Irrigation systems and dams
Irrigation systems and dams
Business Model Description
Develop and distribute small-scale solar powered irrigation solutions and / or integrated systems with water dams.
Expected Impact
Enhance agricultural productivity and reduce impact of climate variability on food systems
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
- Ghana: Northern
- Ghana: Ahafo Region
- Ghana: Greater Accra
- Ghana: Upper East
Sector Classification
Food and Beverage
Development need
Agriculture accounted for 17% of gross domestic product (GDP) and 29% of total employment in 2019 in Ghana, and it constitutes most informal sector employment.(I) Total sales amounted to USD 13.2 billion in 2019, with estimated average growth of 5.6% between 2020 and 2025. Consumption was USD 10.4 billion in the same year and is estimated to grow at 4.9% between 2020 and 2025.(II)
Policy priority
Ghana's agricultural policy focuses on raising the productivity and value added in agriculture, via government initiatives such as Planting for Food and Jobs, and One Village, One Dam.(III)
Gender inequalities and marginalization issues
Women constitute the majority of agricultural employees and are most active in agro-processing and food distribution, and face numerous challenges. These challenges include poor access to land (female farmers own two times less land than their male counterparts) and credit (for every 100 men obtaining credit only 47 women do).(VI)
Key bottlenecks
Key sector challenges include poor farmer education and management skills, business atomization, poor supply chains, limited access to capital and inputs, lack of storage and poor handling practices, low access to information and information and communication technology (ICT) services, and an ageing farming population.
Agricultural Products
Pipeline Opportunity
Irrigation systems and dams
Develop and distribute small-scale solar powered irrigation solutions and / or integrated systems with water dams.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
Ghana suffers a housing deficit of 1.7 million units.
The estimated long term value of the irrigation equipment market is around USD 230 million.(17)
Drip irrigation is reported to increase the net income of vegetable farmers by USD 6000 for a USD 1000 - 1500 investment per acre. This is an attractive opportunity for farmers.(21)
The government is planning to expand irrigated land from 31,000 ha in 2014 to 100,000 ha by the end of 2020.(17) This leaves a substantial untapped market for further developments.
Indicative Return
> 25%
Providing water for corchorus and onion production with pump-tank-hose technology in northern Ghana has a reported internal rate of return of 45% - 47%.(19)
Providing small-scale irrigation in sub-Saharan Africa is reported to generate an internal rate of return (IRR) of 28%. The IRR for dams is around 12%.(20)
Investment Timeframe
Medium Term (5–10 years)
A similar investment in small-scale irrigation in Kenya had a timeframe of 7 - 10 years.(31)
Dam construction or integrated solutions have a total project investment timeframe of 10 years to generate a positive internal rate of return.(23) This timeframe allows for dam construction and required capital expenditure.
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Capital - Limited Investor Interest
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Most agriculture land in Ghana is rain-fed, which endangers productivity and food security. Rains are short and erratic in arid and semi-arid lands, particularly in the northern region with unimodal rainfall patterns.(13)
In 2018, only 0.036 million ha (of 4.7 million ha) of arable land were equipped for irrigation.(12). This result is significantly lower than the 1.9 million ha the Food and Agriculture Organization of the United Nations (FAO) estimated as having irrigation potential.(14)
According to studies, Ghana has one of the lowest percentages of irrigated land in Africa: only 1.6%, or 31,000 ha.(32)
Gender & Marginalisation
Women are the agriculture sector's key workforce. They are particularly affected by the unreliability of income due to reliance on rainfall.
Expected Development Outcome
Improve food security for the entire nation and nutrition at household level, increase agricultural value chain development, reduce agriculture vulnerabilities and reliance on rain, improve livelihoods of populations living in poverty
Increase income of farmers and agricultural growers, create new market opportunities and economies of scale, develop Ghana's agricultural supply chain, reduce price volatility
Higher levels of protection of biodiversity and the entire ecosystem
Gender & Marginalisation
Better living conditions that improve options to realise women's opportunities and support entire households
Primary SDGs addressed
2.2.2 Prevalence of malnutrition (weight for height >+2 or <-2 standard deviation from the median of the WHO Child Growth Standards) among children under 5 years of age, by type (wasting and overweight)
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
6.4.1 Change in water-use efficiency over time
6.5.1 Degree of integrated water resources management
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
Aquifers, river systems and downstream groundwater may be at risk due to increased water extraction for irrigation.(2)
Increased habitat loss of fishery and wildlife (6)
Increased incidence of water-borne and water-related diseases (Malaria, Bilharzia) (4)
Impact Classification
What
Construction of dams and small irrigation systems is likely to be positive because it contributes to increasing yields of farms and farmers' income.
Risk
The model is market proven. However, the lack of appropriate up-to-date policies and regulations, and soil degradation due to irrigation schemes may increase risks.
