Innovation Lab For Small Scale Irrigation

Innovation Lab For Small Scale Irrigation

Research highlight

Learning to use Integrated Decision Support Systems is critical to ensure food security and sustainable development in Ethiopia

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by Yihun Dile

The Feed the Future Innovation Lab for Small Scale Irrigation (ILSSI) recently marked a milestone toward its goal to support African scientists to become trainers on the Integrated Decision Support System (IDSS).

September 20-24, 2021, Harar, Ethiopia, at the Africa Center of Excellence for Climate Smart Agriculture and Biodiversity Conservation of Haramaya University.

Scientists from Bahir Dar University contributed to the first jointly implemented capacity development event at Haramaya University’s College of Medical and Health Sciences in Ethiopia on September 20-24, 2021. The training was hosted and organized by the Africa Center of Excellence for Climate Smart Agriculture and Biodiversity Conservation (ACE Climate SABC) and supported by the Feed the Future Innovation Lab for Livestock Systems (LSIL) at the University of Florida.

Dr. Jemal Yousuf, Haramaya University President, opened the training with a virtual address remarking that local capacity development in IDSS is critical to ensure food security and sustainable development in Ethiopia.

All photo credit to ACE Climate SABC communication office.
Group photo taken at the coffee break of the first day (September 20, 2021) of the IDSS local capacity development. All photo credit to ACE Climate SABC communication office.

The major focus of the capacity development initiative included training on the Soil and Water Assessment Tool (SWAT), Agricultural Policy Environment eXtender (APEX), and Farm Income Simulator (FARMSIM), as well as their integration.

Students and faculty at Bahir Dar University participated in previous trainings and received mentorship from Texas A&M scientists, leading to successful thesis papers and numerous peer-reviewed publications based on the use of the models. The aim was to strengthen capacity on the tools, such that Ethiopian universities and eventually public agencies would be able to apply the models effectively to monitor and plan for natural resource use in agriculture. In addition, ILSSI sought to ensure that Ethiopian scientists would take over the trainings on the models.

The training emphasized application of the tools to the livestock sector within agriculture and natural resource management. Participants received training on the individual models relating to their fields of expertise. On the final day, all the participants came together to practice the integration of the three models in groups. Such group practice facilitates exchange of knowledge and skills learned over the week, and it demonstrates to participants the value of IDSS to research, plan and monitor in agriculture and natural resources. The group activities provide an opportunity for participants to network and establish lasting scientific collaboration.

Photo taken at APEX individual session where Drs. Abeyou W. Worqlul and Tewodros Assefa are teaching.

The increasing interest in the IDSS tools was demonstrated by the diversity of participants’ organizations and professions. Government agencies (e.g., Environmental Protection Authority of Harari Region) and non-governmental agencies (e.g., World Vision) participated. Researchers, graduate students, and/or faculty were represented from the Ethiopian Agricultural Research Institute (EARI), Oromia Agricultural Research Institute, Mechara Agricultural Research Center, and universities including Addis Ababa University, Arba Minch University, Ambo University, Bahir Dar University, Debre Tabor University, University of Gondar, Haramaya University, Hawasa University, Selale University, Wolaita Sodo University, Wondo Genet College of Forestry and Natural Resource, and Wollo University. The 70 participants included 13 women scientists.

Dr. Yihun Dile facilitated a group session on September 24 where participants practiced integration of the three models.

As part of the training event, participants and trainers visited the ACE Climate SABC, Haramaya University research facilities and some notable sites at Haramaya University main campus. Trainers, trainees, and organizers got the opportunity to attend a university-wide research symposium, followed by an ACE Climate SABC dinner event during which participants received training certificates. Certificates of recognition were also awarded to the Feed the Future Innovation Lab for Small Scale Irrigation (ILSSI), trainers from the Texas A&M University and Bahir Dar University, and training organizers at Haramaya University. Final remarks were made by Prof. Mengistu Urge (ACE Climate SABC Leader and Vice President for Academic Affairs), Dr. Tesfaye Lemma (Vice President for Research Affairs), and Dr. Solomon Binor (University Board Member and Science and Research Affairs Director General at the Ethiopian Ministry of Science and Higher Education). Dr. Binor emphasized the importance of short-term capacity development for effective academic and research excellence in Ethiopia. All the speakers showed strong interest to continue the collaboration in research and capacity development activities.

