Kenya is depending on agriculture as 80% of the population lives in rural areas and the agricultural sector contributes 26% to the GDP. The country is facing a deepening poverty and food insecurity in around 50% of the households. The water availability in Kenya is scarce and in some areas the competition for water resources results in violent conflicts.
Irrigation plays an important role in increasing food security and in bringing income to the farmers. As Kenya is divided into different agro-ecological zones, different farming areas ranging from high to medium potential areas, arid and semi-arid lands (ASAL) exist. The high potential areas in the central region north of Nairobi are characterized by high rainfall, permanent river flows, and fertile soils. Commercial farming in that area is dominant. The use of low-cost small-scale irrigation technology is relatively widespread, and (financial) infrastructure and access to markets are relatively good developed In the medium and low potential areas low-cost small-scale irrigation technologies rarely exists, amongst others due to lack of irrigated areas and access to financial services.
Financial services are rarely available for poor smallholder famers, as most of the financial institutions concentrate on financing input for crop production, lack of experience with small-scale farmers, and products are not adapted to requirements of small-scale farmers. On the other hand, smallholder farmers lack knowledge about financial institutions and available products, and are often biased towards them. However, financial services are available and the financial sector is one of the most developed and diversified in Sub-Saharan Africa. (GIZ, 2006).
Governmental irrigation development programs
The first irrigation development projects were undertaken in the colonial era with the establishment of larges schemes with the objective to settle landless population. Small-scale irrigation was put into focus in the 1970s. Water user groups or Water User Associations (WUA) were established for organizing these schemes. Supporting governmental entities are the Irrigation and Drainage Branch (IDB) of the Ministry of Agriculture, and the Rural Development Authorities (RDA). In the late 1980s the private sector started involving in horticultural marketing and exports with participation of small-scale farmers and was rapidly growing (Neubert et.al, 2007).
The governmental irrigation development programs are mainly focusing on small-scale farmers without excess to irrigation water. In the past the farmers were supported through “full initial investment” which nowadays was turned into a cost-sharing mechanism between the beneficiaries (GIZ, 2006).
Small-scale irrigation technologies
Different irrigation systems exist; ranging from intermediate technology systems to manually
operated pump systems (see Table 1).
Supportive factors for the development of small-scale irrigation includes
- Areas with high agricultural potential (fertile soils, sufficient rainfall, access to financial services)
- Market oriented farmers
- Access to individual short to medium-term loans
- Access to affordable technologies and equipment
- Availability of on-farm water
- Access to markets
- Access to financial services
Different irrigation systems exist; ranging from intermediate technology systems to manually operated pump systems (see Table 1). Small-scale irrigation technologies are mainly applied in the high potential areas, where farmers have the financial capabilities and know-how and produce market.
Low cost technologies are used by poor small rural households and for home gardening in peri-urban areas. They vary from bucket and drum kit irrigation to rope & washer pump systems, and more advanced treadle pumps and hand operated pressure pumps. Table 1 gives an overview of investment and technical requirements. Some of them are built with locally available material by local mechanics, and are a distributed locally. Operation and maintenance requirements are low, as are investment loans, but they are labor intensive. However, these systems cannot be applied e.g. in gravity fed communal systems.
Medium-cost technology comprises e.g. motorized pumps, which require less manual labor and can irrigate larger areas in topographical challenging areas.
Beside the small-scale irrigation technologies, community irrigation schemes, mainly with gravity-fed sprinkler or furrow irrigation systems, exist. Communal systems include around 150 to 250 small-scale farmers. Each farmer operates independently and individually and cultivates around 0.2 to 0.4 ha. These systems need more costly and complex irrigation systems and infrastructure, and therefore require loans. Investment costs are around US$ 1500 to 2000 for 0.4ha.
An overview of different level of irrigation technologies and investment needs are summarized in Table 2. Low-cost irrigation technology is mainly financed through savings and short-term loans, while medium-cost irrigation equipment (e.g. motorized pumps) requires savings in combination with loans.
