Selling spices and herbs at the local African market in Manzini, Swaziland, Kingdom of Eswatini Swazi

High-Value and Drought-Tolerant Crop Production

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High-Value and Drought-Tolerant Crop Production

Country
Sector
Most 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
Sub Sector
Most 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
Indicative Return
Describes 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).
> 25% (in ROI)
Investment Timeframe
Describes 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 Size
Describes 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.
< USD 50 million
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Zero Hunger (SDG 2) Responsible Consumption and Production (SDG 12)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Climate Action (SDG 13)

Business Model Description

Cultivate high-value and drought-tolerant crops, including Bt cotton, bananas, citrus and macadamia, to serve the domestic market, substitute imports, and supply raw material to the textile value chain.

Expected Impact

Enhance income generating activities for smallholder farmers and support import substitution in a sustainable manner.

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

Explore the country and target locations of the investment opportunity.
Country
Region
  • Eswatini: Shiselweni
  • Eswatini: Lubombo
  • Eswatini: Manzini
  • Eswatini: Hhohho
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
Eswatini is a food-deficit country, depending on imports for domestic demand (1). Total food imports reached 291,529 metric tons in 2020-21, declining by 20% due to interruptions in cross-border trade (26). 30% of the population is food insecure, with 70% involved in agriculture (3). Poor farming practices contribute to a 30-40% loss of annual produce (11).

Policy priority
Agriculture is identified as one of the five key growth sectors in the government's Strategic Roadmap (12). The key targets include eliminating hunger, halving poverty, strengthening value chains and develop a smallholder-led food economy (5), as well as import substitution and improved irrigation and infrastructure (3).

Gender inequalities and marginalization issues
Smallholder agriculture remains the backbone of rural livelihoods in Eswatini, with over 70% of the country’s people, 60% of whom are women, relying on subsistence and small-scale farming to support their livelihoods (6). Investments in agriculture is key to driving poverty alleviation and empower youth and women in rural areas (7).

Investment opportunities introduction
The government has proposed 21 projects worth E 5.362 billion (USD 352.7 M) for the agriculture sector in the Post Covid-19 Economic Recovery plan (3). Opportunities include improving water resource management, climate-smart agriculture, diversifying agricultural production, investing in pre- and post-harvest infrastructure and strengthening value chains.

Key bottlenecks introduction
Reoccurring droughts and flooding which is exacerbated by dependency on rainfed agriculture (3). A land tenure system that reduces security of smallholder farmers as a result of no land rights and encroachment of settlements and a lack of appropriate financing for smallholder farmers to afford basic inputs (6).

Sub Sector

Food and Agriculture

Development need
Agricultural productivity has decreased contributing to only 9% of GDP (2) due to dependency on rainfed agriculture and restricted access to technology and financing (5,8). Majority of infrastructure is owned by large scale farmers limiting access to value chains and infrastructure for smallholder farmers (4, 6, 7).

Policy Priority
The Swaziland National Agricultural Investment Plan (SNAIP) prioritizes investments to enhance agricultural productivity and climate resilience (4). Diversifying agricultural production for advancing sustainable livelihoods is also emphasized by the Zero Hunger Strategic Review and the Strategy for Sustainable Development and Inclusive Growth (SSDIG) (7, 8).

Gender inequalities and marginalization issues
Despite women making up 70% of agriculture labor force in Eswatini, gender inequality persists with women lacking access to land ownership, financing, inputs and means of production (6, 4). Agriculture development could reduce poverty as many rural households depend on it to support their livelihoods.

Investment opportunities introduction
Projects listed in the Covid-19 recovery plan include investing in climate-smart agriculture techniques and infrastructure and diversifying agriculture to include more high value- and drought tolerant crops (11). Investing in agro-processing and strengthening the value chain can minimize waste and develop smallholder farmers (4).

Key bottlenecks introduction
Persistent and reoccurring droughts prevent rain-fed farmers from producing sufficiently. High cost of agricultural inputs and a lack of financing opportunities restrict smallholder farmers from upscaling their operations, access to markets and diversification of value chains.

Industry

Agricultural Products

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

High-Value and Drought-Tolerant Crop Production

Business Model

Cultivate high-value and drought-tolerant crops, including Bt cotton, bananas, citrus and macadamia, to serve the domestic market, substitute imports, and supply raw material to the textile value chain.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

< USD 50 million

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

20% - 25%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Over 80,000 ha of land is under crop production

Eswatini's cotton output increased by 23% to 759 metric ton in 2018. Pineapple and banana production also grew over the same period (15).

In Eswatini, 1,151 ha of land was under banana production producing 6,857 tons, 1,974 ha under cotton production, 1,075 ha under pineapple production producing 30,982 tons in 2019 (15).

Eswatini produced a total revenue of E 25,952,642 (USD 1.7 million) in 2021 from the cotton industry (16).

Indicative Return

ROI
Describes an expected return from the IOA investment over its lifetime.

