Large scale irrigation investments in sub-Saharan Africa: Is big beautiful?
During much of the 20th century, governments world-wide made substantial investments in building and in later years rehabilitating large-scale irrigation schemes. In Asia and Africa, newly independent countries continued this trend, often at an even higher rate than their colonial predecessors. However, by the late 20th century, governments and investment institutions lost interest: global food prices were substantially lower, reducing the economic justification; and there was growing awareness that many such schemes were white elephants, performing far below their potential; some were total failures, and environmentalist opposition was making itself heard.
In the 21st century, major investments to construct new, or expand existing, large-scale irrigation schemes have returned in sub-Saharan Africa (SSA). Examples include Bura and Mwea in Kenya, the Shire Valley Transformation Program in Malawi, and various projects in Nigeria, Niger and other West African countries. These involve investments by the World Bank, JICA, Kuwait Fund, Millennium Challenge Corporation, and others. "Farmer-led Irrigation Development" is the current rhetorical buzzword, promoted even by the World Bank, but in reality, the big bucks are going into large-scale construction projects.
This development is especially surprising in light of a long history of disappointing outcomes, and several important studies that decisively demonstrate the very high likelihood that large-scale irrigation projects do not achieve the expectations identified in project preparation documents. For example, in 2007, IWMI and the World Bank published a major comprehensive study that examined detailed cost and performance data from several investment banks for 314 irrigation schemes in 50 countries in Asia, Africa, and Latin America (Inocencio et al., 2007). That study confirmed that overall unit costs were significantly higher in SSA than other regions. The main reason was the very high likelihood of a project being a "failure" in SSA. The study concluded that well-designed investments in small-scale irrigation schemes can yield good returns: "large irrigation investment projects supporting many small-scale irrigation schemes are likely to lead to the best results." Even the World Bank concluded that, "there are few examples of successful, or even adequate, results from [large scale irrigation] investments in recent years, and there have been a number of spectacular failures" (World Bank, 2008: 31).
A subsequent study supplemented the 2007 study with additional data and found that small-scale and micro irrigation projects have far lower unit overhead as well as construction costs and perform better than large-scale schemes (Fujiie et al., 2011).
A recent study (Kikuchi et al. 2020) takes a different approach: it evaluates the economic viability of constructing large-scale irrigation schemes in the 21st century by estimating what it would cost today to construct a very successful large-scale irrigation scheme (Mwea in Kenya). Mwea, a rice scheme, is one of the most productive large-scale irrigation schemes in SSA. Nevertheless, the conclusion is clear: the project would be marginally viable only if the shadow price of rice were as high as the world price prevailing during the mini-rice crisis in 2008-2013. At current and likely future prices it is not an economically viable investment.
Further, even projects that at completion seem to be performing well nearly always deteriorate rapidly, requiring additional investments in their rehabilitation. This applies to Mwea as well as many others. Sustained quality operation and maintenance requires adequate finance as well as human resources. These are in short supply in SSA. Additionally, studies have shown that per beneficiary, large scale irrigation investments are far more expensive than small-scale irrigation investments. For example, de Fraiture and Giordano (2014) found from surveys that while motor pumps cost on the order of USD 400/ha, canal irrigation costs can be as much as USD 10,000/ha with some variation either way.
Why are investments in large-scale irrigation back in vogue with international finance institutions and African governments? Have solutions been found to the causes of poor returns on previous investments? Have public sector irrigation management agencies become transparent, accountable, financially solvent, more skilled in construction and scheme management, and better at working with farmers? The World Bank lists these as critical for success. But examining the new projects in Kenya, Malawi, and West Africa, for example, does not reveal any substantial restructuring and capacity strengthening of the relevant government agencies.
My hypothesis is there are other significant drivers of these investments. On the one hand, international investment institutions are designed to make large projectized investments. They must "move" large amounts of funds to developing countries every year, and large-scale irrigation projects certainly do move money. This is in contrast with supporting "farmer-led irrigation development": to do this effectively requires patient long term attention to policy reform, building up private sector-based value chains for making available the finance, equipment and support services, and development of effective output markets to make irrigated agriculture profitable. They can support this as a sideline, but not as a major institutional focus.
