In Sub-Saharan African countries since the liberalization reforms in the 1980s and 1990s the governments have removed price control and input subsidies and privatized various public enterprises to expect benefits from effective market operation. But since then there has been stagnant agricultural productivity and subsequent slow pace of rural poverty reduction in these countries. Since one of the main reasons for low agricultural productivity was low input use among farmers, many countries have begun to reintroduce the agricultural input subsidies.
The Malawian government pioneered the return to large-scale subsidies in 1998 when it started distributing free fertilizer after having discontinued similar programs in the early 1990s. The Nigerian government, resumed the fertilizer subsidization in 1999. In 2000, the Zambian government instituted a program, in which it distributed seeds and fertilizer to households. In 2006, Kenya, which has been touted for successfully developing private agricultural input markets through effective implementation of liberalization policies, also launched a fertilizer subsidy program. In 2008, the Ghananian government instituted a national voucher-based fertilizer subsidy after having been absent from active participation in the sector since liberalization in 1991.
Against the declining yields of maize since liberalization reform in mid-1980s, while I was working in Tanzania in a donor agency the Tanzanian government returned to subsidize transport for fertilizer in 2003 in Southern Highlands which have been high maize production area. It has been a hot debate between the government and donors including IMF and World Bank.
The debate against the subsidies was from the liberalization point of view that the input subsidy was not a sustainable measure for agricultural production and productivity growth because of poor input/output market operation in rural areas, and that it was just for politically utilized by the government and the local politicians. Banful (2011) suggests the politically motivated allocation of the programme benefits in Ghananian case. Although no major extensive review on political use of transport subsidy exists, the results of the transport subsidies were found cost-ineffective for the farmers to have better access to the inputs and the government phased out this programme in 2008.
Instead, in the same year, on the high food and fertilizer prices internationally, the Tanzanian government gave high priority to stimulate a rapid supply response to avoid food crisis, and asked the donor support. The World Bank supported to introduce the 5-year input voucher scheme learning from the Malawian programme, whose first 3 years was financed by the World Bank followed by the latter 2 years financed by the government budget. The programme expects to increase maize and rice production and productivity in high promising areas, with increased access to inputs. Accompanying support for scaling up Alliance for Green Revolution in Africa’s agro-dealer training and its support for credit guarantees for agro-dealers, the programme aims the exit strategy that after maximum 3 years of receipt of vouchers the farmers would gain enough income to purchase inputs on commercial basis.
Starting from the concern whether the input subsidy is an effective measure for sustainable agricultural production growth, I am planning to conduct my research by looking at the impact of the input voucher scheme on the poverty and wellbeing of poor people, not only beneficiary of the vouchers but also non-beneficiaries, in Tanzania. Also I was wondering in working in Tanzania how the people perceived of their living in rural areas, I would like to incorporate the people’s views of the programme in the research process.
Tamahi Kato is a PhD candidate within the Vulnerability and Poverty Reduction research team at IDS.