I’ve mentionned the Malawi Fertilizer Subsidy program before. Well, the very first time I’ve read about it, one word made me nervous: distribution.
See, to receive an EU or US farm subsidy, one has to file paperwork , it’s reviewed by an agency which checks if the requirements are fulfilled and calculates the amount and bam, the check is cut. It’s almost automatic (though my past experience with the EU taught me it can be painful). Politicians set-up the policy but then leave it alone.
In Malawi however, that would be a bit harder to do. First of all, ressources are a lot more limited and with 80% of the population being farmers, requirement would have to be extraordinarly hard to prevent everybody from qualifying. Then, there’s the issue of lack of bureaucracy (isn’t that a funny sentence to type ?). A farmer in France or Iowa have a papertrail on everything, from the size of their land to past production, costs, investments accounts to their financial situation. That’s not the case in Malawi and makes a bureaucratic subsidy impossible. And then there is the complex parliamentary situation which influenced the Bill. Remember, Malawi’s president left his party after election and therefore has no congressional support. And the House is divided between 3 parties, none of them having a majority. So the bill came from a desire to subsidize maize production in order to achieve food sufficiency (maize is the food staple). But in the process, tobacco and i think tea were added (the votes of the party based in the tobacco producing area were needed) making the reach of the bill even larger.
So yeah, distributed. Coupons, given by the Ministry of Agriculture to Regional Authority to Local Chiefs to Farmers. That made me nervous. Corruption, patron-client relationship, political rewards were the first words coming to my mind. Especially with a president who is currently trying to build his own political party from scratch. And of course it happenned:
Malawi National Assembly has said it will summon Minister of Defence Bob Khamisa to properly explain why he was found with the fertiliser subsidy coupons and who gave him.
Bwanali claimed in an interview with Capital Radio that he was personally given 2000 coupons by Deputy Minister of Agriculture Binton Kutsaira, though the latter has since refused to say anything on the matter.
Recent media investigations revealed that each minister and loyal DPP members of parliament were given 2000 coupons to be distributed to the party
Malawian police have impounded 300 bags of fertilizer from ruling party regional governor for the north, Harry Mkandawire, when they stormed his house for search and arrested him.
Eye witness said police stormed Mkandawire’s residence upon a “tip-off” from the public that Mkandawire was frustrating the fertilizer subsidy programme by denying members of the opposition parties from benefitting. Police confirmed the incident and said investigations are underway.
But those two cases are only the tip of the iceberg. After all, we’re talking about a small portion of a multi-million program being misused by the higher levels of the administration. Most of the subsidy did reach farmers and did create results.
The real issue is which farmers it reached. The final decisions were left to the discretion of traditionnal local chiefs. And while some communities have their priorities straight or are fair (those two are not the same), how easily could family feuds, neighbour conflicts, parochialism, conformism or local politics influence the process ? How about efficiency concerns ? After all, nothing says that those who could make the best use of the subsidy (the most industrious poor farmers) are those who seem to need it the most (the poorest farmers).
In short, a top-down distribution process with so many layers of non-neutral decision-makers allows too many misuse and misallocation opportunities. Yet, at least for now, free-market or bureaucratic allocations would probably have a smaller reach.
So readers, brothers, sisters, economists, policy-wonks and africans, how do you make it work ?