Solar Powered Cold Storage
Solar Powered Cold Storage
Business Model Description
Construct solar powered cold storage containers for the storage of agricultural products via pay-for-use models. Increased cold storage results in less overall food waste with resulting income and environmental benefits (9).
Expected Impact
Achieve positive outcomes on farmer income, as well as decreased CO2 emissions through adoption of renewable energy sources as well as the decreased food waste.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
Disclaimer
UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.
The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.
Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
Country & Regions
- Sierra Leone: Countrywide
Sector Classification
Food and Beverage
Development need
Food security is a significant challenge in the country with 25-50% of the population facing some level of food insecurity (1). Despite the availability of fertile arable land, 75% remains uncultivated, and the country relies heavily (80% of foodstuffs consumed) on import (2). Farmers suffer from low yield and high cost of transport, as well as lack of access to financing. At the same time, agriculture is a critical part of the economy - providing many jobs and the largest portion of GDP (3). The fishery industry also suffers from overfishing, and illegal, unreported, and unregulated (“IUU”) fishing particularly by foreign fleets leading to sustainability challenges (4).
Policy priority
Food security and agriculture are a major focus for the government. Improvements have been made by development partners, national policies, and Apex Bank. The stated objective in the Mid Term National Development Plan includes policy interventions for improving financial access, better inputs, improved mechanization, promotion of research, and others (3). Environmental protection and sustainability are also considered. The Ministry of Agriculture and Forestry is focused on rice self-sufficiency, livestock development, crop diversification, and forestry management from a policy level.
Gender inequalities and marginalization issues
While women are proportionally more employed in agriculture, and there was a recent positive development with land reform so that women can now own land (5), there are significant inequalities in the value chain of higher value agricultural activities and women overall benefit less economically from this sector while also facing more challenges, such as lack of access to information and resources (6). Women are also more affected by malnutrition compared to men (6). In addition, agriculture is a major focus for all regions of Sierra Leone apart from the urban Freetown - which is far more developed than other regions. Rural areas are more marginalised overall with respect to food security, employment and health outcomes, despite being the main places where agricultural activities take place.
Investment opportunities introduction
Improving productivity and commercialization of the agricultural sector is a priority. The Agricultural Transformation Strategy plans to double production of rice, forestry, and livestock, as well as to increase the budgetary allocation to 10% to align with the Maputo Accord and attract external investment. Furthermore, in 2021 several policy shifts were announced by the Ministry of Agriculture and Forestry, aimed at increasing land under cultivation and improving yields through measures such as establishing a US$10 million agriculture credit fund to expand access to finance; e-wallet input delivery; mechanization promotion including through establishment of machine ring centers; and addition of e-extension services. The main opportunities seem to be in value added activities in processing, as well as various technological and mechanisation support activities to improve efficiency, yields, transport, market access and so forth (3).
Key bottlenecks introduction
Farmers suffer from low yield and high cost of transport, as well as lack of access to financing and insurance services. There is a low level of mechanisation and access to tools and equipment, such as irrigation (3). There have also been challenges with land ownership, especially for women (6). The fisheries industry also has a lack of infrastructure and value chain development (4). In terms of agro-processing, the level is low in the country, and there are only a few successful examples (3).
Food and Agriculture
Development need
Agriculture faces many challenges, including lack of mechanization and a high cost of production, lack of access to finance and insurance services, and lack of adequate storage facilities and processing, leading to more post-harvest losses. There is also a lack of access to improved seed, and the linkages between the manufacturing sector and primary sectors, such as agriculture, have been weak (3).
Policy priority
Agriculture is clearly stated as a major priority for the government in the Mid Term National Development Plan (3). In addition, the National Agricultural Transformation Strategy 2019-2023 includes more detailed plans, such as to double production of key crops (7). The Ministry plans for capacity building as well as a USD 10 million agriculture fund (3). There is also significant development agency support, such as from the FAO (8). The Government of Sierra Leone, through the Ministry of Trade and Industry (MTI), is implementing the Sierra Leone Agro-Processing Competitiveness Project with financing from the International Development Association (IDA) of the World Bank Group.
