Agricultural crops storage
Agricultural crops storage
Business Model Description
Construct and operate silos and storage facilities for crops that can be leased or operated directly.
Expected Impact
Improve food security and therefore reduce income losses by small and medium scale farmers, as well as benefit other actors in the food market.
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: Northern Province
Sector Classification
Food and Beverage
Development need
Agriculture dominates Rwanda’s economic growth, involving more than 70% of the population.(1) The sector also provides 91% of Rwanda's food supply and 70% of export revenues, and accounts for 32.7% of gross domestic product (GDP).(2)
Policy priority
Government policy aims to transform agricultural productivity, and achieve food security and related environmental actions.(3) The government also recognizes the importance of agricultural cooperatives, emphasizing them in its agricultural policy.(4)
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.(34)
Investment opportunities introduction
Agricultural performance needs to match rapid population growth, to feed the cities and provide rural employment.(5) Despite declining fertility rates, Rwanda's population is projected to grow significantly: from around 10 million to over 16 million by 2032.(1)
Key bottlenecks introduction
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.(34)
Food and Agriculture
Policy priority
The government recognizes agricultural storage as a key priority for agriculture development, as well as a way of overcoming hunger-related issues.
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.(34)
Agricultural Products
Pipeline Opportunity
Agricultural crops storage
Construct and operate silos and storage facilities for crops that can be leased or operated directly.
Business Case
Market Size and Environment
Only one-third of agricultural output could be stored in 2019.
In 2019, Rwanda produced 960,000 metric tons of cassava, wheat, rice, sorghum and maize.(9)
As of 2019, Rwanda's agricultural storage capacity was estimated to be around 316,050 metric tons.(10) This means that only one-third of agricultural output could be stored in a sector that is is highly dependent on seasonal production.
Indicative Return
> 25%
A regional case study of metal silos for maize found an estimated benchmark internal rate of return of up to 50%.(8)
The benchmark return on equity, based on cost of equity data for the subsector including a country risk premium is 17.2% - 21.2%.(11)
Investment Timeframe
Short Term (0–5 years)
Depending on size of the complex, the logistics and technology involved as well as materials used, it can take 2 months to 2 years for silos to be constructed, become functional and generate income. Positive cash flows are expected within 5 years.(12),(13),(14),(15)
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Volatile
Market - Highly Regulated
Impact Case
Sustainable Development Need
Rwanda is significantly off track to attain SDG 2 - Zero Hunger.(7)
In Rwanda, post-harvest food losses reach up to 40%, and are caused (among other factors) by inappropriate storage and packaging.(6)
The hunger gap must be addressed immediately by improving food supply and quality. Investments must be directed towards agricultural infrastructure.
Gender & Marginalisation
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.(34)
Expected Development Outcome
Reduced food waste, hunger and food insecurity
Improved distribution and value chains
Alleviated poverty levels due to a higher supply of agricultural products
Gender & Marginalisation
Investments could help female farmers by improving efficiency, enhancing access to markets, and increasing their revenues.
Primary SDGs addressed
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
2.3.2 Average income of small-scale food producers, by sex and indigenous status
34.9% (32)
USD 184.82 (33)
N/A
N/A
8.1.1 Annual growth rate of real GDP per capita
8.2.1 Annual growth rate of real GDP per employed person
3.57% (32)
3.7% (32)
5% (31)
N/A
12.3.1 (a) Food loss index and (b) food waste index
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Outcome Risks
Land clearing
Soil sealing and degradation e.g. by removing the topsoil upper layer to develop a strong foundation for silos, which affects soil-related ecosystem services.
Soil sealing and degradation may reduce soil water holding capacity (affecting flooding), and threaten soil biodiversity (sealing prevents recycling of dead organic material).(7)
Soil sealing and degradation may interfere with the carbon cycle (due to topsoil and vegetation removal).(7)
Impact Risks
Evidence risk because it may be difficult to track impact generated through this investment opportunity area given limited data availability
Impact Classification
What
Scaling up storage for agricultural output has positive outcomes because it improves food security, increases employment opportunities and reduces post-harvest losses.
Risk
Although the model is proven, exchange rate fluctuations and market price volatility can affect the business.
Impact Thesis
Improve food security and therefore reduce income losses by small and medium scale farmers, as well as benefit other actors in the food market.
