Asian Development Bank approves US $ 200mn loan to boost Sri Lanka’s water and food security

The Asian Development Bank (ADB) has approved a US $ 200 million loan to support the second stage of the Mahaweli Water Security Investment Programme, a major infrastructure initiative designed to improve the agricultural resilience in Sri Lanka’s drought-prone North Central province.

The funding aims to complete the essential components of the government’s North Central Province Canal (NCPC) project, which transfers the excess water from the Mahaweli River to the country’s dry northern and northwestern zones. 

This approval comes at a critical time for the island nation, following the devastation caused by Cyclone Ditwah in late November. The cyclone, which resulted in the country’s worst flooding in two decades, damaged over 160,000 hectares of paddy fields and nearly 110,000 hectares of other crops, highlighting the urgent need for disaster-resilient irrigation systems.

ADB Country Director for Sri Lanka Takafumi Kadono noted that while Sri Lanka has made strides in reducing food insecurity, it remains a significant development challenge. Kadono emphasised that higher agricultural productivity and crop diversification are essential for long-term food security, necessitating adequate water resources and robust irrigation infrastructure.

The ADB is leading a broad co-financing effort for the project. In addition to the bank’s own US $ 200 million commitment, the initiative is expected to mobilise US $ 60 million from the OPEC Fund for International Development and US $ 42 million from the International Fund for Agricultural Development.

The investment will finalise the construction of tunnels, open canals and covered canals connecting the Moragahakanda Reservoir to the reservoirs of Huruluwewa, Manankattiya, Eruwewa and Mahakanadarawa. Once completed, the infrastructure will irrigate approximately 14,912 hectares of paddy fields. The project also includes the implementation of a supervisory control and data acquisition system to streamline and modernise the NCPC operations.

Beyond the basic infrastructure, the project targets the modernisation of farming practices through a commercial agriculture development component. This involves constructing 13 pressurised pipe distribution networks to provide “water on demand” via drip irrigation to 5,039 hectares of upland fields. These upgrades are expected to directly benefit more than 35,600 farming households by enabling a shift toward high-value crops.

The programme will encourage the farmers in the upland areas to cultivate perennial crops with export potential, such as mango, papaya, guava and passion fruit. In the lowland paddy areas, the project will support diversification into crops like mung bean, chili, maize and groundnut, particularly during the April to September Yala season. To ensure sustainability, the initiative will also assist the farmer organisations in operating as business entities, facilitating better access to financial services and fostering public-private partnerships.