Photo taken after a visit to the ACE Climate SABC at Haramaya University main campus.

The multi-partner training is the result of a longer-term collaboration between ILSSI, Bahir Dar University, and the Ethiopian Agricultural Transformation Agency (ATA). The ACE Climate SABC at Haramaya University was established through the financial support from The World Bank.

Group photo of trainers and training organizers taken at the closing ceremony of the IDSS local capacity development training at Haramaya University.

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This work was funded in whole or part by the United States Agency for International Development (USAID) Bureau for Food Security under Agreement # AID-OAA-L-15-00003 as part of Feed the Future Innovation Lab for Livestock Systems as well as under Agreement # AID-OAA-A-13-00055 as part of the Feed the Future Innovation Lab for Small Scale Irrigation. Any opinions, findings, conclusions, or recommendations expressed here are those of the authors alone.

New business models bring solar irrigation to Malian farmers / De nouveaux modèles commerciaux apportent l’irrigation solaire aux agriculteurs Maliens

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Researchers and businesses in Mali join forces to overcome challenges and make solar irrigation pumps available to smallholder farmers. Version Française ci-dessous.

More than two-thirds of the people living in Mali rely on rain-fed farming for food and income. But frequent dry spells and droughts threaten incomes and food security, eroding their livelihoods and increasing the risk of conflict.

Using irrigation technologies to supplement rainfall, both during dry spells and during the long dry season, could help safeguard farmers against weather-related shocks and boost their production. Because the price of solar photovoltaic panels has been rapidly decreasing in recent years, solar-powered pumps are emerging as a climate-smart, affordable irrigation technology suitable for production on over 4.4 million hectares. Malian farmers and the broader population could benefit from the opportunities of solar-powered irrigation, such as economic growth and improved nutrition.

However, the market for solar pumps in Mali is underdeveloped, which inflates prices and reduces access for smallholder and resource-poor farmers. That’s why the Feed the Future Innovation Lab for Small Scale Irrigation (ILSSI) is partnering with two solar energy companies to test and refine new, sustainable business models that can improve farmers’ access to finance and information, strengthen the distribution networks for solar pumps, and ultimately boost small scale irrigation.

Focal points in Mali with an EcoTech solar-powered irrigation pump. Photo: EcoTech Mali.

New financing models for inclusive solar irrigation

Following a competitive process, ILSSI has identified EMICOM and EcoTech Mali as two existing businesses with the expertise to develop new business models for solar-powered irrigation. ILSSI aims to help reduce the risks of these and other private sector companies as they invest in new finance products and distribution approaches to reach smallholder farmers, including women.

One central challenge for farmers is the initial cost of investing in solar pumps. Even if farmers are aware that these technologies exist, few of them can afford the up-front investment, explained Konimba Dembele, Manager of EMICOM. But businesses such as EMICOM and EcoTech Mali plan to offer finance products to help farmers manage pump purchases:

“In the coming months or even weeks this risk will be considerably reduced because the financial support of ILSSI has supported us in the establishment of payment facilities (PAYGO) in order to allow small producers, excluded from the traditional banking system, to pay the pump by credit,” said Dembele.

PAYGO is mobile money platform for asset-based finance and part of a sub-distribution model that offers farmers the option to start using a pump, while they make payments for it over time. EcoTech Mali is also developing a PAYGO-based financing option. PAYGO finance has enabled people across sub-Saharan Africa to access off-grid power solutions and is now being rolled out for solar-powered pumps. Both companies expect that the offer will allow more farmers to afford solar irrigation.

Farmer irrigating with the help of a solar-powered pump. Photo: EcoTech Mali.

Bringing the market to farmers

Another challenge is related to market reach: Smallholder producers are dispersed throughout Mali, many in remote areas with little infrastructure, and it is therefore difficult to reach farmers with information, to ensure that products are available, and to offer after-sales services.

The EMICOM team is looking to fill that gap by traveling into rural areas in Bamako, Koulikoro, and Sikasso to establish 17 sub-distribution points to raise awareness with farmers:

“Thus, the prospective caravans allow us to both advertise irrigation pumps and to communicate about our innovations in terms of financing and options of payment,” Dembele said.

EcoTech Mali is combining their PAYGO finance model with a village-based agent approach in Sikasso. Men and women local agents will demonstrate and educate farmers about solar pumps. The local agents will also be involved from marketing to finance through to after-sales services. This distribution model builds community-level capacity and offers employment, while expanding off-grid irrigation solutions.

