Agricultural Irrigation Systems and Drainage Technology
Agricultural Irrigation Systems and Drainage Technology
Business Model Description
Invest in the establishment of affordable irrigation facilities and drainage infrastructures for the sustainable and inclusive intensification of agricultural production
Expected Impact
Provide a reliable food supply, support farmer livelihoods and reduce negative environmental impact and increasing access to water
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
- Tunisia: South-West
- Tunisia: Centre-West
- Tunisia: North-West
- Tunisia: Centre-East
Sector Classification
Food and Beverage
Development need
Tunisia has limited natural resources of water, soil and fisheries, and is also highly exposed to climate change, hindering food security. Degradation of land and water resources, desertification and loss of biodiversity, inappropriate use of pesticides and fertilizers, and lack of modernization prevent increase in added value with significant consequences on livelihoods. (1,2)
Policy priority
The 5-Year Development Plan (2016-2020) and National Climate Change Adaptation Plan are intended to boost agriculture's contribution to Tunisia's growth by increasing agricultural activity's adaptability and bolstering food security. (3,4) Stimulus programs are also suggested for agriculture since they employ 14.4% of the workforce and provide up to 10.1% of GDP (5).
Gender inequalities and marginalization
Rural women constitute the most vulnerable segment of farmers (6). Rural women contribute in various ways to their families' income, in addition to household chores, activities are primarily underpaid. Rural women encounter difficulties due to societal norms and gender-based prejudice, complicating their access to markets and services (3).
Investment opportunities introduction
In the first 11 months of 2021, 475.1 million TND (USD 164 million) of private agricultural investments were made, which shows a 26.5% increase compared to the same period of the previous year (7). Moreover, recent investment-related legislation places a premium on investor rights and provides incentives to attract investment.
Key bottlenecks introduction
COVID-19 severely affected agriculture, including input supply disruptions, challenges in vital sectors, marketing and supply disruptions, logistical issues, and border closures (8). Structural restrictions affect agriculture, including poorly organized value chains, restricted access to funding, and severe water scarcity paired with low soil fertility (3).
Food and Agriculture
Development need
Tunisia is one of the world's twenty poorest countries regarding water resources, with agriculture using more than 80% of its available water (8). It is thus critical to develop irrigation to avoid digging new wells in vulnerable regions and optimize surface water management within watersheds via small-scale catchment infrastructure (9).
Policy priority
Since water management is critical for agricultural growth and irrigation, and Tunisia is suffering from the depletion of its groundwater resources, the government is dedicated to promoting irrigation and drainage projects (10).
Gender inequalities and marginalization issues
Although Tunisia's agriculture is becoming increasingly feminized, women are still underrepresented in irrigators' groups and less so in agricultural production organization and water usage choices. In areas with a preponderance of patriarchal institutions, women's knowledge and experience in irrigated agriculture are not considered.
Investment opportunities introduction
The industry has recently been made more amenable to public-private partnerships (PPPs). Tunisia seems to be expanding its willingness to engage the private sector in water resource-related services. For example, the private sector controls 44% of irrigation systems in Tunisia. (12)
Key bottlenecks introduction
The challenges of sustainable irrigated agriculture are numerous: water governance and institutions; economic viability and financial balance of irrigated systems; social equity in land and water allocation; and engineering and hydraulic performance. These are all aspects that must be considered in light of the impacts of climate change (13).
Agricultural Products
Pipeline Opportunity
Agricultural Irrigation Systems and Drainage Technology
Invest in the establishment of affordable irrigation facilities and drainage infrastructures for the sustainable and inclusive intensification of agricultural production
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
The size of the drip irrigation systems market in the Middle East and Africa, estimated at USD 572 million annually by 2025, is expected to attract specialized industry players to the continent (16).
Indicative Return
10% - 15%
A comparable project in the same domain predicts an IRR of 14.9% (17).
Investment Timeframe
Medium Term (5–10 years)
Benchmark projects by DFIs in agricultural irrigation have investment timeframes of around 6 years (17).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Capital - Requires Subsidy
Capital - Limited Investor Interest
Market - Highly Regulated
Impact Case
Sustainable Development Need
According to the Agriculture Investment Promotion Agency (APIA), Tunisia has an average annual water supply of 4.8 billion cubic meters, 80% of which is utilized for agriculture. However, the World Bank reports that up to 40% of water utilized in agriculture is wasted owing to poor irrigation (21).
Total direct economic losses were estimated to be around TND 470 million (USD 164 million) due to under- and over-irrigation. This could have a significant impact on food security, water conservation, and sustainable production in Tunisia (22).
A variety of factors threaten Tunisia's environment. Notably, the nation is one of the most vulnerable countries in the world to water shortages (23). As a result, irrigation systems become even more critical.
Gender & Marginalisation
According to UC Davis, women in developing countries irrigate 100 square meters of vegetables by hand every day, hauling upwards of 1,300 pounds of water – even more during arid seasons (24).
Expected Development Outcome
Improving sustainable agricultural irrigation systems in Tunisia will help optimize water consumption in the industry, both reducing the amount of water used and the depletion of groundwater resources.