Further, governments thrive on attracting funding for large-scale civil works. They bring much-needed resources into the government. They offer an opportunity for politicians to win votes by announcing and initiating large new projects. Public sector irrigation agencies are often politically powerful, and their civil engineers are trained to design and construct large-scale infrastructure. Day-to-day management of irrigation schemes and responding to the needs of their supposed clients (farmers) is not rewarding, either intellectually or financially. They want to manage large contracts, which offer all kinds of below-the-radar opportunities. Politicians and civil servants collaborate in this process.
It is therefore no surprise that efforts to bring about significant structural reforms in public irrigation agencies always fall short of finance institutions' expectations. The vested interests in the status quo are powerful and well-entrenched, and there is no incentive for the finance institution to seriously rock the boat, for example by withholding large amounts of funds.
My conclusion is that, first, SSA governments and their financial partners must abandon projects to construct new large-scale irrigation schemes. Second, any investment in rehabilitation or modernization of existing large schemes must be contingent on actually implementing (not simply promising) major structural reforms to create the incentives needed to achieve sustainable high performance. Third, international finance institutions need to reform themselves to make then effective partners in achieving long-term farmer- and consumer-driven agricultural development. If they do this, they will be more effective in helping governments implement reforms.
De Fraiture, C., Giordano, M. 2014. Small Private Irrigation: A Thriving but Overlooked Sector. Agricultural Water Management 131: 167-174. https://doi.org/10.1016/j.agwat.2013.07.005.
Fujiie, H., Maruyama, A., Fujiie, M., Takagaki, M., Merrey, D.J., Kikuchi, M. 2011. Why Invest in Minor Projects in Sub-Saharan Africa? An Exploration of the Scale Economy and Diseconomy of Irrigation Projects. Irrigation and Drainage Systems 25: 39-60. DOI 10.1007/s10795-011-9111-4.
Inocencio, A., Kikuchi, M., Tonasaki, M., Maruyama, A., Merrey, D., Sally, H. 2007. Costs and Performance of Irrigation Project: A Comparison of sub-Saharan Africa and Other Developing Countries. 2007. IWMI Research Report 109. http://www.iwmi.cgiar.org/Publications/IWMI_Research_Reports/PDF/PUB109/RR109.pdf.
Kikuchi, M., Mano, Y., Njagi, T., Merrey, D., Otsuka, K. 2020. Economic Viability of Large-scale Irrigation Construction in sub-Saharan Africa: What if Mwea Irrigation Scheme were Constructed as a Brand-new Scheme? Forthcoming, Journal of Development Studies. Also: JICA Research Institute Working Paper 200, January 2020 (https://www.jica.go.jp/jica-ri/publication/workingpaper/wp_200.html), and Discussion Paper Series of Hitotsubashi University (https://hias.hit-u.ac.jp/glecs/hias_dps/hias-e-87/).
World Bank. 2008. Investment in Agricultural Water for Poverty Reduction and Economic Growth in Sub-Saharan Africa: Synthesis Report. http://documents.worldbank.org/curated/en/167991468303275116/Investment-in-agricultural-water-for-poverty-reduction-and-economic-growth-in-Sub-Saharan-Africa-synthesis-report.
Photo Credit: Jean-Yves Jamin/Cirad
Interesting that you don't mention climate change as a driver for irrigation. FCDO (DFID) largely stopped financing irrigation in the 1980s, but has recently restarted under the name of ‘adaptation’, and many others have started reinvesting. It is easy to see why – temperature and rainfall patterns are changing and agriculture is suffering, and hence irrigation is widely promoted. Although there are many other stronger influences which lead to underperforming agriculture, these are glossed over – particularly as there are a new group of stakeholders promoting irrigation who are unfamiliar with the past problems and are eager to promote what seems to be an obvious solution. Politicians and irrigation agencies are only too willing to take advantage of this change of heart. It is sometimes disheartening to hear conversations which could easily have taken place in the 1980s and for the same mistakes to be made, but new ideas are emerging. Whether this is sufficient to make large-scale irrigation viable is debateable, but I am sure many governments will keep trying.
This is a novel and interesting way to re-evaluate viability--take a project that has actually succeeded and re-evaluate using today's costs and benefits, knowing that the outcome is probably at the top of the range actually achievable more widely.
