be a barrier to wider adoption.(9),(7)
Sustainable Development Need

Insufficient adoption of productive technologies is one of the key reasons for low agricultural productivity in Sub-Saharan Africa.(10)

On average, Rwanda receives insufficient rainfall for agricultural activities for one-third of the year.(12)

Introducing irrigation schemes enables horticultural production during dry seasons, boosting on-farm cash profits by 70%.(13) Profits increase by an estimated $435/ha on irrigated plots.(7)

Gender & Marginalisation

Women will benefit from improved irrigating, because they constitute 65.5% of the labour force in subsistence and 34.5% in market-oriented agriculture.(17)

Currently, women are usually responsible for bringing water for both agricultural and household needs.(18) If addressed, it would likely increase their wellbeing and allow them to focus on other additional tasks and value adding.

Expected Development Outcome

Increased agricultural yields

Improved sustainability of land use and reduced land degradation

Fewer constraints arising from slope and rainfall

Gender & Marginalisation

Improved farming conditions and income for female farmers

Increased revenues for smallholder farmers

Primary SDGs addressed
2 - Zero Hunger
Zero Hunger (SDG 2)

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

Current Level

USD 184.82 (35)

N/A

Target Level

N/A

N/A

6 - Clean water and sanitation
Clean water and sanitation (SDG 6)

6.4.1 Change in water-use efficiency over time

6.5.1 Degree of integrated water resources management

Current Level

Water use efficiency: USD 31.52/m3 (35)

35% (35)

Target Level

N/A

N/A

15 - Life on Land
Life on Land (SDG 15)

15.3.1 Proportion of land that is degraded over total land area

Current Level

12% (35)

Target Level

N/A

Secondary SDGs addressed
1 - No Poverty
No Poverty (SDG 1)
8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)
12 - Responsible Consumption and Production
Responsible Consumption and Production (SDG 12)
Directly impacted stakeholders
People
Smallholder farmers with stable and increased incomes
Gender inequality and/or marginalization
Female farmers as a critical workforce in the agricultural sector
Planet
Natural environment, reflecting greater productivity and less harmful agricultural practices
Corporates
Food markets and processing facilities, reflecting more stable agricultural supply
Public sector
Government with higher productivity in the agricultural sector
Indirectly impacted stakeholders
People
Citizens in general benefitting from reduced food insecurity
Outcome Risks

Aquifers, river systems and downstream groundwater depletion may be at risk due to increased water extraction as a consequence of irrigation activities.(19)

Waterlogging and salinization of soils (20)

Increased incidence of water-borne and water-related diseases (malaria, bilharzia) (20)

Potential impact on decline in fishery and wildlife habitat loss (20)

Gender inequality and/or marginalization risk: Risk of a need for resettlement or changes in the lifestyle of local populations (20)

Impact Risks

Execution risk if instalments are not delivered as planned

Unexpected impact risk given the impact of over-irrigation on soil

What

Investments in affordable power solar irrigation systems, which have the potential to impact smallholder farmers - including women - positively.

Who

Smallholder farmers, stakeholders involved in supply chain operations, citizens benefitting from reduced food insecurity.

Risk

Although the models are market proven, there is a possibility of negative environmental and social impacts, human health hazards, an financial incentives necessary to increase an initial uptake.

Impact Thesis

Improved yields, increased cultivation and productivity, higher revenues and reduced risks are direct benefits, which ultimately lead to an intensified agricultural production.

Policy Environment

National Agriculture Policy 2018: Developing a more efficient irrigation systems is one of the priorities for promoting sustainable water management for climate-resilience in farming and rural areas.(21)

Strategic Plan For Agriculture Transformation 2018-24 (PSTA 4): This plan focuses on facilitating private sector investment and supporting demonstration of technologies such as irrigation solutions. It identifies irrigation investments as one of the key factors for increased productivity and resilience of the agricultural sector.(22)

Vision 2050: This policy states in 2050 agriculture in Rwanda will be market-led and high-tech, driven by professional farmers with large farms on irrigable lands totalling about 600,000 ha, with an irrigation rate of 100% of irrigable land.(23)

Rwanda Irrigation Master Plan: This plan aims for a full, efficient and sustainable exploitation of both surface (runoff, rivers, lakes) and underground water resources by promoting irrigation. It states a need for government subsidies for agricultural credits and irrigation management transfer.(24)

Detailed Implementation Plan for the nationally determined contributions of Rwanda: This plan presents a need for irrigation and wastewater irrigation due to population growth and growing food consumption.(25)

Forward Looking Joint Sector Review. Fiscal Year 2019-2020: This document identifies irrigation as one of the key areas to monitor and report.(26)