Financial services for small-scale irrigation
The financial sector in Kenya is one of the most developed in Sub-Sahara Africa. However, financial services for small-scale farmers are limited in most rural areas. Financial services with regard to agricultural purposes are available mainly for large estates and big agro-related businesses. Nevertheless, the situation has improved in the last years. Different financial institutions emerged and developed services for lower income costumers (e.g. Equity Bank, K-Rep Bank and Family Finance Building Society, SACCOs, NGO-Microfinance Institution). Currently, these institutions cover mainly the rural centers, cash crops areas and high potential areas, but are in expanding their services. Recently, financial institutions discovered as well the potential of products for small-scale farmers. However, the access to financial services especially in rural areas is very limited. Furthermore, financial products designed for specific needs of small-scale farmer are not existing and many farmers lack information about financial institutions. The existing financial services for small-scale agriculture lack experience with small-scale irrigation and horticultural farmers and are not adapted to the needs of these types of farmers. The available financial services concentrate on financing inputs for crop production. However, reliable information on how farmers finance their investments and costs are not available (GIZ, 2006). Financial services are needed for specific agricultural activities and therefore financial mechanisms require being in time and flexible. Especially short- to medium-term loans are required for small-scale irrigation farmers. Short-term loans, for e.g. input supply, are available from many institutions and as well agri-marketing businesses. The share of medium-term loans (usually up to 36 month), for e.g. irrigation system construction, is moderate. Long-term loans (> 5 years) are only available with some financial institutions that are supported by donors. Interest rates are around 16 to 24% per year. Lending of loans is either individually or in groups (e.g. NGO-Microfinance Institutions). Subsidized loans are offered by the parastatal Agricultural Finance Cooperation (AFC) with an interest rate of 10% per year. It is assumed that only a few small-scale irrigation farmers received loans. On the other hand, subsidized loans exist for gravity sprinkler community irrigation schemes with the support of donors. The majority of agricultural credit is offered by private sector players, like exporters, input suppliers or marketing cooperative societies, and not by financial intermediaries. (GIZ, 2006).
Important elements for access to financial services:
- timely availability, fast processing and costumer friendly
- flexibility within the product range, especially with regard to repayment mode and collateral requirements,
- the combination of loan products and savings,
- proximity of financial institutions or delivery mechanisms that allow easy access to financial services.
(adapted from: GIZ, 2006:53).
Key factors for strengthening and up-scaling of financial services to small-scale irrigation farmers
- Improving information and commitment of financial service providers
- Enhancing the range of financial products
- Client-orientation and increasing knowledge of the small-scale irrigation sector
- Expanding delivery channels and lending methodologies (individual and group lending)
- Enhancing loan collateral
- Providing standard financial products (e.g. flexible short term loans for low- and medium-cost irrigations technologies and irrigation systems; deposit facilities)
- Developing of adapted financial products (e.g. microleasing; wholesale lending; non-credit financial services)
- Enhancing financing mechanisms for reduction of risks and / or transaction cost (combination of financing and insurance; tripartite arrangements; warehouse receipts)
- Enhancing the outreach of financial institutions;
- Promotion of Public Private Partnerships;
- Complementary government services (extension service, research, regional planning)
(source: GIZ, 2006).
GIZ (2006): Financing Small-Scale Irrigation in Sub-Sahara Africa. Geseelschaft fuer Internationale Zusammenarbeit (GIZ).
http://agriwaterpedia.info/images/0/06/GIZ_(2006)_Financing_Small-Scale_Irrigation_in_SSA_Part_1_DeskStudy.pdf [Access 2013-02-22].
Neubert, S., Hesse, V., Iltgen, S., Oyando, .O., Onchoke, W., Peters, V., Seelaff, A. & Taras, D. (2007): Poverty Oriented Irrigation Policy in Kenya. Deutes Institut fuer Entwicklungspolitik (DIE), Discussion Paper 12/2007. Paper;active:Publikationen\Discussion Paper\ADMR-7BRHCE http://www.die-gdi.de/CMS-Homepage/openwebcms3.nsf/(ynDK_contentByKey)/ADMR-7BRHCE?Open&nav=expand:Publikationen\Discussion Paper;active:Publikationen\Discussion Paper\ADMR-7BRHCE [Access 2013-02-22].
Blank, H. G., Clifford, M. M. & Murray-Rust, H. (2002): The changing face of irrigation in Kenya: Opportunities for anticipating change in eastern and southern Africa. International Water Management Institute. Colombia, Sri Lanka.
http://www.ilri.org/InfoServ/Webpub/fulldocs/IntegratedWater/IWMI/Documents/related_doucments/pdf/KenyaProceedings.pdf [Access 2012-12-10].
- ↑ Catchments of the Tana, Athi and Ewaso Ng’iro rivers
- ↑ Usually irrigated an area of 1 to 5 hectares, are resource poor and depend on family work force; development potential depends on natural and economic conditions
- ↑ Farmers mostly own the land and irrigated an area of 20 to 200ha.
- ↑ Rural Savings and Credit Societies