Affordable irrigation systems
Affordable irrigation systems
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.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Rwanda: Eastern Province
- Rwanda: Western Province
- Rwanda: Kigali
Sector Classification
Food and Beverage
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)
Food and Agriculture
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)
Agricultural Products
Pipeline Opportunity
Affordable irrigation systems
Develop and provide low cost solar pump-based irrigation systems for smallholder farmers using a farmer-led irrigation model.
Business Case
Market Size and Environment
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)
Indicative Return
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)
Investment Timeframe
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)
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Volatile
Business - Supply Chain Constraints
Impact Case
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
2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
USD 184.82 (35)
N/A
N/A
N/A
6.4.1 Change in water-use efficiency over time
6.5.1 Degree of integrated water resources management
Water use efficiency: USD 31.52/m3 (35)
35% (35)
N/A
N/A
15.3.1 Proportion of land that is degraded over total land area
12% (35)
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
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
Impact Classification
What
Investments in affordable power solar irrigation systems, which have the potential to impact smallholder farmers - including women - positively.
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.
Enabling Environment
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)
Marketplace Participants
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)
Target Locations
Rwanda: Eastern Province
Rwanda: Western Province
Rwanda: Kigali
References
- (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
- (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