Solar Powered Irrigation

Solar Powered Irrigation

Photo by Shutterstock / robertonencini

Solar Powered Irrigation

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).
15% - 20% (in IRR)
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 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Affordable and Clean Energy (SDG 7) Industry, Innovation and Infrastructure (SDG 9)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Climate Action (SDG 13) Gender Equality (SDG 5)

Business Model Description

Construct and maintain solar powered irrigation systems for farmers in order to increase the length of the growing season and improve productivity and income. The target group is mostly agricultural processors who would provide the systems to farmers in order to secure and improve their supply and thus generate revenue, but farmers could potentially buy their own systems as well if they had access to microloans or could get the systems on a pay as you go basis or similar.

Expected Impact

Increase farmer productivity and income, mitigate against the negative impacts of climate change, and achieve a positive result on renewable energy availability within the country.

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.

Read More

Country & Regions

Explore the country and target locations of the investment opportunity.
Region
  • Sierra Leone: Countrywide
Learn more

Sector Classification

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

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).

Sub Sector

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.

Industry

Agricultural Products

Pipeline Opportunity

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

Solar Powered Irrigation

Business Model

Construct and maintain solar powered irrigation systems for farmers in order to increase the length of the growing season and improve productivity and income. The target group is mostly agricultural processors who would provide the systems to farmers in order to secure and improve their supply and thus generate revenue, but farmers could potentially buy their own systems as well if they had access to microloans or could get the systems on a pay as you go basis or similar.

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 1 billion

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

Sierra Leone has approximately 5.8 million smallholder farmers, constituting 70% of the population, with minimal existing irrigation penetration.

Considering that the overall GDP of Sierra Leone is approximately 4 billion USD (10) and approximately 60% of that is agriculture (3), the approximate size of the agriculture market overall is around 2.4 billion USD. Since 67% of the total agriculture value is crops, the crop market is roughly 1.6 billion USD in value. Solar irrigation could be used by Sierra Leone's 5.8 million smallholder farmers with minimal existing irrigation potential (9) at scale, thus potentially accessing the entire agriculture market.

The global solar water pump market was estimated at USD 2.38 billion USD by Power for All (13).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

15% - 20%

Although data from Sierra Leone itself is limited with respect to solar irrigation investments, due to the nascent nature of the ecosystem, information from other Sub-Saharan African countries shows a case for IRRs of 20-50% (11, 12).

Data from investments in Sierra Leone and nearby countries in PayGo as well as solar pumps show IRRs at ranges of 9 to over 30% (15). Additionally, the blended cost of borrowing for a typical PayGo company in Africa is often as high as 18% or more (14).

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)

Although Sierra Leone specific data is limited, data from similar contexts shows that returns have been created in as little as 2 years at individual farmer level (11) while at the startup / facilitator level these have been mostly in the 5-10 year range for a range of solar investments (15), including in the Sierra Leone context although not for this exact model.

Ticket Size

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

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

While solar irrigation can present savings over diesel powered irrigation in terms of operating costs, it also does mean a higher upfront investment that many farmers cannot afford (16). A pay-as-you-go (PAYGO) or lease-to-own model can assist with this. At the same time when considering PAYGO models, the cost of capital is still high at 18% or more and this contributes to the low profitability of many such companies (14).

Market - Volatile

There are a range of challenges at the end-user level of smallholder farmers that need to be considered. These can include proper maintenance of solar irrigation systems as well as training and awareness on their use and maintenance (16).

Impact Case

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

Sustainable Development Need

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).

Farmers' livelihoods are particularly vulnerable to changes in rainfall due to climate change (4) and irrigation is underdeveloped in Sierra Leone (3), including since high upfront costs can be prohibitive (16).

The generation of clean energy in Sierra Leone is currently limited at 30% (3).

Gender & Marginalisation

Women in Sierra Leone are more often the farmers, yet see less financial gain, and also suffer disproportionally from malnutrition (6).

Expected Development Outcome

Solar powered irrigation can lead to increased crop rotations and yields that improve agricultural productivity by 30-50% (12, 17, 20).

Solar powered irrigation through deferred payment models such as PAYGO and lease-to-own can reduce cost barriers for farmers looking to add solar irrigation capacity to their farming operations (12, 16). It can also help mitigate the impacts of climate change directly through predictable water supply as well as indirectly, though not relying on diesel powered irrigation.

Solar powered irrigation increases the overall supply of clean energy in Sierra Leone, and in the future farmers could potentially sell spare capacity back into the grid or use it for other purposes and household power needs (21, 22).

Gender & Marginalisation

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.1.1 Prevalence of undernourishment

Current Value

National average income is USD 1,004 USD while median income is USD 765 in 2023 (23).

In 2020, the prevalence of undernourishment in Sierra Leone was 27% (30)

Target Value

N/A

N/A

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.2.1 Renewable energy share in the total final energy consumption

Current Value

The percentage of clean energy production is 30% (3).

