Unlocking Finance for Advanced Irrigation Technologies in Sub-Saharan Africa: A Case Study of Djaramaya Scheme in Chad

Abstract

Nearly 236 million in Sub Saharan Africa (SSA) were undernourished in 2017 due to food shortages. Agriculture in most of the SSA countries is rainfed and where irrigation is practiced inadequate surface method is used. In Chad, the agricultural sector is relatively inefficient despite the availability of fertile soils (39 million hectares) and abundant water resources. Irrigation accounts for less than 1% (out of 6% of cultivated lands) while only 9% of the potential water resources have been utilized. While increasing crop and water productivity, many studies agreed that Advanced Irrigation Technologies (AIT) could be profitable when growing high-value crops. However, little researches if not any, have attempted to study the potential and cost-effectiveness of AIT coupled with a sustainable financial model in the arid regions in Chad. Therefore, the objectives of the present study were to investigate the current socio-economic and environmental setups of Djaramaya irrigation scheme, to assess the adaptability of drip technology under high-value crop development as well as to analyze financial options, and sustainability of the scheme investment. Both qualitative and quantitative methods were used to conduct the research. A survey was carried out in Djaramaya scheme using a structured questionnaire for a sample size of 60 farmers that were purposively selected. Key informants from agricultural-related institutions including Ministries and agencies were also interviewed. Moreover, the research adopted investment appraisal technique using discounted cash flow method to simulate the financial viability of AIT investment in Djaramaya scheme. The results of the study showed that 45% of the studied area is suitable for AIT. The estimated NPV (positive) and C/B ratio (=2.76) at 10% discounted rate suggested that the investment in drip under tomato crop is economically viable. Besides, the study found that farmers would be able to recover the initial investment from the profit generated (IRR=25%) at the end of the third year. Furthermore, the study explored opportunities for sustainable financial model through private sector participation for revitalizing Djaramaya scheme. Guerdane’s Public-Private Partnership (PPP) arrangement in Morocco was found to be suitable for the viability of Djaramaya scheme from which best practices can be transferred to Chad.