A couple of points: the author does not mention the dissent rate used. If it's the "usual" 12% that the World Bank used to use, that is probably well above today's cost of capital.
Second, the piece suggests that small scale and "farmer led irrigation" may be a better option. Most of the promotion of FLI that I have seen is rather like calling the clearing of the Amazon rainforest "farmer led agriculture".
Does the author have a view on FLI?
I couldn't agree more, Doug. These large-scale build-neglect-rebuild infrastructure projects burden next generations with debts and dependencies, on top of climate change impacts. They are corruption-prone by design (inflated proposals and spending pressure once approved). Obviously, investments in agriculture are key in a continent where most people are food producers, that still needs to import food. There are so many better ways for governments and financing institutions to invest, also large sums as in transport and roads. And, yes, the 'smaller' long-term investments in high-tech but low-cost water technologies, energy sources (like solar), technical capacity development of both women and men, bottom-up, transparent and accountable institutions, market development including protection against food dumping, etc.
Great piece, indeed. There are lessons for those countries which have not yet started large scale agricultural projects.
In this region, rainfall is highly variable, drought is common, low food production, and most people live below the international poverty line made the author raising this brilliant motto: Large scale irrigation investments in sub-Saharan Africa, where the irrigation and agricultural development, proposals to expand irrigation to increase productivity and reduce poverty must be developed for the sake of the continuity of life in this part of the world. However, Large-scale schemes are not the solution. Large-scale schemes is not lucrative but location-bound. Because of their cost and complexity, large dams are no longer built for one purpose alone. Any dam suitable for storing the large quantities of water required for large-scale irrigation will have to double as a hydroelectric power plant. Thus, the reservoirs considered here for irrigation use
are those identified by a companion AICD study on power sector investment needs as being economically viable for power system development within the next decade. Because these schemes are already deemed viable for hydropower generation alone, the irrigation component need not contribute to the capital cost of dam construction. Therefore, the investment costs of large-scale irrigation development may reflect only irrigation-specific infrastructure, such as distribution canals and on-farm systems. The irrigation potential of areas downstream from hydroelectric dams could be evaluated according to a wide range of agro-ecological considerations and involved in next studies. Besides, I hoped if the author has linked the large-scale land acquisition with corporate social responsibility (CSR) and introduced a clear methodology to avert the impact of climate change on irrigated area and investment return.
First, thank you to everyone who has commented so far. Here I will respond briefly and selectively to some points made in the comments.
Simon Howarth, note that this blog is narrowly focused on whether investing in new large-scale irrigation makes economic sense. A broader analysis is still needed. My hypothesis would be that including an analysis of climate change impacts on rainfall and temperatures, social and environmental impacts, and the often-observed need to rebuild schemes long before their “economic life” is included would strengthen the argument that these are not the best use of scarce capital.
Chris (which Chris?), I am not an economist, my co-authors are, but my understanding is we used 8% which is the current Bank assumption. We actually tested several IRR scenarios. See the paper. One of my co-authors may also respond on this point. And I do have a position on “farmer-led irrigation”: overall, providing policy and institutional support to enable farmers to make their own investments make a lot of sense. And I believe an analysis of actual cases will show that in most cases, farmers invest to increase the productivity of existing cultivated land, not to turn forests into farmland. So, it is not “clearing the Amazon” in most cases.
Barbara van Koppen and I are long-time colleagues and friends, and in this case, we agree 100%. Thank you, Barbara and also Salam Abdulrahman.
Loai Aljerf, thank you for raising the issue of large dams. However, the scheme we analysed, Mwea in Kenya, has no dam associated: it is a run-of-the-river scheme. Therefore, your point that large dams justified by other uses can support large scale irrigation does not work: even with no dam costs, Mwea is barely viable economically.
Finally, I should note that in addition to being published by JICA, a revised version of the paper was recently published by the Journal of Development Studies. We are waiting for the editors to correct an error they introduced into Table 2, but here is the link for those interested: https://doi.org/10.1080/00220388.2020.1826443.
I'm afraid that this note (and subsequent comments) fail to consider the different elements that comprise an 'irrigation scheme' and their functions. To be simplistic, one key element is a storage component to ensure that there is a reliable flow of water available. Another element is the off-take and transport of the water from that source to the field edge (for convenience sake).