Target Value

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).

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.4.1 CO2 emission per unit of value added

Current Value

Sierra Leone emitted 1.3 million tonnes of CO2 in 2021 (31), while its GDP in 2021 was 4.25 billion USD (32), resulting in a CO2 emission per unit value of 0.000306.

Target Value

Sierra Leone is targeting a 10% reduction in GHG emissions by 2030, and 25% by 2050 (4).

Secondary SDGs addressed

13 - Climate Action
5 - Gender Equality

Directly impacted stakeholders

People

Smallholder farmers benefit from improved productivity and thus income, as well as risk mitigation from the impacts of climate change.

Gender inequality and/or marginalization

Since women are heavily involved in agriculture, improvements in agricultural income will have a direct impact on them. People in rural areas will be better able to access mechanisation that would normally require grid access or diesel.

Planet

The environment benefits from reduced emissions as a result of adoption of climate smart technologies.

Corporates

Corporates in agricultural value chains benefit from improved access to primary agricultural products.

Public sector

The Government of Sierra Leone benefits from achievement of key policy aims around agricultural sector productivity and mechanisation, as well as through increased development of renewable energy sources.

Indirectly impacted stakeholders

People

Consumers of agricultural products benefit from improved hunger outcomes, farming communities benefit from better economic outcomes.

Outcome Risks

Improper management of water sources for irrigation can lead to challenges with water depletion, especially as concerns groundwater (24). However, it should be noted that Sierra Leone has abundant surface water sources, which should help mitigate this risk (28).

If not managed well, irrigation schemes have been shown to have negative impacts on inequality as women have less access to water, information and credit (24).

Impact Risks

Lack of proper ownership and training of the solar irrigation systems may result in improper maintenance and lack of sustainable use and results (16).

Poor access to replacement parts may result in solar irrigation systems stopping working (20).

If other agricultural productivity constraints are not addressed, such as limited training, poor infrastructure, limited inputs, and so forth, the benefits of irrigation alone may be limited.

Impact Classification

A—Act to Avoid Harm

What

Solar powered irrigation, especially via deferred payment approaches, can result in increased farmer productivity and income, as well as mitigation against the negative impacts of climate change, and a positive result on renewable energy availability.

Risk

Failing to plan for proper training and maintenance may limit the usefulness and sustainability of solar irrigation systems. In addition, if other productivity constraints are not addressed, impact may be limited.

Contribution

Solar irrigation has a net positive benefit on two sectors at the same time - namely both agriculture and renewable energy - helping both develop with resulting positive economic benefits.

Impact Thesis

Increase farmer productivity and income, mitigate against the negative impacts of climate change, and achieve a positive result on renewable energy availability within the country.

Enabling Environment

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

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 mechanisation 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 supporting mechanisation and technology.

Renewable Energy Policy (2016) (38) and National Energy Strategic Plan (2009) (39) 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

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) (35). The GEF Small Grants Programme also supports various solar projects, and has already funded a solar drip irrigation project in Sierra Leone (36).

Financial incentives: 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 (34). This is part of the IFAD supported Rural Finance and Community Improvement programme and helps ensure better access to finance for farmers including for mechanisation elements such as solar irrigation. Many other international grants and funds are focused on agriculture in Sierra Leone, with a key example relevant to solar irrigation being that of the Smallholder Commercialization and Agribusiness Development Project (SCADeP) run by GoSL but supported by World Bank (37).

Regulatory Environment

Sierra Leone’s Income Tax and Finance Acts include income tax exemptions from import duty on farm machinery, which solar irrigation systems are (33).

The National Water Resources Management Law 2017 introduced regulatory controls over water activities, in order to promote sustainable use of Sierra Leone’s water environment (including springs, streams, rivers, estuaries and groundwater resources) (40).

The Finance Act 2017 provides duty exemptions on the importation of solar equipment that meets International Electrotechnical Commission (IEC) standards (27). Finance Act of 2022 added the supply of solar power to the list of Goods and Services Tax zero-rated supplies. (28).

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Auto Smart Irrigation, Aptech Africa, Solar Era Holdings, Easy Solar.

Government

Ministry of Agriculture and Forestry, 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

World Bank, Sustainable Energy for All, European Union (EU), UNOPS, African Union Development Agency, International Water Management Institute.

Non-Profit

Foreign, Commonwealth and Development Office (UK), Africa Clean Energy Technical Assistance Facility, Deutsche Gesellschaft für Internationale Zusammenarbeit / Energising Development, Millennium Challenge Corporation (US), Welthungerhilfe, Barefoot College, Oxfam, Njala University.

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

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

Sierra Leone: Countrywide

Irrigation takes different forms and has different uses by agriculture types. However, while the use case for irrigation may vary across smaller regional location, it could be used across the country and all the provinces (28). At the same time, it mainly makes sense to use it in rural areas that are the main agricultural regions in need of irrigation (9), and thus exclude the mixed urban Western Area.

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.