Sub-distributors are trained on how to maintain the solar-powered pumps. Photo: EMICOM.

Dembele, of EMICOM, explained the benefits of bringing not only products, but finance, services and learning, to where farmers are:

“This is why the collaboration with ILSSI for the establishment and training of sub-distributors is very important to create this product availability and bring the after-sales service closer to customers, with local technicians learning the basic repair skills. In addition, it allows us to establish dynamic capacity building to increase their skills to be able to repair or even manufacture spare parts in Mali and thus reduce dependence on import of parts.”

A partnership that mitigates business risks

EMICOM and EcoTech Mali are working to bring solar irrigation to farmers, but creating a reliable, stable market for solar pumps and related services across Mali hinges on companies themselves being able to overcome business risks and establish viable ventures.

“When entering the small scale irrigation market, our main risk lies in the adoption of the technology by the farmers. Since we ensure the whole supply chain of the technology—purchase, import, stocking, and distribution—if the famers are not convinced and don’t buy the technology, then we will struggle to sell our stock,” said Olivier Starkenmann, a Founding Partner of EcoTech Mali.

Partnering with ILSSI helps alleviate this risk, he explained:

“Awareness raising is the key to show the benefit of such technologies. ILSSI’s collaboration is crucial since they share the costs of the social marketing efforts that must be done, and they will bring research that shows both the barriers and potential for this market. To ensure wide adoption by farmers, it is also important to add capacity building and complement the awareness with related topics, such as good practices in irrigation, on-field water management, and how to use solar energy.”

From innovation to long-term solution

Strengthening the solar irrigation supply market in Mali and ensuring that farmers can continue to benefit from small scale irrigation will require collaborative efforts in a few areas.

According to Starkenmann, development partners need to support both social marketing and capacity building with farmers, increasing their awareness of and ability to use the solar pumps, for example through projects that directly link with the products provided by local businesses.

Farmers are trained on how to install solar-powered pumps. Photo: EMICOM.

Starkenmann added that sharing the financial risks inherent in offering new financing models between different actors—such as micro-finance institutions, development partners, and businesses—could help incentivize others to enter the market.

Another approach to accelerating the expansion of solar irrigation is, according to Dembele, to help farmers increase their profits from irrigated production:

“Supporting producers to organize and bring products to the market will help make solar irrigation equipment profitable and therefore expand.”

Indeed, linking businesses providing solar irrigation pumps with both farmers who are interested in irrigating their crops and with other businesses interested in buying those irrigated crops is emerging as a promising approach to generating a robust, sustainable market system around solar irrigation. To support the development of such linkages, both EcoTech Mali and EMICOM will be invited to join ILSSI multistakeholder dialogues already established in Mali.

Finally, Dembele said, while the private sector can foster new innovations that meet local needs, advocating for public authorities to launch a national program in support of the solar irrigation supply chain would also be a significant step toward ensuring that solar irrigation and its benefits becomes accessible to all.

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De nouveaux modèles commerciaux apportent l’irrigation solaire aux agriculteurs Maliens

Des chercheurs et des entreprises au Mali unissent leurs forces pour surmonter les défis et mettre des pompes d’irrigation solaires à la disposition des petits agriculteurs.

Plus des deux tiers des habitants du Mali dépendent de l’agriculture pluviale pour leur alimentation et leurs revenus. Mais de fréquentes périodes de sécheresse menacent les revenus et la sécurité alimentaire, érodant leurs moyens de subsistance et augmentant le risque de conflit.

L’utilisation de technologies d’irrigation pour compléter les précipitations, à la fois pendant les périodes de courte and longue saisons sèches, pourrait aider à protéger les agriculteurs contre les chocs climatiques et à augmenter leur production. Etant donné que le prix des panneaux solaires photovoltaïques a rapidement diminué ces dernières années, les pompes à énergie solaire apparaissent comme une technologie d’irrigation adéquate face au climat et abordable, adaptée à la production sur plus de 4,4 millions d’hectares. Les agriculteurs Maliens et la population en général pourraient bénéficier des opportunités de l’irrigation à l’énergie solaire, en termes de croissance économique et de nutrition

Focal points in Mali with an EcoTech solar-powered irrigation pump. Photo: EcoTech Mali.