> 25%

According to the Sector Development Programme Agreement prepared by FAO on a total investment of E 202,86 million (USD 12 million), with state contributions of E 26,79 million and private sector contributions of E 176,07 million, the expected ROI for cotton in Eswatini is 78% (16).

Farmers adopting Bt cotton in Burkina Faso report 50% higher household profits compared to conventional cotton, despite the high costs associated with the Bt cotton seed (30).

Investment Timeframe

Timeframe
Describes 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)

FAO's Sector Development Plan Agreement signed with the Ministries of Agriculture, Finance, Economic Planning and Commerce, Trade and Industries calculates return on investment for crop production over a 5-year period (16).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - Requires Subsidy

High input prices and operational costs for smallholder farmers are not offset by the market price of cotton, necessitating subsidies for smaller operations (16).

Business - Business Model Unproven

Although the business model for Bt cotton is largely unproven, changing bio-safety legislation and recruitment of commercial farmers by the cotton board are prominent steps in expanding the market (16).

Business - Supply Chain Constraints

Macadamias are mainly being farmed by commercial farmers for exportation as a result of high input costs associated with the crop (15).

Market - High Level of Competition

Bananas produced in neighboring countries flood the Eswatini market as local banana prices per crate is higher than prices from the region (mostly South Africa and Mozambique) (15).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Agricultural production is largely split between large-scale commercial farms (predominantly sugar-cane) and rainfed smallholder subsistence farmers. Most subsistence farmers are classified as poor and do not generate sufficient income from their farming activities (18).

Eswatini imports the majority of high value agricultural commodities sold in the retail market as regional prices for commodities such as cotton and bananas still outcompete domestic prices (15, 17).

Extensive and recurring droughts highlight the need for increased production of drought tolerant, high-value crops such as Bt cotton (15).

Gender & Marginalisation

70% of Eswatini's population, most substantial among rural poor women, rely on subsistence farming to support their livelihoods, but do not generate any significant income from agriculture (6).

Expected Development Outcome

The farming system in Eswatini is largely subsistence-based. Smallholder farmers that practice subsistence farming have an opportunity to generate more income by converting to high-value crops (3).

High value crops are currently largely being imported to Eswatini. Investing in high-impact and high-value value chains increase Eswatini's capacity for import substitution and inclusive economic growth (17).

Production of drought tolerant high-value crops increase the country's food security, addressing the needs of 25% of the population who are food insecure and dependent on assistance (25).

Gender & Marginalisation

Women, youth and disadvantaged people living in rural areas that practice agriculture could be empowered through the adaptation of high-value crops that can strengthen agriculture's contribution to poverty reduction (14).

Investments to support the uptake of high-value crops among rural smallholder farmers could increase the productivity and socio-economic status of rural poor engaged in farming, 60% of which are women (6).

Primary SDGs addressed

No Poverty (SDG 1)
1 - No Poverty

1.1.1 Proportion of the population living below the international poverty line by sex, age, employment status and geographic location (urban/rural)

Current Value

58.9% of population live below the international poverty line (19).

Target Value

Reduce percentage of people living in poverty from 58.9% to at least 54% by 2021 (14).

Zero Hunger (SDG 2)
2 - Zero Hunger

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 Value

N/A

N/A

Target Value

The Government aims to double agricultural productivity and the income of small-scale farmers by 2030 (19).

N/A

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.1.1 Number of countries developing, adopting or implementing policy instruments aimed at supporting the shift to sustainable consumption and production

Current Value

N/A

Target Value

N/A

Secondary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Smallholder farmers enjoy greater increase income generating opportunities.

Gender inequality and/or marginalization

Poor and marginalized communities enjoy lower poverty and food insecurity levels thanks to high value crops.

Planet

The planet benefits from a lower environmental burden of agricultural activities thanks to diversification and lower usage of external inputs, such as pesticides and fertilizer.

Corporates

Farmers benefit from higher yields and diversified production, seed suppliers of horticulture and high-value crops take advantage of increased demand for cash crops from producers.

Public sector

The Government benefits as a contribution to its efforts to commercialize smallholder agriculture and boost economic growth by diversifying produce to meet regional and local demand and market opportunities.

Indirectly impacted stakeholders

People

The general population benefits from diversified foods available in the domestic market, having positive benefits on nutrition and food security levels (9).

Planet

Environment benefits from reduced burden on already strained water resources from crops that require less water and are drought-tolerant.

Corporates

Agri-businesses obtain opportunities to export crops either raw or processed to international markets through preferential trade agreements.

Outcome Risks

If the adoption of high-value and drought-tolerant crops is not managed carefully, especially among subsistence farmers, they may lead to crop failure which could endanger household food security levels.

Smallholder farmers may be outcompeted by large-scale commercial farmers that produce at higher and cheaper levels (16), which may lead to the reinforcement of existing inequalities.

Impact Risks

Smallholder farmers may not have access to adequate extension services and support nor enjoy sufficient access to credit, which may limit the uptake of the high-value crops and hence hinder the expected impact (15).