Financial Environment

Financial incentives: A countrywide subsidy of 50% granted is to farmers, with funds earmarked to selected districts. The subsidy is provided by the Rwanda Agricultural Board to increase the use of small-scale irrigation technology by farmers. The Ministry of Agriculture facilitates subsidy through financial institutions.(22)

Fiscal incentives: Investors in the agriculture sector enjoy duty-free importation of all inputs. Agriculture equipment is exempted from tax.(29)

Other incentives: Investors demonstrating capacity to add value and invest in priority sectors, such as agriculture, are offered greater incentives. The government offers grants and special capital access for investors, who promote business and development in rural areas.(30)

Regulatory Environment

Organic Land Law 08/2005: This Act provides a framework for using and managing land, provides principles for governing the legality of land rights, enacts land commissions on national and provincial levels, and allows for land registration, allocation and leasing of state land and land rights transfer.(27)

Organic Law 04/2005 of 08/04/2005 - Modalities of Protection, Conservation and Promotion of Environment in Rwanda: This Act determines the modalities of protecting, conserving and promoting the natural environment in Rwanda.(4)

The Ministry of Agriculture (MoA) is the main body responsible for providing frameworks and resolving issues related to agricultural productivity.(6)

The Rwanda Water and Forestry Authority regulates issues related to managing water resources, as well as establishes policies to support the sector.(28)

Private Sector

RES Irrigation Ltd, Multiple Industries Ltd, Grekkon Limited, Ebony Enterprises Ltd

Government

Rwandan Ministry of Agriculture and Animal Resources (MINAGRI), Rwanda Development Board (RDB), Rwanda Agriculture and Animal Resources Development Board (RAB)

Multilaterals

OPEC Fund for International Development (OFID), World Bank (WB), European Investment Bank (EIB), African Development Bank (AfDB), KfW Development Bank, Food and Agriculture Organization of the United Nations (FAO), World Agroforestry Centre (ICRAF), International Fund for Agricultural Development (IFAD)

Non-Profit

German Corporation for International Cooperation (GIZ)