Cependant, le marché des pompes solaires au Mali est sous-développé, ce qui gonfle les prix et réduit l’accès pour les petits exploitants et les agriculteurs qui n’ont pas de moyens financiers. C’est pourquoi le Feed the Future Laboratoire d’Innovation d’Irrigation à Petite Echelle Innovation (ILSSI) s’associe à deux sociétés d’énergie solaire pour tester et affiner de nouveaux modèles commerciaux durables qui peuvent améliorer l’accès des agriculteurs au financement et à l’information, renforcer les réseaux de distribution de pompes solaires, et, en fin de compte, stimuler l’irrigation à petite échelle.

Nouveaux modèles de financement pour l’irrigation solaire inclusive

A la suite d’un processus concurrentiel, l’ILSSI a identifié EMICOM et EcoTech Mali comme deux entreprises existantes possédant l’expertise nécessaire pour développer de nouveaux modèles commerciaux pour l’irrigation à l’énergie solaire. L’ILSSI aidera à réduire les risques des entreprises du secteur privé alors qu’elles investissent dans de nouveaux produits financiers et approches de distribution pour joindre les petits agriculteurs, y compris les femmes.

Un défi central pour les agriculteurs est le coût initial d’investissement dans les pompes solaires. Même si les agriculteurs sont conscients de l’existence de ces technologies, peu d’entre eux peuvent aborder l’investissement initial, a expliqué Konimba Dembele, Gérant de l’EMICOM. Mais des entreprises telles que EMICOM et EcoTech Mali proposeront des produits de financement pour aider les agriculteurs à gérer les achats de pompes :

“Dans les prochains mois voire semaines ce risque sera réduit de façon considérable puisque l’appui financier de ILSSI nous a soutenu dans la mise en place de facilités de paiement (PAYGO) afin de permettre aux petits producteurs, exclus du système bancaire classique, de payer la pompe par credit,” a dit Dembele.

PAYGO est une plate-forme d’argent mobile pour le financement basé sur les actifs et fait partie d’un modèle de sous-distribution, qui offre aux agriculteurs l’option d’utiliser la pompe, pendant qu’ils effectuent des paiements au fil du temps. EcoTech Mali est entrain également de développer une option de financement basée sur PAYGO. Le financement PAYGO a permis aux populations de toute l’Afrique subsaharienne d’accéder à des solutions d’alimentation hors réseau et est entrain actuellement d’être déployé pour les pompes à énergie solaire. Les deux sociétés s’attendent à ce que l’offre permette aux agriculteurs de s’offrir l’irrigation solaire.

Farmer irrigating with the help of a solar-powered pump. Photo: EcoTech Mali.

Apporter le marché aux agriculteurs

Un autre défi est lié à la portée du marché : les petits producteurs sont dispersés dans tout le pays (Mali), beaucoup dans des zones/régions reculées avec peu d’infrastructures, et il est donc difficile d’atteindre les agriculteurs avec des informations, de s’assurer que les produits sont disponibles et d’offrir des services après-vente.

L’équipe EMICOM cherche à combler cette lacune en se rendant dans les zones rurales de Bamako, Koulikoro et Sikasso pour établir 17 points de sous-distribution afin de sensibiliser les agriculteurs :

“Ainsi, les caravanes de prospections nous permettent à la fois de faire connaitre les pompes d’irrigation mais aussi de communiquer nos innovations en matière de financement et de moyen de paiement,” Dembele a dit.

EcoTech Mali combine son modèle de financement PAYGO avec une approche d’agent local (agent basé au village) à Sikasso. Des agents locaux, hommes et femmes, présenteront et informeront les agriculteurs sur les pompes solaires. Les agents locaux seront également impliqués dans le processus du marketing au financement en passant par le service après-vente. Ce modèle de distribution renforce les capacités au niveau communautaire et offre des emplois, tout en développant les solutions d’irrigation hors réseau.

Sub-distributors are trained on how to maintain the solar-powered pumps. Photo: EMICOM.

Dembele, de l’EMICOM, a expliqué les avantages d’apporter non seulement des produits, mais aussi de financement, des services et de l’apprentissage, là où se trouvent les agriculteurs :

“C’est pourquoi la collaboration avec ILSSI pour la mise en place et la formation de sous distributeurs est très importante pour créer cette disponibilité du produit et rapprocher le service après-vente aux clients avec l’acquisition des bases techniques de l’irrigation par les techniciens locaux. De plus cela nous permet de créer une dynamique de renforcement des capacités de façon à les faire monter en compétence afin de pouvoir réparer, voire fabriquer des pièces de rechange au Mali et réduire ainsi la dépendance aux importations de pièces.”