Agricultural Products
Pipeline Opportunity
Solar Powered Cold Storage
Construct solar powered cold storage containers for the storage of agricultural products via pay-for-use models. Increased cold storage results in less overall food waste with resulting income and environmental benefits (9).
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
Considering that the overall GDP of Sierra Leone is approximately 4 billion USD (11) and 60% of that is agriculture (3), the approximate size of the agriculture market overall is around 2.4 billion USD. Within this, approximately 20-30% of produce is lost due to post harvest losses (22), representing a value of 0.48 billion USD.
Globally, 14% of all food can be lost at postharvest due to many reasons, including lack of storage (12). In sub-Saharan Africa this can be as high as 50%. Assuming a mid-range 30% value given the context, the total value of food lost in Sierra Leone is estimated at 0.24 billion USD.
For cold storage technologies in sub-Saharan Africa alone, there is a potential market size of 7.4 million smallholder farmers (21). No approximations for Sierra Leone specifically are available.
Indicative Return
15% - 20%
The IRR for solar powered cold storage investments can be highly variable based on the exact produce being stored, the business and revenue model for the cold storage unit, and financing instrument. It is also context dependent: Data from Nigeria shows that cold trailers or blast freezers have better IRRs than a cold room for certain products (20). The IRR has therefore been estimated as 20-25%, being on the lower end of the shown rages, given the economic context of Sierra Leone.
Research on cold storage use in Nigeria found that there were "net increases in the share (%) of net revenues to gross revenues by 13 percentage points" (9), which speaks to the sustainability at farmer level as well.
Investment Timeframe
Medium Term (5–10 years)
Research from Nigeria found that profits were "sufficient to recoup the investment costs of USD 40,000 per cold-storage and interest rates in the order of 10 years even when interest rates are 7% per year" (9).
Although agricultural investments are usually longer term, in this case post-harvest loss technology can begin to vest immediately. Based on figures from AkoFresh and other online sources, it would cost about 5,000 - 8,000 USD per storage unit of 2.5 tonnes, and in Ghana they are charging 0.30 USD per day for 20 kg storage, and thus an income of 450 USD maximum per month is possible (10). On a per unit basis, again depending on type of exact model, payback periods in Nigeria also varied greatly, with the two closest models being 2-4 years (20).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Post harvest losses, estimated at 14% globally, and up to 50% in sub-Saharan Africa, (12) are a significant challenge and mean loss of income, lower food security, and also have an environmental cost. In Sierra Leone, post-harvest losses accounted for 20-30% loss of farm produce in 2015. The lack of adequate storage facilities also affects produce quality, reducing market value with negative implications for various parts of the value chain (22).
70% of households in Sierra Leone are farming households, with 40% of households getting at least 30% of their total income from farming. Farmer income figures are limited but the median household income in Sierra Leone is USD 765, and farmers have the lowest incomes on average (15).
The generation of clean energy in Sierra Leone is currently limited at 30% (3). Sierra Leone is also vulnerable to the impacts of climate change (4).
Gender & Marginalisation
Women are more often farmers in Sierra Leone, yet they see less financial gain, and also suffer disproportionally from malnutrition (6).
Expected Development Outcome
Solar powered cold storage is expected to improve post-harvest losses by 30-50%, per proxy cold storage data (23).
Solar powered cold storage can lead to increases in revenue of more than 400% and price increases over 100% in some cases (23).
Solar powered cold storage uses renewable energy as a power source, which improves environmental outcomes and reduces emissions.
Gender & Marginalisation
Cold storage allows for more flexibility and less time pressure on farmers and food processors, which can have beneficial impacts on inclusion of women, as it allows more flexible work times (23).
Primary SDGs addressed
2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.1.1 Prevalence of undernourishment
Proxy data of average per capita income in Sierra Leone of 500 USD in 2021 (14).