Improved irrigation systems would provide a stable water source for agriculture, reducing the effect of climate anomalies such as prolonged droughts.
Microirrigation is likely to assist farmers in adapting to climate change and reducing production volatility.
Gender & Marginalisation
Drip irrigation has transformed agriculture for women farmers worldwide, enabling them to boost yields without losing water-carrying capacity. Women are using drip irrigation to advance their status in the food chain and alleviate their responsibilities (24).
While workers are still required to transport water to the tanks, drip irrigation enables them to use less water more effectively, decreasing waste and boosting yields (24).
Primary SDGs addressed
6.4.1 Change in water-use efficiency over time
6.4.2 Level of water stress: freshwater withdrawal as a proportion of available freshwater resources
10.16 US dollars per cubic meter
96%
n/a
12.5%
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
n/a
n/a
12.2.1 Material footprint, material footprint per capita, and material footprint per GDP
n/a
n/a
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Indirectly impacted stakeholders
Gender inequality and/or marginalization
Planet
Corporates
Outcome Risks
Agricultural irrigation systems may result in job losses as the labor need decreases.
Drip irrigation may impose extra expenses on smallholder farmers, who would need to pay for new wells and related infrastructure.
Gender inequality and/or marginalization risk: Automation tend to result in job losses and thus might reduce female employment, which accounts for the majority of labor force in the sector.
Impact Risks
If farmers' needs and preferences are not well incorporated into the investment, the irrigation solutions may not be embraced and thus may not create the expected impact.
Availability of water resources and public water infrastructure are external factors that might disrupt the investment's ability to deliver the expected impact.
New irrigation and drainage technologies may cause unexpected impact risks.
Impact Classification
What
Positive results are likely to include reduction in water waste, better water availability for farmers, increased agricultural production, and less soil contamination and degradation.
Risk
While agricultural irrigation and drainage model is proven, farmers' engagement, local water infrastructure and new technologies require consideration.
Impact Thesis
Provide a reliable food supply, support farmer livelihoods and reduce negative environmental impact and increasing access to water
Enabling Environment
Policy Environment
Tunisia's 5-Year Development Plan (2016-2020) seeks to increase agriculture's contribution to the country's growth by ensuring the sustainability of natural resources and bolstering food security, among other goals (26).
The 2017 National Water Sector Report offers an overview of the sector in Tunisia. It assesses water resources, institutional structure, and efforts. The study is a tool for stakeholder engagement, emphasizing the necessity for technology transfer and PPPs in agriculture (26).
The 2011 National Strategy for Sustainable Drinking Water and Irrigation Systems aims to assist user associations in sustainable irrigation system management and facilitate private sector entry into the irrigation system maintenance business (26).
The 2007 National Strategy for Farm Sector and Ecosystem Adaptation to Climate Change recommends strategies to increase agricultural sector resilience. These incl. trading blue credits entail the exchange of water usage rights. Unused water rights may be sold to others (26).
The government launched the Irrigated Agriculture Intensification Project (2018-2024) to optimize the industry's water use. The initiative aims to enhance the irrigation infrastructure while strengthening institutional control and farmer training (21).
Financial Environment
Financial incentives: Tunisia offers a premium incentive that encourages foreign investors to pursue sustainable development; equal to 50% of the approved investment, up to a maximum of 300,000 TND (USD 104,000). This premium is given to environmentally responsible initiatives.
Fiscal incentives: For a period of 10 years, profits generated from agricultural direct investments are ultimately deducted from taxable income.
Other incentives: Imported equipment is exempt from customs charges and taxes. VAT and consumption taxes are waived on imported and locally purchased equipment. Registration fees paid on the transfer of agricultural land may be reimbursed upon request within a three-year period.
Regulatory Environment
Tunisia's 2014 Constitution guarantees the right to water. Water conservation and practical usage are both governmental and societal responsibilities.
The Investment Law n°2016-71 on September 30, 2016 allows for two bonus and incentive programs. Article 20 of provides for a first regime for national interest projects, while Article 19 provides for projects including direct investment activities.
Government Decree 2017-389 defines projects of national interest as those contributing to a national economic priority (incl. agriculture) and satisfy one of the following criteria: investment of 50+ million dinars; creation of 500 new employment each year for three years.
Marketplace Participants
Multilaterals
Food and Agricultural Organization (FAO), International Fund for Agricultural Development (IFAD), African Development Bank (AfDB), European Bank for Reconstruction and Development (EBRD), and International Finance Corporation (IFC).
