LILONGWE-(MaraviPost)- Malawi’s economic growth largely depends on agricultural proceeds, particularly cash crops including tobacco, tea, rice, among others. Despite this, poverty alleviation remains elusive after 53 years of independence.
Food insecurity contributes to high inflation rates that results in skyrocketing prices of goods and services that consequently make the poor remain poor and some even worse.
It is in this regard, that government, since independence, subsidies for various social needs, has been on the card with different approaches.
For instance in agriculture, from mid 1970s up to the early 1990s, Malawi financed the universal fertilizer subsidy program that provided low interest credit to smallholder farmers and also controlled the price of local maize.
After 30 years of independent rule, and Malawians enjoying universal subsidized fertilizer and other farm implements, the universal fertilizer subsidy support was withdrawn due to World Bank imposed structural adjustment program.
The withdraw of the subsidies was also followed by change in governance structure and leadership from one party Malawi Congress Party (MCP) rule under Dr. Kamuzu Banda to multiparty with United Democratic Front (UDF) under Bakili Muluzi in 1994. This also affected the implementation of the universal policy as the Bank dictated the terms that was the condition for the government get loans.
The country’s attainment of democracy saw the Muluzi regime changing from food security policies to business enterprise, resulting in the decline in maize production, the country’s staple food that determines inflation. It also negatively affected the country’s food security.
In a desperate move to reverse this, the latter Muluzi era – 1999 to 2004 – introduced “starter packs,” to provide smallholder farmers with inputs at household level, but later changed to targeted individuals, specifically vulnerable or the very poor.
This did not yield bumper harvest and Malawi experienced incessant escalating chronic food shortages due to the lack of tangible policy direction in food security matters.
Farm Inputs Subsidy Program (FISP)
The coming to power of the economic engineer, and long-time World Bank economist, late President Bingu wa Mutharika in 2004, re-introduced the farm subsidies program to a larger scale, through the Farm Inputs Subsidy Program (FISP), in which beneficiaries accessed the inputs at a reduced price by using the coupon system. These were distributed at the very local level; as were the inputs — at the chief’s or village head person.
In the first year, Govetnment made the Programme available universally. In its third year however, about 1.7 million poor farmers were targeted, and provided with two 50 kilogram (kg) bags of fertilizer, improved hybrid and open pollinating maize seed at reduced cost.
Village Development Committees (VDCs) and chiefs, were tasked to identify beneficiaries in the vulnerable households so they can be targeted; households headed by children and women were also included on the lists.
The result of the FISP initiative, was incredible: maize production tripled in the first two years from an average of 1.06 metric tons per hector in 2005/2006 to 2.27ton/ha in 2009/2010.
This boosted Malawi’s Gross Domestic Product (GDP) growth to an average of 7.4%, higher than the World Bank recommended rate of six percent for Sub-Saharan Africa, including Malawi.
Inflation slid into single digits, benchmark interest rates went down from around 40% to 25%, for the first time in two decades.
With the surplus grain, Malawi sold and donated to the then hunger-stricken Zimbabwe with 40,000 metric tons of maize; even Haiti benefited from Malawi maize and rice grains during the 2008 Hurricane Ike disaster.
Food security at household level greatly improved; even the most vulnerable and poor women managed to produce yields enough for themselves and had surplus throughout the year.
“I used to harvest much more than now, enough for my family in a year, because FISP was performing magic for local farmers. This is the reason we gave the late Bingu another term in 2009: to take us to the “promised land.” But now, it’s only a dream as we are no longer benefiting from it (FISP),” Paul Chimangeni Mulangeni, a first FISP beneficiary lamented. He hailed from Nyezerera Villiage, Traditional Authority (T.A.) Kaduya in Phalombe district.
Where did FISP go wrong?
The Malawi government allocated MK2.2 billion, MK5.5 billion, and MK10.7 billion in 2005, 2006 and 2007, respectively that mostly the MK10.7 billion was slightly more than half of the budget, to the ministry of agriculture, which was at MK21 billion and pegged at 12 percent of the entire national budget.
In 2008, FISP got MK19.4 billion from the ministry’s budget of MK32.2 billion, which was 14% of the national budget.
In 2009, the program received MK17.8 billion with another MK1.6 billion for seed while in 2010, FISP was allocated MK19.7 billion and MK17.4 billion in 2011.
Again in 2012, 2013, 2014 and 2015, 2016 the initiative got MK40.6 billion, MK54.4 billion, MK59.7 billion and MK41.5 billion and MK41.5 billion respectively.
Since 2011, misguided ruling politicians manipulated practical measures in the implementation of the program, marred by corruption, and dubious transactions of awarding contracts to the importers, and failure to distribute the inputs to intended beneficiaries.
Identification system of beneficiaries, changed from VDC to capital hill, and the number of farmers reduced from the initial 1.7 million in 2005 to 900,000 in 2016.
The reduction of the beneficiaries’ list impoverish many of the vulnerable groups since they were not given enough inputs.
According to Chief Msakambewa of Ntchisi, the reduction is a set agenda for politicians to ensure the poor farmers who, form large group of voters in elections, are perpetual beggars of food aid, and inputs from the government or ruling parties.
The World Bank’s 2016 Malawi Economic Monitor, dated October, reports that although the FISP initiative aimed to make inorganic fertilizer available to smallholder and resource-poor farmers, the targeting of the program is inefficient.
The Bank monitor states that in 2013, only around one-third of rural households in the bottom quintile obtained subsidies of inorganic fertilizer, while half of those in the top two quintiles obtained the fertilizers.
“This poor targeting, reflects the lack of clarity regarding the objectives of the program. It’s not really clear whether the program is actually being implemented as a program to reduce poverty or whether the goal is rather to boost maize production at the national level”, World Bank said.
FISP existing strategy
The failure to achieve increased yields, despite the high level of participation of non-poor farmers though huge, some of funds in the national budget, is cause for concern including the World Bank and the UK’s Department for International Development (DFID).
Most people are not surprised by the DFID shocking announcement in March 2017 that will stop supporting FISP from July 2017. This is effectively depriving the program about 700,000 pounds (MK630 million) contribution to the country’s financial budget on the initiative.
The British withdraw from the program, received mixed reactions from agricultural experts, politicians, and government on whether the decision was the right signal for phasing out FISP.
Economics lecturer at the University of Malawi’s Chancellor College, Ben Kalua observed that inefficiencies, and rampant corruption that are characterizing the program, were evidence enough to have exist strategy or phasing-out completely because local farmers are not benefiting.
While Felix Jumbe, former chairperson of Parliamentary Committee on Agriculture, differs with Kaula and arguesthat proper credit system and market products were the strategy to shape the program.
Jumbe who is also an agricultural expert and Member of Parliament for Salima Central constituency, observed that FISP has effective objectives and that its main beneficiary is common man in the village.
The lawmaker suggested that introduction of a bill on FISP was another way to reshape the program which will incorporate its implementing strategies.
“The program is just perfect. What has gone wrong, is the element of targeting the few. It must be a credited system with already-made markets focusing on all crops and not only maize. This will be possible with a separate Bill that will govern its implementation; he said minus this, that nothing will change.
“The Bill will direct farmers to be in groups or cooperatives. They don’t need to be given free inputs, but meaningful credits that will be a revolving fund,” Jumbe suggested.