In an effort to combat food insecurity and enhance agricultural productivity, a groundbreaking partnership has been formed between the British International Investment (BII) and the Shell Foundation. This collaboration aims to invest $2.6 million in SunCulture, a Kenyan company providing solar-powered irrigation systems to smallholder farmers.
With approximately 9,000 smallholder farmers set to benefit, the BII and Shell Foundation have committed $2.1 million and $0.5 million, respectively, towards SunCulture’s initiatives. The funding seeks to address the pressing issue of food insecurity affecting 2.8 million people in Kenya, exacerbated by the adverse effects of climate change on agriculture.
The partnership aims to design and finance a facility enabling SunCulture to leverage the future value of carbon credits. This approach will reduce the upfront cost of climate-smart irrigation products, offering farmers the following advantages:
1. Up to five times increased incomes due to longer and more frequent growing seasons.
2. Average time savings of 17 hours per week compared to manual water collection for irrigation.
3. Improved resilience to climate shocks, with 92% of SunCulture farmers reporting enhanced recovery from events such as droughts.
Anticipating a 25-40% reduction in the cost of solar irrigation pumps through carbon monetization, SunCulture expects to expand its market reach, providing clean irrigation solutions to thousands more farmers in East Africa.
The facility will be repaid through the future sales of carbon credits, with BII shouldering the risk associated with the volatility in voluntary carbon markets.
Samir Ibrahim, CEO of SunCulture, expressed enthusiasm for the innovative structure, emphasizing its potential to accelerate the scaling of green technology in emerging markets. Andrew Mitchell, UK’s Minister for Development and Africa, highlighted the ambition for BII to lead in climate finance, delivering innovative solutions as outlined in the recently published Development White Paper.
Nick O’Donohoe, CEO of BII, stressed the importance of supporting farmers in adopting sustainable practices to increase productivity and enhance resilience to climate change. The investment is intended to catalyze private capital from carbon markets for climate-smart solutions in Kenya and across Africa.
Jonathan Berman, CEO of Shell Foundation, emphasized the innovative financing mechanism’s potential to empower millions of smallholder farmers in emerging markets. The investment is the first transaction under the strategic memorandum of understanding between BII and Shell Foundation, aiming to provide up to $245 million in blended finance and co-investment products.
Shell Foundation’s investment also includes co-funding from the UK’s Foreign, Commonwealth & Development Office through its Catalysing Agriculture by Scaling Energy Ecosystems (CASEE) partnership.
Aligned with the vision of the Africa Green Industrialisation Initiative (AGII), launched at COP28, this investment contributes to several United Nations Sustainable Development Goals, including Zero Hunger (SDG2), Affordable and Clean Energy (SDG7), and Climate Action (SDG13).
Photo ( Sun Culture via Facebook)
By: Delino Gayweh
December, 10, 2023
Serrari Financial Analyst