In 2020, the prevalence of undernourishment in Sierra Leone was 27% (26).
N/A
N/A
7.2.1 Renewable energy share in the total final energy consumption
The percentage of clean energy production is 30% (3).
According to the Medium Term National Development Plan, the government targets to increase the country’s capacity for renewable energy (solar and hydro) contribution to 65% by 2023 from the current 30% level (3).
12.3.1 (a) Food loss index and (b) food waste index
Post harvest food loss in Sierra Leone is estimated to be as high as 40% (27).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
Improved cold storage means better ability to sell more produce, but it could also add costs into agricultural value chains and thus increase costs to end consumers.
Increased need to bring produce to an intermediary place could increase transport requirements with resulting negative emissions.
Impact Risks
As the intention is to put solar powered cold storage directly within the first mile of agricultural value chains, the generally remote nature of such areas in Sierra Leone may mean difficulties in repairing solar panels or cold rooms in a timely manner. Adequate replacement parts would need to be ensured.
If cold storage is in place and works well but market access is limited or market information is limited, it may still not have the full effect on farmers' incomes.
Lack of awareness of the cold storage system on the part of the farmers would lead to less use. Proper education and awareness campaigns should be deployed.
Impact Classification
What
Cold storage of agricultural products using renewable energy leads to less food waste and positive outcomes on farmer income as well as reduced CO2 emissions.
Who
Smallholder farmers in the agricultural value chain benefit from improved storage, and therefore income opportunities. The general population enjoys greater access to produce, and the environment suffers lower impacts.
Risk
Difficulties with maintenance, as well as access to information on markets and overall awareness of cold storage may present challenges to achieving impact, if not addressed.
Contribution
Apart from its applications to the agricultural value chain, cold storage can also benefit other sectors, such as health sector with storage of vaccines and medicines. In addition, the use of solar power helps develop the adoption of renewable energy.
Impact Thesis
Achieve positive outcomes on farmer income, as well as decreased CO2 emissions through adoption of renewable energy sources as well as the decreased food waste.
Enabling Environment
Policy Environment
Medium Term National Development Plan (2019) (3) has both agriculture and energy as key policy areas. Within agriculture, there is mention of development of agricultural value chains as well as cold storage specifically for fishery sector and value chain improvements more broadly. For energy, there are targets to increase the country’s capacity for renewable energy.
National Agricultural Transformation Strategy 2019-2023 (7) plans to put agriculture at the centre of economic development and improve value chains, and support mechanisation and technology.
Renewable Energy Policy (2016) (33) and National Energy Strategic Plan (2009) (34) have objectives to increase access to modern energy supplies in off-grid areas for reduction of poverty. They also prioritize small-scale decentralized solar power supplies to meet the basic needs of lighting, refrigeration and media and information technology in rural areas, and calls for the development of a strategy, plan and mechanisms for rural electrification.
Financial Environment
Fiscal incentives: Any business registered in Sierra Leone and having at least 20% Sierra Leonean ownership shall be entitled to corporate tax exemption including exemption from corporate income tax plus 50% exemption from withholding taxes on dividends paid by agribusiness companies and complete exemption from import duty on agricultural machinery (26).
Financial incentive: The Apex Bank and its Community Banks established in key rural areas targets smallholder farming groups, and micro and small-scale entrepreneurs, including women and youths, for financing (27).
Financial incentives: The renewable sector in Sierra Leone is heavily supported by donors. Several grants are available to invest in alternative energy in Africa: The Sustainable Energy Fund for Africa (SEFA) is a multi-donor fund managed by AfDB that provides catalytic finance to unlock private sector investments in renewable energy and energy efficiency (including in green power systems that shift away from fossil fuel based power, such as irrigation normally would be) (30). The GEF Small Grants Programme also supports various solar projects, and has already funded a solar drip irrigation project in Sierra Leone (31).
