Several studies suggest that irrigation solutions increase net income of smallholding farmers by 30-100%. Despite these evident benefits, 2.7 million smallholder farmers in Nepal still rely on seasonal monsoon rainwater for irrigation. Solar powered irrigation pumps offer a reliable solution to meet the present needs of rural, smallholding farmers; however, these pumps are not readily accessible to the majority of rural farmers. This inaccessibility can be attributed to two primary problems:
(a) the financing constraints faced by uncollateralized rural farmers and
(b) the high transaction cost incurred by both the developers and investors in making these projects investible.
Gham Power, a social enterprise operating in Nepal since 2010, has developed an innovative online project development platform – Off Grid Bazaar – with the aim of eliminating these barriers and increasing the reach of smallholding farmers to reliable and cost-effective irrigation solutions.
Gham Power has developed algorithms that help farmers accurately estimate their water need leading to design of optimal system sizes. This automated customization reduces the transaction cost for suppliers. In addition, Gham has developed algorithms that precisely forecast the profitability and credit score of individual projects. Investors use these metrics to make informed investment decisions. Individual projects are, then, aggregated together in the platform for investors and grant providers, who fund a portion of individual projects; this investment will finance the credit purchase of irrigation solutions for smallholding farmers hence, eliminating their financing constraints.
WHY IS GRANT NEEDED?
Although there is a high demand for irrigation instruments in Nepal, private enterprises require assistance of public finance during this interim period. The following reasons justify this need:
- The perceived off-taker risk – in this context, the inability of farmers to repay private investors – deters private investment during the early phase of these projects. Grants will be capitalized to execute initial batch of projects and create early success stories, which in turn will play a catalytic role in raising private investment during the latter phase of this initiative.
- In the present market scenario, it is difficult for suppliers to predict farmer’s willingness to pay for irrigation solutions. Gham Power, using these initial projects, will create financial packages that accurately reflect farmer’s willingness to pay. These financial packages will be designed to reflect the variances in farmer’s income, such that farmers repay when they are most likely to.
- The current ask of 30% grant contribution will secure private investments which will allow Gham Power to roll out 100+ projects. This will give Gham Power access to a credible pathway to scale.
Starting 2019, Gham Power is organizing a crowdfunding campaign to fund 100 small irrigation projects. All funds for this initiative are channeled through the platform. We ensure that each penny of your investment is directed towards helping a rural, small-holding farmer access reliable and cost-effective irrigation solution. Your contribution, during this initial phase, will be received as a grant, which in turn will subsidize the cost of irrigation solutions for farmers. During the latter phases of this initiative, Gham Power aims to incorporate a debt option for investors. If you have already invested in Gham Power’s projects, you can track the operational data of projects you have invested in. Log in to Off Grid Bazaar for more information.