Un partenariat qui atténue les risques commerciaux

EMICOM et EcoTech Mali s’efforcent d’apporter l’irrigation solaire aux agriculteurs, mais la création d’un marché fiable et stable pour les pompes solaires et les services connexes à travers le Mali dépend de la capacité des entreprises elles-mêmes à surmonter les risques commerciaux et à créer des entreprises viables.

« En entrant sur le marché de l’irrigation à petite échelle, notre principal risque réside dans l’adoption de la technologie par les agriculteurs. Puisque nous assurons toute la chaîne d’approvisionnement de la technologie – achat, importation, stockage et distribution – si les agriculteurs ne sont pas convaincus et n’achètent pas la technologie, nous aurons du mal à vendre notre stock », a déclaré Olivier Starkenmann, Fondateur Associé de l’EcoTech Mali.

Le partenariat avec l’ILSSI aide à atténuer ce risque, a-t-il expliqué :

« La sensibilisation est la clé pour montrer les avantages de telles technologies. La collaboration de l’ILSSI est cruciale car ils partagent les coûts des efforts de marketing social qui doivent être faits, et ils apporteront des recherches qui montrent à la fois les barrières et le potentiel de ce marché. Pour assurer une large adoption par les agriculteurs, il est également important d’ajouter le renforcement des capacités et de compléter la sensibilisation avec des sujets connexes, tels que les bonnes pratiques en matière d’irrigation, la gestion de l’eau sur le terrain et l’utilisation de l’énergie solaire. »

De l’innovation à la solution à long terme

Le renforcement du marché de l’approvisionnement en irrigation solaire au Mali et la garantie que les agriculteurs peuvent continuer à bénéficier de l’irrigation à petite échelle nécessiteront des efforts de collaboration dans quelques domaines.

Selon Starkenmann, les partenaires de développement doivent soutenir à la fois le marketing social et le renforcement des capacités des agriculteurs, en augmentant leur sensibilisation et leur capacité à utiliser les pompes solaires, par exemple par le biais de projets directement liés aux produits fournis par les entreprises locales.

Starkenmann a ajouté que le partage des risques financiers inhérents à l’offre de nouveaux modèles de financement entre différents acteurs, tels que les institutions de micro-finance, les partenaires de développement et les entreprises, pourrait aider à inciter d’autres à entrer sur le marché.

Farmers are trained on how to install solar-powered pumps. Photo: EMICOM.

Une autre approche pour accélérer l’expansion de l’irrigation solaire est, selon Dembele, d’aider les agriculteurs à augmenter leurs bénéfices de la production irriguée :

“Un accompagnement des producteurs dans l’organisation du marché pour la production, la collecte jusqu’à leur écoulement sur le marché contribuera à la rentabilisation des équipements d’irrigation solaire et donc à leur expansion.”

En effet, mettre en relation des entreprises fournissant des pompes d’irrigation solaires avec les agriculteurs intéressés par l’irrigation de leurs cultures et avec d’autres entreprises intéressées par l’achat de ces cultures irriguées apparaît comme une approche prometteuse pour générer un système de marché robuste et durable autour de l’irrigation solaire. Pour soutenir le développement de tels liens, EcoTech Mali et EMICOM seront invités à se joindre aux dialogues multipartites de l’ILSSI déjà établis au Mali.

Enfin, a déclaré Dembele, alors que le secteur privé peut favoriser de nouvelles innovations qui répondent aux besoins locaux, le plaidoyer auprès des autorités publiques pour lancer un programme national à l’appui de la chaîne d’approvisionnement de l’irrigation solaire serait également une étape importante pour garantir que l’irrigation solaire et ses avantages deviennent accessible à tous.

Pathways to more nutrition-sensitive irrigation

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This video highlights the pathways from irrigation to improved nutrition and provides recommendations for policymakers, project implementers, investors, and researchers to promote more nutrition-sensitive irrigation.