country static map
semi-urban
Rwanda: Eastern Province
The Eastern Province (along the entire eastern border) is mountainous, while the Central and Western regions (from the northern to the southern border) are hilly, creating major constraints for irrigation without access to the proper technology.(31) The rainfall is the lowest in the country's east, which is therefore the most vulnerable to dry-season droughts.(6)
semi-urban
Rwanda: Western Province
The Eastern Province (along the entire eastern border) is mountainous, while the Central and Western regions (from the northern to the southern border) are hilly, creating major constraints for irrigation without access to the proper technology.(31)
semi-urban
Rwanda: Kigali
The Eastern Province (along the entire eastern border) is mountainous, while the Central and Western regions (from the northern to the southern border) are hilly, creating major constraints for irrigation without access to the proper technology.(31)
Sector Sources
  • 1) National Institute of Statistics of Rwanda (2020). Labour Force Survey Trends August 2020 (Q3). http://www.statistics.gov.rw/publication/labour-force-survey-trends-august-2020q3 2) International Fund for Agricultural Development (2019). Country Strategic Opportunities Programme 2019 – 2024 for the Republic of Rwanda. https://www.gtai.de/resource/blob/45938/fe1c62c39e821a638471d69ef0ee5261/pro201904175029-data.pdf 3) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 4) Yilmaz, D.and Yilmaz, I.C. (2020). 'Comparative Cost Assessment of Cold Storage Plants and Natural Storage Structures for Potatoes', Potato Resources. https://doi.org/10.1007/s11540-020-09454-0 5) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 6) Republic of Rwanda (2010). Rwanda Irrigation Master Plan. http://apps.worldagroforestry.org/downloads/Publications/PDFS/B16738.pdf 7) Byiringo, E., Jones, M. and Kondylis, F. (2020). Impacts, Maintenance and Sustainability of Irrigation in Rwanda. International Initiative for Impact Evaluation. https://www.3ieimpact.org/sites/default/files/2020-03/IE112-DPW1.1085-Rwanda-Irrigation.pdf 8) Rwanda Water Portal. Hillside Irrigation. https://waterportal.rwb.rw/toolbox/471 9) Jones, M., Loeser, J. and Kondylis, F. (2020). Factor Market Failures and the Adoption of Irrigation in Rwanda. NBER. https://www.nber.org/papers/w26698 10) Jones, M.R., Kondylis, F., Loeser, J. A. and Magruder, J. (2019). Factor Market Failures and the Adoption of Irrigation in Rwanda. http://documents1.worldbank.org/curated/en/496531576687282363/pdf/Factor-Market-Failures-and-the-Adoption-of-Irrigation-in-Rwanda.pdf
IOA Sources
  • 11) International Food Policy Research Institute (2010). What Is the Irrigation Potential for Africa? A Combined Biophysical and Socioeconomic Approach. Discussion Paper 00993. http://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/2205/filename/2206.pdf 12) You, L., Xie, H., Wood-Sichra, U, Guo, Z. and Wang, L. (2014). 'Irrigation potential and investment return in Kenya', Food Policy, 47, 34-45. https://www.sciencedirect.com/science/article/abs/pii/S0306919214000712 13) Hartung, H. and Pluschke, L. (2018). The benefits and risks of solar-powered irrigation - a global overview. FAO. http://www.fao.org/3/i9047en/I9047EN.pdf 14) UNDP/PwC Stakeholder interviews in Kenya, 2020. 15) SunCulture (2020). Company profile and its investors public profile. 16) UNDP/PwC Stakeholders interviews in Rwanda, 2020. 17) National Institute of Statistics of Rwanda (2020). Labour Force Survey Trends August 2020 (Q3). http://www.statistics.gov.rw/publication/labour-force-survey-trends-august-2020q3 18) Energy4Impact (2018). New solar irrigation project to improve farmers’ livelihoods and food security in Rwanda. https://www.energy4impact.org/news/new-solar-irrigation-project-improve-farmers%E2%80%99-livelihoods-and-food-security-rwanda 19) National Geographic Society (2020). Environmental Impacts of Agricultural Modifications. https://www.nationalgeographic.org/article/environmental-impacts-agricultural-modifications/ 20) Food and Agriculture Organization of the United Nations (1997). Irrigation Potential In Africa: A Basin Approach. Rome: FAO Land and Water Development Division. http://www.fao.org/3/W4347E/w4347e00.htm#Contents 21) Ministry of Agriculture and Animal Resources (2017). National Agriculture Policy. https://www.minagri.gov.rw/fileadmin/user_upload/webstore/National_Agriculture_Policy_-_2018___Approved_by_Cabinet.pdf 22) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 23) Gatete, C. (2016). The Rwanda we want: Towards ‘Vision 2050’. https://www.minecofin.gov.rw/fileadmin/user_upload/Minecofin/Speeches/Hon_Gatete_Umushyikirano_Presentation_2016.pdf 24) Republic of Rwanda (2010). Rwanda Irrigation Master Plan. http://apps.worldagroforestry.org/downloads/Publications/PDFS/B16738.pdf 25) Michaelowa, A. (2017). Detailed Implementation Plan For The Nationally Determined Contributions (NDCs) Of Rwanda. Republic of Rwanda. https://environment.gov.rw/fileadmin/NDC/Nationally%20Determined%20Contributions%20%28NDCs%29.pdf 26) Ministry of Agriculture and Animal Resources (2019). Forward Looking Joint Sector Review. Fiscal Year 2019-2020. http://www.minecofin.gov.rw/fileadmin/templates/documents/NDPR/Joint_Sector_Review/Forward_Looking_JSRs/Forward_Looking_JSR_2019-20/Agriculture_FL_JSR_Report__2019-2020_Scan.pdf 27) Republic of Rwanda. Organic Law N° 08/2005 of 14/07/2005 Determining the Use and Management of Land in Rwanda. https://urbanlex.unhabitat.org/law/194 28) Rwanda Water and Forestry Authority. Water Laws and Policies. http://www.rwfa.rw/index.php?id=33 29) Africa Legal Network (2015). Investment Guide - Rwanda. https://www.africalegalnetwork.com/wp-content/uploads/2015/12/Rwanda-Investment-Guide-2015.pdf 30) Rwanda Development Board. Agriculture - Incentives for investors in the sector. https://rdb.rw/investment-opportunities/agriculture/#tab-1-3 31) The World Atlas. Maps of Rwanda. https://www.worldatlas.com/maps/rwanda 32) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press. https://dashboards.sdgindex.org/profiles/RWA 33) Republic of Rwanda (2019). Voluntary National Review Rwanda 2019. https://sustainabledevelopment.un.org/content/documents/23432Rwanda_VNR_Document__Final.pdf 34) SDG Tracker (2021). Measuring progress towards the Sustainable Development Goals. https://sdg-tracker.org/ 35) United Nations. Sustainable Development Goals. https://unstats.un.org/sdgs/indicators/database/ 36) Republic of Rwanda (2020). Nasho solar-powered irrigation project to boost productivity and improve lives. https://www.gov.rw/blog-detail/nasho-solar-powered-irrigation-project-to-boost-productivity-and-improve-lives