Non-Profit
Tunisian Union of Agriculture and Fisheries (UTAP)
Public-Private Partnership
Africa Agriculture and Trade Investment Fund (AATIF)
Target Locations
Tunisia: South-West
Tunisia: Centre-West
Tunisia: North-West
Tunisia: Centre-East
References
- (1) The Republic of Tunisia, 2021. Voluntary National Review 2021. https://sustainabledevelopment.un.org/content/documents/279442021_VNR_Report_Tunisia.pdf+AY91:AY95
- (2) The Republic of Tunisia, 2019. Voluntary National Review 2019. https://sustainabledevelopment.un.org/index.php?page=view&type=111&nr=23372&menu=35
- (3) Minister of Agriculture, Water Resources and Fisheries. FAO 35th Regional Conference for the Near East. https://www.fao.org/3/cb1226en/cb1226en.pdf
- (4) Republic of Tunisia, 2018. Economic Recovery Plan 2019-2020. http://www.cae.gov.tn/wp-content/uploads/2019/08/Plan-de-relance-V-Finale-12-oct.pdf
- (5) French Development Agency, 2021. North Africa Regional Strategy 2021-2025. https://www.afd.fr/sites/afd/files/2021-03-02-49-37/strategie-regionale-afrique-nord-2021-2025.pdf
- (6) FAO, 2021. FAO supports a new startup that facilitates market access for small farmers and Tunisian artisans. https://www.fao.org/neareast/news/view/en/c/1413975/
- (7) APIA, 2021. 475.1 Millions de dinars d'investissements agricoles privés durant les onze premiers mois de l'année 2021. http://www.apia.com.tn/actualites/detail/179
- (8) SwitchMed, 2018. Tunisia. https://www.unido.org/sites/default/files/files/2020-01/SwitchMed%20Magazine%20-%20Tunisia.pdf
- (9) IFAD, 2019. Republic of Tunisia Country Strategic Opportunities Programme (COSOP) 2019-2024. https://www.ifad.org/en/-/republic-of-tunisia-country-strategic-opportunities-programme-2019-2024-1
- (10) FAO, 2017. Country Fact Sheet on Food and Agriculture Policy Trends. https://www.fao.org/3/i7738e/i7738e.pdf
- (11) KariaNet, ESDU, 2016. Women's informal groups and their impact on irrigated agriculture in Tunisia. http://www.karianet.org/uploads/daam/11521535548Womens%20informal%20groups%20and%20their%20impact%20on%20irrigated%20agriculture%20in%20Tunisia_Karianet_Daam_19.3.2018.pdf
- (12) Ecofin Agency, 2020. Tunisian govt plans $120mln agricultural investment in 2021. https://www.ecofinagency.com/public-management/2611-42097-tunisian-govt-plans-120mln-agricultural-investment-in-2021
- (13) FIPA, 2019. Investing in Tunisia: The Opportunity to Come.
- (14) Oxford Business Group. Government programmes and private investment boost efficiency and equity in Tunisia's olive oil segment. https://oxfordbusinessgroup.com/overview/green-shoots-government-programmes-and-private-investment-sector-improve-irrigation-and-boost
- (15) Startup Tunisia. https://startup.gov.tn/fr/database
- (16) Jeune Afrique, 2021. Agriculture de demain : le Burkina Faso à la pointe de la micro-irrigation. https://www.jeuneafrique.com/mag/1134757/economie/agriculture-de-demain-le-burkina-faso-a-la-pointe-de-la-micro-irrigation/
- (17) African Development Bank, 2017. PROJECT TO DEVELOP IRRIGATION SCHEMES THROUGH VALUE CHAIN DEVELOPMENT. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/TUNISIA_-_Project_to_develop_Irrigation_Schemes_through_Value_Chain_Development.pdf
- (18) Stakeholder Consultations held in 2021.
- (19) FTDES, 2020. Etude sur Les Petites Exploitations Agricoles en Tunisie. https://inkyfada.com/wp-content/uploads/2020/11/exploitations.agricolesFTDES.pdf
- (20) NABC, 2018. Tunisia Business Opportunity Report: Agriculture. https://nabc.nl/wp-content/uploads/2020/08/NABC-Tunisia-Report_FINAL.pdf
- (21) Oxford Business Group. Government programmes and private investment boost efficiency and equity in Tunisia's olive oil segment. https://oxfordbusinessgroup.com/overview/green-shoots-government-programmes-and-private-investment-sector-improve-irrigation-and-boost
- (22) Chebil et al, 2019. Estimation of the economic loss due to irrigation water use inefficiency in Tunisia. https://www.researchgate.net/publication/331286119_Estimation_of_the_economic_loss_due_to_irrigation_water_use_inefficiency_in_Tunisia
- (23) World Crunch, 2020. In Tunisia, A Digital Revolution For Agriculture Takes Root. https://worldcrunch.com/tech-science/in-tunisia-a-digital-revolution-for-agriculture-takes-root
- (24) NETAFIM, 2019. Empowering women in developing countries with Agritech. https://www.netafim.com/en/blog/how-innovation-in-agritech-is-empowering-women-in-the-developing-world/
- (25) National Geographic Society, 2020. Environmental Impacts of Agricultural Modifications. https://www.nationalgeographic.org/article/environmental-impacts-agricultural-modifications/ "26) UNDP, 2020. Engaging private sector in NDC implementation - Assessment of private sector investment potential for the water sector in coastal areas. https://www.undp.org/content/dam/LECB/docs/pubs-reports/undp-ndcsp-tunisia-private-sector-exec-sum.pdf?download "