If high-value crops are produced for export instead of meeting domestic market needs, Eswatini's levels of food insecurity and dependency on food imports may remain unchanged.

If the production of high-value and drought-tolerant crops is hindered by climatic factors or poor farming practices (16), profitability levels may be too low to achieve the expected impact.

If supply chains are inefficient, farmers may not be able to fully benefit from the gains of high-value crops (12), lowering the expected impact.

Impact Classification

C—Contribute to Solutions

What

High-value and drought-tolerant crop production and processing leads to strengthening of agricultural value chains and enhanced international trade by producing agricultural products that are in high demand domestically and internationally.

Who

Smallholder farmers, rural populations and the planet enjoy greater and more sustainable production opportunities and market access from high-value and drought-tolerant crop production and processing.

Risk

While the model of high-value and drought-tolerant crop production and processing is proven, smallholder farmer support systems, target markets, climatic factors and farming practices, and supply chain inefficiencies require consideration.

How Much

High-value and drought-tolerant crop production and processing contributes to doubling small-scale farmers' income and productivity by 2030 (19), and increasing output of high-value crops including cotton, which rose by 23% in 2018 (15).

Impact Thesis

Enhance income generating activities for smallholder farmers and support import substitution in a sustainable manner.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

Ministry Of Agriculture Strategic Plan, 2018- 2023: Outlines the intention of Ministry of Agriculture to increase area under cotton production and to support smallholder producers to meet demand of local ginneries (20).

Swaziland National Agricultural Investment Plan (SNAIP), 2015: Investments in high-value crops, including conventional vegetables, baby vegetables, fruits, cotton and yellow maize, are highlighted as a key strategy for commercializing smallholder agriculture and boosting economic growth (4).

National Development Plan (NDP), 2019/2020: Identifies high value crops comprising of horticulture, vegetables, cotton variants and new fruits as opportunities for advancing agriculture and that regulatory frameworks are being developed to support export of high value agricultural commodities (18).

Financial Environment

Financial incentives: Government has implemented an input-subsidy programme for supporting smallholder farmers producing high-value crops (15). It has allocated E 42.2 million (USD 2.8 million) to cater for the subsidy programme with the goal of increasing number of beneficiaries to 15,000 (29).

Fiscal incentives: Government provides special deductions not to exceed 5% of taxpayer's taxable income and deductions of the expenditures, not exceeding 30% of the gross income derived from farming operating relating to erection of buildings used in farming operations not to exceed E 60,000 (USD 4,000) (21).

Fiscal incentives: Agribusiness is among the sectors applicable for the Developmental Approval Order (DAO), a corporate tax incentive for companies contributing to the country's development including a 10% corporate tax rate for 10 years and an exemption from withholding taxes on dividends, including for relevant crops (22).

Regulatory Environment

Commercialization of Agriculture Land Bill, 2019: Aims to increase the number of farmers with formal ownership and titles of the land for advancing commercial agriculture (15).

Biosafety Act, 2012: Regulates all genetically modified organisms (GMOs); it allowed for the first release of Bt cotton in 2018 (27).

Cotton regulation, 1967: Entails the constitution and functions of the National Cotton Board and its regulatory powers (28).

Pesticides Management Act, 2017: Seeks to regulate the importation, manufacture, exportation, distribution, sale and use of pesticides in order to enable people to obtain the benefits with minimal adverse effects on human, animals and the environment (5).

Marketplace Participants

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Private Sector

Artemis foods, Crookes Brothers, Kindbridge Mdzimba avocados & Vegetables, Nisela Farms, Vunisa Cotton, Ukwazi Macadamia, United Plantations, ENAU, United Plantations.

Government

Ministry of Agriculture, National Agricultural Marketing Board (NAMBoard), Eswatini Water and Agricultural Development Enterprise (ESWADE), National Cotton Board

Multilaterals

Food and Agriculture Organization (FAO), World Food Programme (WFP), International Fund for Agricultural Development (IFAD), European Union (EU).

Non-Profit

Taiwan Technical Mission, German Society for International Co-operation (GIZ), Eswatini National Agricultural Union, Small-Scale Farmers Associations, World Vision International, Cooperazione Per Lo Sviluppo Dei Paesi Emergenti (COSPE).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Eswatini: Shiselweni

Cotton, sweet potato and other high-value and drought-tolerant crops are grown in parts of the Shiselweni region (15, 23).
rural

Eswatini: Lubombo

Cotton, banana and other high-value and drought-tolerant crops are grown in parts of Lubombo, with United Plantations and Nisela farm located in the region (23).
semi-urban

Eswatini: Manzini

Manzini is regarded as the retail hub of Eswatini for agricultural produce and potential exists for increasing cotton production in the dry middleveld (15).
semi-urban

Eswatini: Hhohho

High rainfall and moderate temperatures in Hhohho are conducive for relative higher yields for a variety of crops (15).

References

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