Impact Thesis
Enhance agricultural productivity and reduce impact of climate variability on food systems
Enabling Environment
Policy Environment
Medium-Term National Development Policy Framework: The government plans to expand and rehabilitate existing irrigation infrastructure and develop large-scale private and public irrigation schemes. The policy also aims to increase the amount of irrigated land to 100,000 ha by 2021.(III)
Investing for Food and Jobs: This policy dedicated USD 210 million and 245 million in 2020 and 2021 (respectively) to the second subprogram - Mechanization, Irrigation and Water Management. The government will develop the subsector through risk mitigation for investors, establishing Public-Private-Producer-Partnerships (PPPPs) and strengthening value chains.(V)
One Village, One Dam Initiative: This initiative aims to construct around 560 small earth dams and dugouts focusing on northern regions. In 2020, 339 were reported to be 90% -100% completed.(24)
Irrigation Policy 2011: This policy underlines the importance of decentralizing irrigation schemes and and engaging farmers in planning.
Financial Environment
Financial incentives: The Ghana Commercial Agriculture Development Project (GCAD) will channel funds to scale the investment in irrigation and rehabilitation of existing irrigation infrastructure.(30)
Fiscal incentives: Ghana offers a custom duty exemption for agricultural and industrial plant, machinery and equipment imported for investment purposes.(27) There is a 10-year 1% reduced corporate income tax rate (normal is 25%) for 'the interest or dividend paid or credited to a person on a qualifying investment in a qualifying venture capital financing company.(28)
Other incentives: The Ghana Commercial Agriculture Development Project (GCAD) auctions land for development to support participation in publicly funded irrigation schemes.(29)
Regulatory Environment
A comprehensive irrigation regulatory environment is yet to be fully developed. Ghana's National Irrigation Policy was developed in 2012. A USAID review found the policy and regulatory irrigation landscape is not supported by up-to-date regulations.(15)
Changes in the sector are gaining momentum, exemplified by modernization of the Ghana Irrigation Development Authority (GIDA). GIDA is responsible for establishing the standards for irrigation infrastructure and irrigation schemes.(15)
The Ghana Irrigation Development Authority (GIDA) answers to the Ministry of Food and Agriculture which is the highest regulatory body for agriculture. It develops policies and regulations for the sector.(25)
The Water Resource Commission is responsible for the use of water resources. It published the Dam Safety Regulation 2016, which described requirements for dams. It also provides drilling licenses and licenses for large-scale water connected activities (energy generation, aquaculture etc.).(26)
Marketplace Participants
Private Sector
Agrimat, Dizengoff, B-AGRIC, Ghana Green Irrigation & Landscaping LLC
Government
Ghana Irrigation Development Authority (GIDA), Water Resource Commission
Multilaterals
World Bank, Japan International Cooperation Agency, United States Agency for International Development (USAID), Millennium Challenge Corporation, International Fund for Agricultural Development, African Development Bank (AfDB), Food and Agriculture Organization of the United Nations (FAO)
Non-Profit
French Development Agency, Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Development (ACDI/VOCA)
Public-Private Partnership
Ghana Irrigation Development Authority, TechnoServe, Social Enterprise Development (SEND), Foundation, International Development Enterprises (IDE)
Target Locations
Ghana: Northern
Ghana: Ahafo Region
Ghana: Greater Accra
Ghana: Upper East
References
- (I) World Bank database. https://data.worldbank.org/ (II) IHS Markit. Comparative Industry Forecast Tables, Agriculture, ISIC Classification Rev. 4. (III) Republic of Ghana (2017). Medium-Term National Development Policy Framework: An Agenda for Jobs: Creating Prosperity and Equal Opportunity for All (First Step) 2018-2021. https://s3-us-west-2.amazonaws.com/new-ndpc-static1/CACHES/PUBLICATIONS/2018/08/23/Medium-term+Policy+Framework-Final+June+2018.pdf (IV) 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. (V) Ministry of Food and Agriculture (2018). Investing For Food and Jobs (IFJ): An Agenda for Transforming Ghana’s Agriculture (2018-2021). https://mofa.gov.gh/site/images/pdf/National%20Agriculture%20Investment%20Plan_IFJ.pdf (VI) Send Ghana (2014). Women and Smallholder Agriculture in Ghana - Policy Brief 2014. https://www.sendwestafrica.org/phocadownload/Women%20and%20Smallholder%20Agriculture%20in%20Ghana%20Policy%20Brief%20-%20Copy.pdf
- (1) Ghana Investment Promotion Centre (2017). Doing business in Ghana - To Know and Invest in Ghana.