Other incentive: The Sierra Leone Agribusiness Development Fund (managed by KPMG) was created to address financing and technical assistance challenges faced by agribusinesses that have plans to work with smallholder farmers in out-grower schemes (29).
Regulatory Environment
Sierra Leone’s Income Tax and Finance Acts include income tax exemptions from import duty on farm machinery (28).
The Finance Act 2017 provides duty exemptions on the importation of solar equipment that meets International Electrotechnical Commission (IEC) standards (35). The Finance Act of 2022 added the supply of solar power to the list of Goods and Services Tax zero-rated supplies (36).
The Fishery Products Regulations of 2007 list several requirements for spaces that freeze fish and fish related products. Most of these relate to specific hygiene conditions of such spaces such as requirements for easy cleaning. At the same time, the stipulations around requirements for safe storage of fish under cold conditions also means there is a strong market incentive for the fishery industry to invest in or procure from providers of cold storage (37).
Marketplace Participants
Private Sector
Freetown Cold Storage, Sierra Frozen Foods Inc, Solar Era Holdings, Easy Solar.
Government
Ministry of Agriculture and Forestry, Ministry of Fisheries and Marine Resources, Ministry of Health, Ministry of Trade and Industry, Ministry of Labour and Social Security, Ministry of Lands, Country Planning and Environment, Ministry of Finance and Economic Development, Ministry of Energy, The Electricity and Water Regulatory Commission, Environmental Protection Agency.
Multilaterals
International Fund for Agriculture Development (IFAD), Food and Agriculture Organisation (FAO), World Bank, Sustainable Energy for All, European Union (EU), UNOPS, African Union Development Agency, UNICEF.
Non-Profit
Non-Profit: BRAC International, UKAid, Africa Clean Energy Technical Assistance Facility, Engineers Without Borders, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) / Energising Development, Millennium Challenge Corporation (US), Welthungerhilfe, Oxfam, SEND Sierra Leone.
Public-Private Partnership
Power Africa (USAid led partnership) brings together companies, development partners and the US government to spur increased investment in the energy sector in Africa.
Target Locations
Sierra Leone: Countrywide
References
- (1) IMF. 2022. Sierra Leone: 2022 Article IV Consultation and Fifth Review.
- (2) International Trade Administration. 2021. Sierra Leone - Country Commercial Guide
- (3) Government of Sierra Leone. 2019. Sierra Leone’s Medium-Term National Development Plan 2019 - 2023.
- (4) Government of Sierra Leone. 2021. Updated Nationally Determined Contribution (NDC).
- (5) Government of Sierra Leone. 2022. Customary Land Rights Act.
- (6) FAO. 2018. Country Gender Assessment Series: National gender profile of agriculture and rural livelihoods, Sierra Leone.
- (7) National Agricultural Transformation. Strategy 2019-2023
- (8) FAO, Sierra Leone. Access through https://www.fao.org/sierra-leone/programmes-and-projects/ru/.
- (9) Takeshima et al. 2021. Solar-Powered Cold-Storages and Sustainable Food System Transformation. Evidence from Horticulture Markets Interventions in Northeast Nigeria. IFPRI Discussion Paper.
- (10) AkoFresh. Access through https://www.akofresh.com/
- (11) World Bank, Sierra Leone. Accessed through https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=SL
- (12) FAO. 2019. The State of Food and Agriculture: Moving Forward on Food Loss and Waste Reduction.