Enabling Environment
Policy Environment
Strategic Plan For Agriculture Transformation 2018-24: This plan recognizes storage as one of the key pillars for the agricultural value chain and food loss reduction. The document indicates a need to scale up, modernize and improve the accessibility of storage facilities.(17)
Vision 2050: This policy outlines 'sustained food security and nutrition for all households and age groups' as one of Rwanda's basic development needs. Meeting that need requires investments in appropriate food storage infrastructure.(21)
Strategic Plan For Agriculture Transformation 2018-24: This policy focuses on increasing attractiveness of investment in the agriculture sector by promoting public-private partnerships (PPPs), especially targeting infrastructure investments.(17)
Financial Environment
Financial incentives: An allowance of 40% of the investment amount in new/used assets is provided if the amount invested is at least USD 44,000 and business assets are held for at least 3 tax periods. Grants and special capital access are available for investors who promote business and development in rural areas.(27)
Fiscal incentives: 50% corporate income tax reduction (to 15%) for agro-processing companies, accelerated depreciation rates, import duty exemptions for agricultural machinery, value added tax exemption on agricultural inputs and livestock material.(28)
Other incentives: Investors demonstrating capacity to add value and invest in the priority sector are offered greater incentives.(27)
Regulatory Environment
Law No 47/2012 of 14/01/2013 Providing Regulations on the Food and Pharmaceutical Products: This Act prohibits manufacturing, preparing, storing, packaging or keeping food products for sale without compliance with hygiene requirements.(22)
Law No.43/2013 of 16/6/2013 Governing Land in Rwanda: This Act determines the framework for allocating, acquiring, transferring, using and managing land in Rwanda.(23)
Annex 2 of the Ministerial Order 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations: This order provides the Rwandan building code with all construction standards and requirements.(24)
Building Faults and Administrative Sanctions Annex 4 of the Ministerial Order N° 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations: This order lists the sanctions that may be applied for breaching the regulations.(25)
Ministerial Order No 01/cab.M/09 OF 27/07/2009 Determining the Modalities of Constructing Buildings Providing Various Public Services to Ease the Access of Persons with Disabilities: This order defines terms and provides construction accessibility requirements for all public service buildings.(26)
Marketplace Participants
Private Sector
InspiraFarms, Bolloré Africa Logistics, SDV Bollore, ENAS, Sarura Commodities, African Development Bank, DOB Equity, International Finance Corporation (IFC)
Government
Ministry of Agriculture and Animal Resources, Rwandan Grains and Cereals Corporation, Rwanda Development Board, Rwanda Horticulture Development Authority (RHODA)
Multilaterals
World Bank, VestedWorld, United Nations Development Programme (UNDP), Food and Agriculture Organization of the United Nations (FAO)
Non-Profit
AgriProFocus Rwanda, Rwanda Youth in Agribusiness Forum (RYAF)
Target Locations
Rwanda: Eastern Province
Rwanda: Western Province
Rwanda: Northern Province
References
- (1) United Nations Development Programme (2020). Sustainable Development Report 2020. https://unstats.un.org/sdgs/report/2020/The-Sustainable-Development-Goals-Report-2020.pdf
- (2) 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
- (3) National Institute of Statistics of Rwanda (2014). RPHC4 Thematic Report: Labor Force Participation. http://www.statistics.gov.rw/publication/rphc4-thematic-report-labour-force-participation
- (4) World Bank (2020). Rwanda Food Smart Country Diagnostic. http://documents1.worldbank.org/curated/en/288911601302842762/pdf/Rwanda-Food-Smart-Country-Diagnostic.pdf
- (5) Food and Agriculture Organization of the United Nations. Decent Rural Employment. http://www.fao.org/rural-employment/work-areas/youth-employment/ica-programme/rwanda/en/
- (6) World Bank (2020). Rwanda Food Smart Country Diagnostic. http://documents1.worldbank.org/curated/en/288911601302842762/pdf/Rwanda-Food-Smart-Country-Diagnostic.pdf
- (7) Food and Agriculture Organization of the United Nations. Decent Rural Employment. http://www.fao.org/rural-employment/work-areas/youth-employment/ica-programme/rwanda/en/
- (34) 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
- (8) Regassa, S. (2014). Does it Pay to Invest in Post-harvest Management? An Ex-Ante Cost Benefit Analysis of Reducing Maize Storage Losses in Darimu Woreda, Ethiopia. https://www.shareweb.ch/site/Agriculture-and-Food-Security/focusareas/Documents/phm_regassa_cba_ethiopia.pdf
- (9) Regassa, S. (2014). Does it Pay to Invest in Post-harvest Management? An Ex-Ante Cost Benefit Analysis of Reducing Maize Storage Losses in Darimu Woreda, Ethiopia. https://www.shareweb.ch/site/Agriculture-and-Food-Security/focusareas/Documents/phm_regassa_cba_ethiopia.pdf
- (10) Allafrica (2019). Rwanda: Why Agro-Processing Factories Reject Local Maize Produce. https://allafrica.com/stories/201901220046.html]
- (11) PwC analysis based on Prof. A. Damodaran data, 2020.