Given SSA's often extreme climate variability, there is substantial benefit from building a dam to store water to enable reliable flows (and let's not go into the use of World Bank discount rates which will immediately render such a scheme financially unviable even if the storage functions for a century because 12% renders any benefit beyond the 1st decade almost completely valueless).
Once that reliable flow is available, it is quite possible - indeed common - for smaller scale schemes to be organised or self-organise to use that flow. So the notion that there has to be a single scheme which covers all activities is not particularly helpful.
Consider the impact of the Aswan High Dam, completed in Egypt in 1970. It was not part of a large irrigation project. But it has enabled small local initiatives to achieve huge increase in production and livelihoods without which Egypt would have collapsed socially and economically. How do we value that contribution? By simply looking at the increased cotton, rice and sugar production? By the more recent transformation of the Egyptian horticultural sector?
Let's at least distinguish between the water resource investment required to enable irrigation development and the subsequent water distribution investment and take a wider development perspective to our project appraisal.
This is not a competition between engineers and rural sociologists. It is about viable strategies to address the broader SSA challenge of reducing farmers' risks by ensuring a reasonably reliable water source. That will sometimes require large infrastructure investments to achieve. And of course if there are situations where small schemes don't require such investment, they should proceed. Indeed, in many parts of the continent they do, through local initiative - which reinforces the point that the large infrastructure is an enabling investment that can transform a rural economy and should be considered and funded as such.
1.Why large-scale irrigation development is back?
Global Food Crisis: In 2007-8 when the global food crisis occurred and international food prices were soaring, food importing countries were the most affected by malnutrition and poverty. Subsequently, local food production in these countries has become a national security issue. In addition to feeding the growing population, these countries needed to produce enough food to protect their citizens specially the poor against food price increase in the international market.
Climate Change: The economies of most African countries is dependent on climate-sensitive sectors like agriculture. Climate change poses a serious challenge to sociio-economic development of countries particularly for SSA. Increased precipitation intensity and variability are projected to increase the risks of drought and flooding in many areas particularly in Africa. This is expected to lead to decreased food security and increased vulnerability of poor rural farmers. Irrigation development is one of key adaptation measure to mitigate the negative impacts of climate change.
Definition: For the purpose of common understanding, I suggest defining large-scale irrigation is beneficial. In India, probably 10,000 ha is considered as small or medium scale, in Ethiopia from 3000 ha it is considered as large scale, and other countries may have their own definition. In this paper which one are we referring to?
2. Cost of irrigation development
IWMI’s 2007 research findings show that overall unit costs of irrigation development investment in SSA are significantly higher than other regions. I tend to agree with the research finding because often of the times irrigation development sites in SSA are found in remote areas where there are no physical, economic and social infrastructures. The cost of building these services are lumped together with the cost of irrigation development which inflates the unit cost of irrigation development. Later, irrigation development also brings unforeseen benefits like trade, education, creation of towns, etc. triggering growth.
3. Success stories:
I acknowledge that there are significant failures of large-scale irrigation development around the world however, we must not forget that there are also some success stories. To mention some, the Wonji Sugar Estate (7050ha) which started in 1954 in Ethiopia still contributes to the economy of the country. Subsequent large-scale irrigation developments in Ethiopia such Metehare (9920ha), Fincha (6800ha) Sugar Estates producing 261,000 tons of sugar is substituting import. Tendaho cotton plantation (33,000ha) supplying 8,370.4 MT of seed cotton to the local textile industry, offering employment, since 1960. Similar success stories of Illovo sugar estates in Malawi is another evidence creating employment and supporting the local economy. The common factor in all these schemes is that they produce cash crops have processing plants.
Conclusion: I understand the viewpoint of the author to come up with the conclusion that SSA governments and their financial partners must abandon projects to construct new large-scale irrigation schemes however my point of view is that;
large scale irrigation could continue to contribute to the socio-economic development of countries if appropriate management model is put in place and private sector is facilitated in marketing and value chain approach is followed as demonstrated above.
In conclusion, in my opinion instead of abandoning large irrigation development in its entirety, it is advisable to find the right development model including fighting below-the-radar opportunities that will undermine the development objective of irrigation development. In this regard, the role of research and development is of paramount importance to come up with a right model.