- (13) WFP. 2019. Draft Sierra Leone country strategic plan (2020–2024). Accessed from: https://executiveboard.wfp.org/document_download/WFP-0000106354
- (14) World Bank, Sierra Leone. Accessed through https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=SL
- (15) Sierra Leone Investment and Export Promotion Agency (SLIEPA), Invest in Sierra Leone - Incentives. Accessed through https://www.sliepa.gov.sl/invest-in-sierra-leone/all-incentives "16) DTU. 2017. Cold storage rooms for Sierra Leone farmers. Accessed from: https://www.dtu.dk/english/news/all-news/nyhed?id=008583CF-EB74-4AA2-AA52-D92094EE370A "
- (17) Swissinfo. 2009. Once "very promising", Sierra Leone struggles. Accessed from: https://www.swissinfo.ch/eng/once--very-promising---sierra-leone-struggles/7131594
- (18) UNICEF. 2022. Delivery of solar powered refrigerators to improve vaccine coverage in Sierra Leone. Accessed from: https://www.unicef.org/sierraleone/stories/delivery-solar-powered-refrigerators-improve-vaccine-coverage-sierra-leone
- (19) FreshPlaza. 2022. ColdHubs wants to expand beyond Nigeria. Accessed from: https://www.freshplaza.com/europe/article/9442747/coldhubs-wants-to-expand-beyond-nigeria/
- (20) USAID. 2022. Power Africa Nigeria Power Sector Programme: Productive Use Cold Storage Systems in Nigeria. Accessed from: https://pdf.usaid.gov/pdf_docs/PA00Z8X7.pdf
- (21) Lighting Global. 2022. Off-Grid Solar Market Trends Report 2022: State of the Sector. Accessed from: https://documents1.worldbank.org/curated/en/099235110062231022/pdf/P175150063801e0860928f00e7131b132de.pdf
- (22) Conteh et al. 2015. The determinants of grain storage technology adoption in Sierra Leone. Accessed from: https://www.cahiersagricultures.fr/articles/cagri/pdf/2015/01/cagri2015241p47.pdf
- (23) Shell Foundation. 2019. The cold chain opportunity: reducing postharvest losses and increasing market access for rural farmers. Accessed from: https://shellfoundation.org/feature_posts/the-cold-chain-opportunity/
- (24) Food and Agriculture Organisation. 2018. Sierra Leone Integrated Household Survey. Accessed from: https://www.fao.org/3/cc0136en/cc0136en.pdf
- (25) UNDP Stakeholder Consultations, April 25, 2023, May 10, 2023, and June 1, 2023
- (26) Word Bank Website. Accessed from: https://data.worldbank.org/indicator/SN.ITK.DEFC.ZS?locations=SL
- (27) WFP. 2022. Sierra Leone Annual Country Report 2022. Accessed from: https://docs.wfp.org/api/documents/WFP-0000147998/download/
- (28) SLIEPA Website. Available incentives in Sierra Leone. Accessed from: https://www.sliepa.gov.sl/invest-in-sierra-leone/all-incentives
- (29) KPMG Website. Accessed from: https://kpmg.com/ke/en/home/services/advisory/international-development-advisory-services/our-sectors-idas/agribusiness-sector/sierra-leone-agribusiness-development-fund.html
- (30) EEP Africa. https://eepafrica.org/
- (31) SGP The GEF Small Grants Programme Website. Accessed from: https://sgp.undp.org/spacial-itemid-projects-landing-page/spacial-itemid-project-search-results/spacial-itemid-project-detailpage.html?view=projectdetail&id=21584
- (32) Regional consultation workshop, Freetown, Sierra Leone. March 28, 2023.
- (33) Government of Sierra Leone. 2016. Renewable Energy Policy of Sierra Leone. http://www.energy.gov.sl/PR_Renewable%20Energy%20policy%20of%20SL_FINAL%20for%20Print.pdf
- (34) Government of Sierra Leone. National Energy Strategic Plan. 2009. http://www.ecowrex.org/system/files/repository/2009_energy_strategic_plan_-_min_ener.pdf
- (35) Sustainable Energy for All. Increasing Energy Access in Sierra Leone. March 2021. https://www.seforall.org/publications/increasing-energy-access-in-sierra-leone
- (36) ENS. Africa Tax in Brief. https://www.ensafrica.com/news/detail/5283/africa-tax-in-brief-
- (37) Government of Sierra Leone. The Fishery Product Regulations. 2007.