- (12) International Silo Organisation (2020). Nothing works like a tower silo. https://silo.org/storage-methods/
- (13) Štaba, D., Blanda, M. and Dolaček-Alduk, Z. Organization and technology during construction of cement silo. https://www.irbnet.de/daten/iconda/CIB15859.pdf
- (14) Silos Cordoba (2019). Silos Córdoba has signed a contract for the construction of a grain terminal in Nigeria. https://siloscordoba.com/blog/new-projects/silos-cordoba-has-signed-a-contract-for-the-construction-of-a-grain-terminal-in-nigeria/
- (15) AgroMet (2015). Agrom Met silos provider. https://www.silos.com.pl/faq,64.html
- (16) Malabo Montpellier Panel (2016). Off The Ground: Investing In Rwanda's Agriculture Value Chains. https://www.mamopanel.org/resources/reports-and-briefings/ground-investing-rwandas-agriculture-value-chains-/
- (17) Ministry of Agriculture and Animal Resources (2018). Strategic Plan for Agriculture Transformation 2018‐24. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf
- (18) Willoughby, R. and Forsythe, L. (2012). Farming for impact – a case study of smallholder agriculture in Rwanda. Technical Report. Concern Worldwide.
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- (20) Smith, P., House, J. and Sobocka, J. (2016). Global Change Pressures on Soils from Land Use and Management. Global Change Biology, Wiley. https://hal.archives-ouvertes.fr/hal-01444070/document
- (21) 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
- (22) Republic of Rwanda. Official Gazette n° Special of 17/01/2013. http://extwprlegs1.fao.org/docs/pdf/RWA131821.pdf
- (23) Republic of Rwanda. Official Gazette no Special of 16/06/2013. http://gmo.gov.rw/fileadmin/user_upload/laws%20and%20policies/Law_N_______43-2013_of_16-06-2013_governing_land_in_Rwanda.pdf
- (24) Republic of Rwanda. Annex 2 of the Ministerial Order 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations. https://www.mininfra.gov.rw/fileadmin/user_upload/Annex_II.pdf
- (25) Republic of Rwanda. Building Faults and Administrative Sanctions is Annex 4 of the Ministerial Order N° 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations. https://www.mininfra.gov.rw/fileadmin/user_upload/Annex_IV.pdf
- (26) Republic of Rwanda. Ministerial Order No 01/cab.M/09 OF 27/07/2009 Determining the Modalities of Constructing Buildings Providing Various Public Services to Ease the Access of Persons with Disabilities. https://www.mininfra.gov.rw/fileadmin/_migrated/content_uploads/ITEKA_RYA_MINISITIRI_RIGENA_UBURYO_INYUBAKO__ZOROHEREZA____ABAFITE_UBUMUGA.pdf
- (27) Africa Legal Network (2015). Investment Guide - Rwanda. https://www.africalegalnetwork.com/wp-content/uploads/2015/12/Rwanda-Investment-Guide-2015.pdf
- (28) Rwanda Development Board (2015). The Law on Investment Promotion and Facilitation. https://rdb.rw/wp-content/uploads/publications/Investment%20Promotion%20Law%202015%20(Investment%20code)).pdf
- (29) National Institute of Statistics of Rwanda (2019). Seasonal Agricultural Survey - 2019 Annual Report. http://www.statistics.gov.rw/publication/seasonal-agricultural-survey-2019-annual-report
- (30) 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
- (31) Republic of Rwanda (2019). Voluntary National Review Rwanda 2019. https://sustainabledevelopment.un.org/content/documents/23432Rwanda_VNR_Document__Final.pdf
- (32) SDG Tracker (2021). Measuring progress towards the Sustainable Development Goals. https://sdg-tracker.org/
- (33) United Nations. Sustainable Development Goals. https://unstats.un.org/sdgs/indicators/database/