Resources on nutrition-sensitive irrigation:

Project sites:

The two-faced challenge of the credit constraints limiting smallholder farmers’ irrigation investments

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by Nicole Lefore, Director of Feed the Future Innovation Lab for Small Scale Irrigation (ILSSI), Bedru Balana, Research Fellow at the International Food Policy Research Institute (IFPRI), and Claudia Ringler, Deputy Director of Environment and Production Technology Division at IFPRI

Many smallholder farmers, especially women and other marginalized groups, face difficulty in accessing loans and other forms of credit. Such credit constraints are often considered a key barrier to adoption of mechanized agricultural technologies, such as small scale irrigation equipment.

So how can this challenge be overcome? A new study indicates that the solution might be more complex than previously assumed.

A challenge with two equally important causes

In the past, both research papers and policy guidance documents have advocated for improving the supply of credit to smallholder farmers. The argument is that smallholders face credit constraints on the supply side, meaning that not enough loans or credit schemes are available to them. Therefore, the argument goes, expanding the supply of loans or other forms of finance would unleash investment in irrigation technologies.

Based on this premise, the Feed the Future Innovation Lab for Small Scale Irrigation (ILSSI) has been exploring various affordable and accessible financing options to make loans more available to small scale irrigators, to particularly address these supply-side constraints to credit.

However, a more recent ILSSI study cautions against oversimplifying the solution to credit constraints, when looking to scale irrigation technologies. It has found that demand-side factors, that is, constraints related to the farmers’ own perception and context—such as their risk aversion, bad experiences with past loans, financial illiteracy, perceived high transaction costs, and their household’s labor supply shortages—might play an equally important role, effectively shaping the amount of credit that smallholder farmers are willing to take on, even if they had access.

Complementary solutions required

Using primary data from surveys in Ethiopia and Tanzania, scientists from the International Food Policy Research Institute (IFPRI) working with ILSSI analyzed both demand- and supply-side constraints to credit. The aims of the study were to identify the credit-constraint status of smallholder farmers, that is, whether farmers are unconstrained, supply-side constrained, or demand-side constrained and to assess gender-differentiated credit constraints.

Fig. 1. Supply- and demand-side credit constrained households.

The results showed that demand-side credit constraints are at least as important as supply-side factors. The message is that easing supply-side constraints alone—for example through lowering barriers to entry for credit—will be insufficient if demand-side constraints are not also addressed. Moreover, gendered credit constraints are also on the demand side – and women face additional challenges generating demand for credit as well as accessing credit.

Fig. 2. Supply- and demand-side factors to credit constraints.

These findings open a broader discussion of what it will truly take to improve farmers’ access to and use of credit and other financing mechanisms, which can support their uptake of small scale irrigation and other technologies. As men and women farmers increasingly desire to take on irrigation, credit will continue to be critical.

Scalable solutions in finance for irrigation will require closer understanding of the nature and sources of credit constraints. What is needed is both more targeted finance instruments, from loans to asset-based finance to insurance, and complementary interventions that address demand-side constraints, such as by improving financial literacy and mitigating perceived risks. Finally, gender-sensitive credit instruments and targeted activities are needed that will both increase women’s interest in and access to credit products.

Further reading

Innovating for financial inclusion: Strengthening asset-based financing for women farmers

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by Thai Thi Minh, Senior Researcher, Scaling Innovations, International Water Management Institute, and Nicole Lefore, Director, The Feed the Future Innovation Lab for Small Scale Innovation, Texas A & M.

Providing asset-based financing is considered an innovation that can enable people ‘at the bottom of the pyramid’, including women farmers, to overcome credit barriers. In sub-Saharan Africa, several solar irrigation pump companies are attempting to fill a widespread credit gap by offering asset-based financing, through which they essentially provide farmers with a loan to purchase a pump, for which the pump itself serves as security.

The advantage of asset-based financing is that it can give farmers access to solar pumps without the usual collateral or credit history required for a loan. This enables them to intensify production and increase their incomes. Farmers pay back the loans in installments, as the pump allows them to increase their incomes, in what is known as a pay-as-you-go (PAYGO) approach. PAYGO also sometimes includes follow-up training and regular product servicing during the period of repayment, which also fills the need for information and after-sales services.

Companies are benefitting from asset-based financing by expanding their markets, while farmers benefit from avoiding the usual credit barriers. But, while innovative, the question is whether asset-based financing is also inclusive when it comes to solar irrigation pumps?

Women in sub-Saharan Africa play a critical role in food security, providing as much as half of agricultural labor and playing significant roles in agriculture and livestock sectors. Yet, gender-based constraints to financial resources—such as loans, formal banking services, and ownership over land and other resources—negatively affect women’s ability to invest in productive assets, such as solar pumps.