In sub-Saharan Africa, the land holding size is commonly very small, and most agricultural producers are subsistence farmers with small holdings, often broken into several plots. The land is either a highland with rugged terrain or a flat land stretched for long distances. Usually availability of water is restricting irrigation unless in some places where there are perennial rivers or impounded water. Groundwater potential in many places is low and it is very difficult to use it used for commercial farming.
Small patches of irrigated commercial farms could be possible in some places while localized small sized farms need to be continued in some other places. It is very useful to expand small scale irrigation rather to improve productivity of por households so that they can grow more than once than they are doing usually confined to the rainy season.
In low-land areas with the construction of irrigation water supply systems there could be a possibility for commercial farms, but the development of commercial farms could have a negative effect on the livelihood of people where their lifestyle is still under development. Commercial farms could affect people’s life (unless they are established in lands that are not occupied so far. Mind you that open land may not be available in sub Saharan Africa as it may be occupied once in a year (pastoralists move during the year from one place to the other for search of pasture and water for their cattle). Commercial lands could displace communities from their ancestral lands while they don’t have coping mechanism to adapt themselves to the new situation nor they don’t have skill to be part of the new life style if at all they are able to secure jobs in the commercial farms or associated Agro-industries.
Therefore, I contend that “Big is not beautiful in Sub-Saharan Africa” in most cases and introduce/ expand commercial farms. Instead small-scale irrigation (that could also be commercial) could be more useful.
just to clarify my earlier comment - I don't personally think that climate change justifies the renewed interest in large-scale irrigation, but I do think it is an important part of the reason that many funding agencies which had shunned irrigation in the recent past are moving back into the sector. And because the new stakeholders are not so familiar with the past problems, some of the same mistakes are being made again (albeit my recent knowledge is purely of South Asia, not SSA).
I am responding to the four most recent comments on the blog; I thank all the commenters for taking the time to share their views.
Starting with Mike Muller: He argues in favour of public investments in water infrastructure to make water available which would enable creating smaller scale schemes. I think this is a very interesting idea; but it is a far cry from the typical large public irrigation scheme built and managed by government agencies to provide irrigation services to thousands of small-scale farmers. It is the latter which are so problematic. His suggestion is well worth exploring – I am not aware of any examples in Africa outside of South Africa (which he refers to). But the idea reminds me of what the huge canal systems in the Indus and Gangetic plains have become: while they were originally constructed to provide water to millions of small farmers, they also contributed to developing groundwater supplies, enabling the pump revolution: their main function today is often simply refilling the aquifer.
I am grateful to Mekonnen Lulsegad for his comment. He used to work for the Ethiopian ministry in charge of large-scale irrigation and currently works for the African Development Bank. He argues in favor of continued investment in large-scale irrigation schemes but emphasizes the importance of getting the model right. His examples are all large commercial estates (sugar and cotton). While I believe he is correct that these are often successful, one must ask at what cost: did they displace people who used to use the land? If they are providing water to many smallholder farmers, are these farmers prospering and improving their lives, or simply making a marginal living? Would the same funds invested in small-scale schemes have had a better return? Anyway, these are also very different from public schemes delivering water to thousands of smallholders.
Getachew Hailemichael reviews some of the constraints to developing large scale irrigation in SSA and concludes small schemes make more sense.
Simon Howarth re-emphasizes that responding to climate change is a major rationale for recent irrigation developments but wonders if newer people in charge are aware of the lessons of the past. I agree that climate change is used as a justification for investing in irrigation but would argue that other, deeper, vested interests are often the real drivers. I do not see evidence that the lessons from the past, especially the importance of getting the policies and institutional frameworks right, have been learned. International finance institutions have been investing for decades in projects justified by claiming they will strengthen public irrigation management institutions, make them more effective and service-oriented, etc. with little to show (in Asia as well as Africa). In 1981, while working for USAID, I wrote a scathing critique of a USD 500 million irrigation project in Pakistan that claimed it would reform the provincial irrigation departments etc. etc. Well, all my predictions that the money would be spent but no reforms implemented were confirmed 5 years later by an evaluation. And little has changed in the decades since.