- (2) National Geographic Society (2020). Environmental Impacts of Agricultural Modifications. https://www.nationalgeographic.org/article/environmental-impacts-agricultural-modifications/
- (3), (4), (5), (6) Food and Agriculture Organization of the United Nations (1997). Irrigation Potential In Africa: A Basin Approach. http://www.fao.org/3/W4347E/w4347e00.htm#Contents
- (7) Mwamakamba, S., Sibanda, L. and Pittock, J. (2017). Irrigating Africa: Policy Barriers and Opportunities for Enhanced Productivity of Smallholder Farmers. https://www.tandfonline.com/doi/full/10.1080/07900627.2017.1321531
- (8), (9), (10), (11) Braimah, C. and Agodzo, S. (2014). Challenges to Efficient and Effective Irrigation Water Management in Ghana – the Case of Bontanga Irrigation Project. http://iosrjen.org/Papers/vol4_issue4%20(part-2)/F04423441.pdf
- (12) FAOStat (2018). Land use. http://www.fao.org/faostat/en/#data/RL
- (13) Dakpalah, S.S., Anornu, G.K. and Ofosu, E.A. (2018). 'Small Scale Irrigation Development in Upper West Region, Ghana; Challenges, Potentials and Solutions', Civil and Environmental Research. https://core.ac.uk/download/pdf/234678688.pdf
- (14) Food and Agriculture Organization of the United Nations (2021). AquaStat. http://www.fao.org/nr/water/aquastat/data/query/results.html
- (15) USAID (2017). Review of the National Irrigation Policy, Strategies and Regulatory Measures for the Irrigation Sub-Sector of Ghana - Ghana Feed The Future Agriculture Policy Support Project (APSP). https://ghanalinks.org/documents/20181/0/Review+of+National+Irrigation+Policy/c15ccefc-9795-4b44-8cd9-246aefcddad1?version=1.1
- (16) Danquah, E.O. et al. (2020). 'Monitoring and Modelling Analysis of Maize (Zea mays L.) Yield Gap in Smallholder Farming in Ghana', Agriculture. https://www.mdpi.com/2077-0472/10/9/420/pdf
- (17) FAO Investment Centre (2014). Ghana: Irrigation market brief. http://www.fao.org/3/a-i4158e.pdf
- (18) International Water Management Institute (2012). Investing in Agricultural Water Management to Benefit Smallholder Farmers in Ghana, IWMI Working Paper 147. http://www.iwmi.cgiar.org/Publications/Working_Papers/working/WOR147.pdf
- (19) Feed the Future (2017). Innovation Lab for Small-Scale Irrigation: Ghana - Profitability and Economic Feasibility Analysis of Small Scale Irrigation Technologies in Zanlerigu and Bihinaayili, northern Ghana. https://www.agrilinks.org/sites/default/files/ilssi_technical_report_economic_anlayis_ghana_31may2017.pdf
- (20) Burney, J.A., Naylor, R.L. and Posel, S.L. (2013). 'The case for distributed irrigation as a development priority in sub-Saharan Africa', PNAS. https://www.pnas.org/content/110/31/12513
- (21) Feed the Future (2016). Drip Irrigation in Smallholder Markets: A cross-partnership study. https://s3.amazonaws.com/www.dripplus.org/Resources_Drip_Irrigation_in_Smallholder_Markets.pdf
- (22) International Food Policy Research Institute (2010). What Is the Irrigation Potential for Africa? - A Combined Biophysical and Socioeconomic Approach, IFPRI Discussion Paper 00993. http://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/2205/filename/2206.pdf
- (23) International Fund for Agricultural Development (2016). Economic and Financial Analysis of rural investment projects. http://www.fao.org/3/a-i6366e.pdf
- (24) FAAPA (Atlantic Federation of African Press Agencies) (2020). One-Village, One-Dam: 437 small earth dams at various stages of completion. http://www.faapa.info/blog/one-village-one-dam-437-small-earth-dams-at-various-stages-of-completion/
- (25) Ministry of Food and Agriculture (2021). Irrigation Development Authority. http://mofa.gov.gh/site/directorates/sub-vented-organization-soes/irrigation-development-authority
- (26) Water Resource Commission (2021). Water use regulations. https://www.wrc-gh.org/regulations/water-use/
- (27) Ghana Investment Promotion Center (2021). Investment Incentives and Guarantees. https://www.gipcghana.com/invest-in-ghana/sectors/75-forestry/315-investment-incentives-and-guarantees.html
- (28) Ghana Investment Promotion Center (202). Ghana incentives inventory. https://www.gipcghana.com/press-and-media/downloads/promotional-materials/33-ghana-incentives-inventory/file.html
- (29) World Bank (2017). Creating Markets in Ghana Country Private Sector Diagnostic. https://www.ifc.org/wps/wcm/connect/90fe56dd-58dc-4c22-8162-90889d6e9365/CPSD-Creating-Markets-in-Ghana-Nov-2017_v1.pdf?MOD=AJPERES&CVID=l.attQE
- (30) World Bank (2014). Fiscal Consolidation to Accelerate Growth and Support Inclusive Development: Ghana Public Expenditure Review. http://documents1.worldbank.org/curated/en/972961498157963462/pdf/Ghana-PER-FINAL-June-19-2017.pdf
- (31) UNDP/PwC stakeholder interviews, Kenya, 2020.
- (32) Abunga Akudugu, M., Salifu, M. and Kaunza-Nu-Dem Millar, K. (2019). 'Rising to meet the new challenges of Africa’s agricultural development beyond vision 2020: the role of irrigation investments for jobs and wealth creation', Invited paper presented at the 6th African Conference of Agricultural Economists, September 23-26, 2019, Abuja, Nigeria.