Cover picture: Mr. Peter Oppong. The owner of the solar irrigation farm. The farm is at Offinso in the Ashanti region of Ghana.
The Essential Role of Innovative Financing for Farmers in the Global South — Insights from Cocoa Irrigation in Ghana
Co-authored by: William Quarmine, Marie-Charlotte Buisson, Archisman Mitra, Petra Schmitter – IWMI Researchers, and Barbra Sehlule Muzata – Global Communications and Brand Leader
In the Global South, where agriculture forms the backbone of rural livelihoods, farmers face ongoing challenges, including limited access to modern agricultural technologies and climate change impacts. Cocoa farmers in Ghana, responsible for a significant share of the world's cocoa production, are particularly vulnerable as unpredictable weather patterns, such as prolonged droughts, continue to threaten their livelihoods. However, recent advancements in innovative financing for solar irrigation offer a promising solution. However, innovative financing solutions for solar-powered irrigation provide a promising way to alleviate these challenges.
Leading this progress, the International Water Management Institute (IWMI), under the CGIAR’s Excellence in Agronomy Initiative (EiA), is developing financial models to bridge the gap between smallholder farmers and advanced technologies like solar irrigation. This research highlights the importance of targeted finance in helping farmers adopt sustainable practices that improve productivity.
Breaking Financial Barriers: Solar Irrigation for Cocoa Farmers in Ghana
Ghana’s cocoa sector has long struggled with water management. With rainfall becoming increasingly unreliable due to climate change, farmers are facing lower yields and deteriorating crop quality. Solar irrigation presents a viable solution, but its adoption has been slow due to high upfront costs and insufficient access to credit. In response, IWMI has worked with key partners to create a new financing model designed to reduce financial barriers for farmers. Supported by organizations like the Mastercard Foundation and local banks, including Access Bank Plc, this model offers low-interest loans with extended repayment terms, helping farmers invest in essential irrigation tools.
According to a bank representative, Access Bank values the contributions of cocoa farmers to Ghana’s economy and recognizes their climate-related challenges. Their collaboration with IWMI and the Mastercard Foundation allows them to offer low-interest, flexible loans for solar irrigation, aiming to strengthen productivity, resilience, and community well-being. This initiative represents a strong commitment to sustainable progress and community empowerment.
Cocoa Harvesting and pod breaking of the cocoa in Ghana
Empowering Farmers Through Inclusive Financing
The financing model’s strength lies in its flexibility. Farmers can now access loans with a 7% flat interest rate, repayment terms extending up to four years, and a six-month grace period. This flexibility enables farmers to recover from crop setbacks before beginning repayments, providing a cushion against the risks inherent in agriculture.
A particularly innovative aspect is the promotion of group ownership models. By pooling resources, farmers can form small groups of three or larger collectives of five to share the costs of irrigation equipment. This approach not only reduces the financial burden on individual farmers but also fosters collaboration and knowledge sharing among farming communities. Additionally, it makes irrigation technology more accessible to smallholder farmers, particularly those who otherwise wouldn’t be able to afford the upfront costs.
Financial Innovation for a Sustainable Future
This financing model is more than just a loan—it’s a strategy for resilience. By adopting solar irrigation, cocoa farmers can adapt to climate change, increase yields, and stabilize incomes, securing the future of Ghana’s cocoa industry. This model aligns with sustainable farming goals that benefit both farmers and the environment.
By offering longer-term loans tailored to the unique realities of agriculture, IWMI’s research has paved the way for sustainable farming practices that extend beyond cocoa. This model can serve as a blueprint for other sectors, demonstrating how innovative financial solutions can unlock new technologies and lead to the widespread adoption of climate-smart agriculture across the Global South.
Looking Ahead: The Need for Stakeholder Action
Multi-stakeholder support is essential to expand this model. Financial institutions, government agencies, and the private sector must collaborate. Banks should develop agriculture-specific products with longer repayment periods, while governments can encourage adoption with supportive policies, like tax incentives for solar technology users. Meanwhile, private companies need to create irrigation products suited to smallholder needs, bundling technical support to promote adoption.
Through partnerships with local banks and organizations, IWMI provides farmers with affordable loans that empower them to invest in productivity-enhancing technologies. This initiative not only safeguards cocoa farmers' livelihoods but also sets a standard for sustainable agricultural practices across the Global South.
Conclusion
Innovative financing, such as the models developed by IWMI, is essential for advancing sustainable agriculture among smallholder farmers in the Global South. By addressing barriers of cost and credit, these solutions offer farmers a lifeline to adapt to climate pressures. For Ghana’s cocoa farmers, this is more than just access to irrigation—it’s a pathway toward a more productive, secure, and resilient future. If replicated, these models could revolutionize agriculture across developing regions.
Further reading
Integrating Farmer Innovation and Scientific Knowledge n Ghana’s Cocoa Sector for Sustainability
Why Ghanaian Cocoa Farmers turn towards Sustainable Agriculture Practices
Cacao production: Challenges and Management Strategies
Cacao Certification as a driving force for adopting Improved Farming Technologies in Ghana, Africa
Boosting Youth Interest in Agriculture: The Impact of Education and Training