Recent research by the Feed the Future Innovation Lab for Small Scale Irrigation (ILSSI), published by the International Food Policy Research Institute (IFPRI), highlights that women seeking credit face more significant supply and demand constraints, such as a lack of information, than men.

A group of farmers inspect newly received solar-powered irrigation pumps. Photo: IWMI.

While many development projects focus on improving women’s access to credit through village savings and loans associations or support through micro-finance institutions, such modes are either insufficient, unprofitable, or fail to reach resource-poor women and men farmers wanting to invest in productive assets. That’s why we are exploring how well asset-based financing enables women to invest in irrigation.

Gender gaps in current credit assessment tools

Companies considering providing asset-based financing to clients typically use credit scorecards to determine whether the client is creditworthy.

Such scorecards or assessment tools are used by a company’s credit review officers to assess commercial aspects of financing and to give a potential client a risk score and a consistency rating. If a potential client is assessed as low risk, and therefore qualifies for credit, the results of the assessment can also be used to set the terms of repayment. In short, credit assessments are a critical tool that aims to reduce the risks associated with asset-based financing for both the loan providers and for clients.

Within the ILSSI project, the International Water Management Institute (IWMI) has reviewed credit scorecard criteria and the credit assessment processes being applied by private solar irrigation suppliers in sub-Saharan Africa offering PAYGO or some form of asset-based financing. The initial review suggests women may still be excluded because the scorecard criteria may be inherently biased.

While credit risk assessment tools are to predict the likelihood of repayment, they are not necessarily designed to be gender sensitive. In fact, few of the irrigation equipment companies with which ILSSI has engaged target women farmers as potential clients for solar irrigation pumps.

Few irrigation equipment companies target women farmers as potential customers. This despite women’s essential roles in agriculture. Photo: IWMI.

We found that typical criteria in credit assessments include access to services and amenities, primary income-generating activity and income, household expenses, and water availability and utility, as well as the client’s farm and farming practices, existing credit access, and financial savings. In this way, use of resource ownership and income as criteria to assess the potential risk of agricultural clients marginalizes most women, as they tend to be resource poor.

At the same time, scorecard criteria exclude the factors known to influence women’s ability to achieve investment returns and repay credit, such as off-farm income, livelihood diversification, group membership and social networks, and financial management. Women farmers may not have the level of income or asset ownership to meet a threshold for low-risk financing, but women farmers may still have strong financial management capacity, awareness about availability of various financial services, and financial literacy. Women farmers generally also have diverse on- and off-farm livelihood activities, which a credit scorecard may not account for. We propose that including these income-generating activities would help better estimate the credit worthiness of women farmers.

Moreover, credit assessment criteria appear to miss the significance of group membership and social networks as well as socio-cultural aspects, such as power relations within households, women’s mobility, inheritance systems, and other socio-cultural relations that influence women’s access to resources such as finance, markets and extension, or information sources.

Creating equal opportunities for women farmers

We are now collaborating with private-sector solar irrigation equipment partners to develop gender-sensitive credit scorecard criteria. The gender-sensitive tool focuses on both the criteria components and the process. Criteria currently excluded, but that could influence women farmers’ ability to obtain and maintain PAYGO loans, will be brought into credit assessments. These additional criteria should also help to develop business models for asset-based lending to groups, which would allow women to pool their resources into a joint asset. ILSSI’s private sector partners will test the application of the new criteria in Ghana and Ethiopia.

We will be supporting continued development of the credit assessments in parallel with capacity development innovations. In Ghana, ILSSI is supporting innovation internships that are embedding young and promising researchers into company activities, including fieldwork on business and financing models to reach women farmers. ILSSI activities in Ethiopia include a ‘hack-a-thon initiative’ by IWMI and Bahir Dar University to develop an app-based digital scorecard to ease the data collection and analysis and improve the assessment algorithm.

Asset-based financing is seen as a high potential solution to credit constraints, building on the strengths of the private sector in development, but if poorly designed, this innovation could inadvertently deepen women’s lack of access to credit for productive assets. Reversely, if credit assessment tools are adapted to assess the creditworthiness of women farmers more accurately, there is potential for the approach to benefit both women and men farmers as well as private sector companies in a growing solar irrigation market.

Texas A&M University System Member