Alternate Investments: African Rain Harvesting Ponds. Supporting Local Communities

Investing in Rain Harvesting Ponds in Africa

Last Updated on

Call me crazy, but I have just invested in rain harvesting ponds in Africa. Wait, what? Isn’t half of Africa a desert, and currently in a drought? Yes and yes. Find out below why I invested in rain harvesting ponds in Africa, and how you can as well.

Contents
The Problem
The Solution
Pond Information
Local Impact
How Much Does a Pond In Africa Cost?
Investment Return
Risks
Review

The Problem

Agriculture represents 75% of Somalia’s economy and it is the most important industry in the country. However, the number one challenge with agriculture in Somalia is obtaining water. The problems with water currently are:

  • the cost to obtain water is too high
  • farms must be built near existing wells
  • if the well breaks, farms will have to purchase water from other sources
  • wells can be few and far between, so large amounts of farming land doesn’t get utilized.

However, these problems are nothing compared to the greater community. In 2016 there was a severe drought which hit Somalia. Many nomads and farms lost their lives due to lack of water. During this season, the price of water was then out of reach for the nomads. Many were forced to abandon their camels and farms.

To see the extent of the 2017 drought, the article and video by the International Committee of the Red Cross were released. The article “Animals die, putting Somalis at risk as severe drought intensifiesdescribes the situation in Somalia after the severe drought. One man saw his herd of 360 goats and sheep drop to 90, and another saw his 270 animals drop to 30. Both men rely on animals for income and food. The remaining animals were too weak to be sold or slaughtered.

Further to this, the UN News has just released the podcast Drought in Somalia could hit not only livelihoods but also ‘pastoralists identity, which explains that the current drought is affecting nearly 20% of the population, causing crops to fail and livestock to die.

The Solution

Agrikaab, the agrifood startup, has created a platform allowing investment in many agricultural related projects in East Africa. These investments include greenhouses, camel farms, local agriculture shops and also water ponds. You can see my review of other Agrikaab projects here.

The company has started construction of 2 rain harvesting ponds in Africa, which will jointly contain 10 million litres of water.

Agrikaab Water Pond in Somalia

The ponds built will serve a couple of purposes:

  • The water will be used to irrigate other greenhouse farms and camel farms owned by Agrikaab. This will reduce the current high price of well water and provide an alternative if a well was to break.
  • The water will serve as an emergency water reserve during dry seasons. The water will be sold at lower prices to nomads and farms, to save lives or people and animals during drought events.

More Information About the Ponds

The 2 rain harvesting ponds in Africa are located outside the city of Galkacyo in central Somalia. They have a capacity of 10,000 m3, which equates to 10 million litres. The ponds will be built next to an upcoming greenhouse farm in the Galkacyo region. The roof area of the greenhouses will help catch rainwater and drain it into the ponds.

Local Impact

The pond will provide:

  • irrigation water to other Agrikaab farms and greenhouses, to produce affordable food to local communities.
  • emergency water for the community during extended drought periods.
  • water, which can be sold at a low cost for animals and families.
Agrikaab water harvesting from trucks

More generally, the mission of Agrikaab is to contribute to food security in East Africa and create local jobs for nomads. Any investment made has a noticed impact on the lives of people and the local economy. In particular, Agrikaab:

  • Creates jobs for former nomads, who take care of the farms, and buy or sell products. The nomads are people who lost animals to climate issues and have moved to the city. The nomads take care of the farms, plants and animals. Half of Somalia’s population (12 million) are nomads whose only assets are livestock.
  • Produces local food at an affordable price. The food is provided to local markets, which is cheaper than importing food from other countries.
  • Supports the local economy. Agriculture is over 75% of Somalia’s economy, so the international investment is vital. Additionally, Agrikaab provides a market for nomads who want to sell their animals.

How Much Does a Rain Harvest Pond in Africa Cost?

The cost to build the ponds will be crowdfunded, with investors receiving a share of any revenues generated from the water. Even if the water is used for other Agrikaab related business, purchase revenues will still be paid to investors.

Farm pond space is sold per cubic metre, with the current price set at $3 USD per m3. A minimum purchase of 50 m3 is required ($150 USD).

Investment Return

After every rainfall event, Agrikaab will report how much water has been collected in the ponds, and investors will get $0.6 per 1,000 L of water stored. These dividends are paid to investors every 6 months until the investor has received a 60% profit. Based on estimates, investors should receive their money back and an interest of 60% within 2.5 – 4 years (~15%-24% p.a.). Once 60% and the initial investment have been gained, the investment will be finished.

Returns are not guaranteed and heavily reliant on rainfall.

Investment Risks

Investing in water in one of the driest places on earth does not come without risk. As you have probably guessed, the main risk to the amount of investment is the amount of rain. According to UN data from last year, this area that the pond is being build received an average rainfall of 125mm. That is enough to fill the 10 million litre farm pond.

Water is tracked regularly and updates are provided through the various applications.

Average Rainfall in Somalia. 2018 Rain vs 20-Year Average.
The rainfall for 2018 in green, and the average for the last 20 years in grey.

Other possible threats to be aware of include:

  • Security – The security situation is unstable with potential clan conflicts. Agrikaab at all times has a team close by.
  • Theft – Low risk of theft as the pond will be situated next to the greenhouse.
  • Regulation – If Agrikaab defaults, there is a potential to lose any invested money.

Overall Review

Out of all the projects that Agrikaab has to offer (including camels, greenhouses with vegetables, agriculture shops, and water), rain harvesting really stuck out as important to me.

How can farms be sustainable without water? Or, what happens when water is so expensive that you must sell all of your animals, and be forced out of your house? What quality of life is that?!

Water is a common thing that most people in developed countries take for granted. Hopefully, my investment helps those communities that don’t have such luxuries. If my investment saves even one life, then it was worth it.

If you are interested in more information about Agrikaab, you can check out my platform review here.

Related

Posted in Investing, Start-Ups, Topics and tagged .

2 Comments

  1. Hey Matt,

    Thanks for writing this article and help to rise some awareness about the drought issue in Somalia.

    I see others investing only in Camels, as it seems a safer investment, but from my point of view and taking into account the nature of Agrikaab (sort of a donation due to high elevated risks) water comes first than a Camel, as It won’t survive without it.

    Agrikkab will be at some point a part of my €45 fund 🙂

    • Hi Tony,
      No problems, thanks for stopping by!
      The work that Agrikaab are doing is really interesting. It looks like they are making a difference!
      I’m of the mindset that if the money invested in the water ponds helps the nomads save their animals, or helps people receive water for their own wellbeing, then its all worth it.
      Looking forward to seeing what else you put into your €45K fund!
      Matt

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.