Some challenges identified with regards to the use of OBA in irrigation sector in other countries include:
- Establishing a subsidy mechanism that adheres to core OBA principles and creates incentives for poor farmers to pre-finance irrigation related investments;
- Identifying measurable service level outputs against which subsidies can be disbursed, and the number of targeted beneficiaries can be accounted for;
- Defining poverty levels to justify the use of subsidies. (Note that farmers who are able to afford irrigation often cannot be classified as poor);
- Determining accurately farmers' ability to repay commercial loans
Structuring irrigation schemes with OBA subsidies with the objective of improving crop production, access to markets, and consequently the sustainability of small-scale irrigation;The study will analyze significant issues related to the financing, structuring, and implementation of sustainable small-scale irrigation schemes in Cameroon's cotton belt region targeted at low-income farmers, taking into account lessons learned from the Burkina Faso ongoing experience. As the context in which the irrigation activities are implemented varies somehow from country to country, the focus of the study will be on principles, concepts, financing, the role of the private sector, and contractual framework that requires attention when irrigation schemes are planned.
The study will examine the characteristics of the sector and various ways to leverage private sector financing using OBA mechanism. The study will also look at structuring an OBA operation with SODECOTON as implementing agency and the potential sources of market failure under such implementing arrangement. The specific objectives of the analysis are to:
1. Assess the applicability of OBA mechanism in Cameroon's irrigation and cotton sectors context focusing on the challenges identified above.
2. Assess, and define technical specification options for irrigation schemes that could be supported by OBA subsidies and eventually derive an OBA project scope (component and associated costs).
3. Evaluate and develop the types of contractual arrangements which need to be put in place to support sustainable small-scale irrigation schemes benefiting from OBA.
4. Develop an economic and financial analysis of a proposed OBA operation.The review will take note of Burkina's experience. The terms of reference will provide details of specific activities to be carried out under the consultancy.
