A solar water pump can pay itself back very quickly.
Joshua Okundi’s five-acre farm is his classroom. A
longtime schoolteacher who left his job to become a
farmer in 2013, Okundi is an instructor to the constant stream of visitors who arrive at his home in
Kendu, a small rural village in the western reaches
of Kenya.
Visitors come seeking advice, seedlings, and a
glimpse at technologies that can help them succeed.
Over the past two years, Okundi has exposed locals to
the potential of solar-powered water pumps. Okundi
was first introduced to the technology in 2015, when a
representative from the U.S. Agency for International
Development-funded Kenya Smallholder Solar
Irrigation (KSSI) project brought a pump to show to
a group of farmers.
Okundi instantly grasped why it was better than the
diesel-powered pumps he had tried to use in the
past. “Whenever there is sun, you can pump water,”
he said. “Whenever a generator is running [the
pump], you have to use fuel. And the pump usually
gets broken. And if the cost of the damage is too
heavy, that will render most of the crops useless.”
The benefits of a reliable pump that doesn’t require
costly fuel are obvious in this part of Africa. With
a climate that is typically hot and dry, agriculture
has always been a challenge here. Climate change
is making it even more difficult. As increasingly frequent, extended and severe droughts become the
norm, the need for reliable irrigation is pressing.
Okundi now uses four pumps to irrigate his crops
of tomatoes and corn and to replenish a small pond
where he raises tilapia and catfish to sell in local
markets. Besides witnessing the pumps in action,
farmers with little money hear this important
message: The pump pays for itself quickly.
Using a pump to grow just half an acre of tomatoes
offers a quick payback. “Within three months, he will
be in a position to start to repay with the profits,” he
said. Winrock International, the NGO that implemented the KSSI project, performed ROI studies on
two farmers who purchased solar pumps. The study
found that one farmer could expect a gross profit
increase of 350 percent after paying off a 22-month
loan, and the other farmer was projected to enjoy a
235 percent increase after retiring a two-year loan.
The limits of energy access
The experiences of farmers like Okundi represent a
different way to approach energy access in the developing world. Debates have long raged about whether
the most direct route out of poverty can be found by extending centralized grids or by employing distributed energy resources, like solar and batteries.
But this either-or debate may be missing a critical
component: Energy access alone does not guarantee vibrant economic activity. “Grid electricity got to
people and 20 years later there has been no economic
impact,” said Bikash Pandey, Director of Innovations,
Clean Energy, Environment and Water at Winrock
International. “Energy is not an end in itself, which
is demonstrated by the fact that energy access has
not had the kind of poverty impact that many have
hoped for and expected.”
Solar water pumps are an example of a distributed
energy approach to energy access that prioritizes
productive uses that generate income for farmers.
“The increased income can be used to pay for the
appliance within one or two years,” said Jennifer
Holthaus, a program officer in Winrock’s Clean Energy, Environment and Water Group. “The farmer
then has access to a device which increases her
income [by a factor of] two or three times for the
next 15 to 20 years.” By reducing the reliance on rainfall to irrigate crops, pumps also lessen the risk of
drought-caused crop failures. This is critical when
farmers are entirely dependent on crop yields to
generate income.
The financial puzzle
Along with benefits to individual farmers, solar
pumps also help address the continent’s overall
lack of irrigation. Indeed, only 5 percent of arable
land in Africa is currently irrigated, compared to 40
percent of Asia. Tapping into Africa’s groundwater
using solar pumps would provide the reliable access
to water necessary to feed the continent’s growing
population.
Winrock’s Pandey sees a parallel with India’s successful efforts to expand irrigation. “India tripled
food production since independence [in 1947] with
only 5 percent more land in production,” he said.
“It came overwhelmingly from increased irrigation
from individual pumps, where the agency for irrigation was with the individual farmer and not the
government. Nobody expects African governments
to provide irrigation.”
What’s preventing African farmers from getting
pumps is a familiar challenge: Their relatively high
upfront costs (ranging between $300 and $1,200) put
them out of reach of most farmers. Banks and other
financial institutions in Kenya have also been slow
to embrace full-scale lending. “Banks in Kenya are
generally reluctant to invest in agriculture, and when
they do provide a loan, they do so against collateral or
a source of reliable income,” said Holthaus. “A school
teacher can get a loan for the pump but not a farmer.”
Testing the financial waters
Far from the rural farms, in Kenya’s commercial
and political capital of Nairobi, the microfinance
company Juhudi Kilimo would seem a natural source
of funding for solar pumps. Launched in 2009, Juhudi
Kilimo’s business is financing Kenya’s smallholder
farmers. It does so with two approaches, both of
which are meant to address the reality that most
of its customers lack the collateral and borrowing
history mainstream financial institutions require.
One approach is asset financing, such as providing loans for farmers to purchase dairy cows. The
organization also relies on a group lending model in which farmers work together to act as co-guarantors for any individual loan a farmer takes out. If
one member of a group can’t repay a loan, the others
must step up and contribute enough to cover the
debt.
It’s a business model that has worked well. Juhudi
Kilimo has 24 branches across Kenya and has distributed over 50,000 loans to farmers. Juhudi Kilimo
began investigating whether there was demand for
solar pumps in 2014. In 2016 the company worked
with Winrock on a small pilot project to raise awareness and provide technical demonstrations of the
pump to farmers.
The pilot only resulted in five farmers buying pumps.
But there were important lessons learned. Two big
ones: The pump made financial sense only for commercial farmers, and those who did take out money
to cover the high upfront cost were able to pay the
loans back quickly. “For smallholder farmers who are
doing an acre of tomatoes or vegetables, they are able
to get back the investment in one and a half cropping cycles. That means they only need to use the
pump less than a year and they are able to get back
their capital,” said Samwel Tobiko, a senior marketing officer at Juhudi Kilimo.
But favorable economics aren’t enough. Research
conducted for Juhudi Kilimo showed the profound
impact a person’s income level has on their decisionmaking. “The lower your income levels are, the more
short-term oriented you are because you have more
pressing problems. You have children to feed, you
don’t know where your next meal is coming from, you are worried about school fees,” said Elvin Walela, a
senior partnership officer at Juhudi Kilimo.
Walela believes that dynamic may begin to change
through increased awareness of the rapid payback
of pumps, and if solar pump manufacturers can
drive down costs to equal their diesel-powered
counterparts.
