Recent African experience with input subsidies
3.10. Conclusions from recent experience
A number of observations from the limited programmes reviewed here war-rant particular emphasis:
First, we reiterate a point made by Druilhe and Barreiro-Hurlé (2012) that the resurgence of agricultural input subsidy programmes in Africa is not a temporary phenomenon—they are attempting to address a real set of agri-cultural and development problems and their visibility and immediacy make them politically attractive. In this context, debates about their effectiveness and about ways to improve that effectiveness are healthy and should be wel-comed. It is, however, important that such debates are based on thorough agronomic, economic, political, and administrative analysis of historic, cur-rent, and potential costs and achievements of subsidy programmes.
In this context our second observation, again supported by Druilhe and Barreiro-Hurlé (2012) is disappointing: it is notable how diffi cult it is to fi nd comprehensive reviews of subsidy programmes, despite the substantial num-ber of programmes that have been or are being implemented across Africa and the very substantial investments of public funds in these programmes.
There is a major need for country studies to document country experiences, using a comprehensive conceptual framework linking inputs, activities, out-comes, and wider impacts, as developed in the previous chapter.
Third, we note a continuing tendency for programmes to focus on produc-tion objectives and producer welfare, and to ignore the interests of consum-ers and the processes (and necessary conditions) for subsidy programmes to contribute to wider pro-poor economic growth. This is a critical omission, and is linked to the limited extent that the design and implementation of many programmes are integrated with complementary investments. Such integration is needed fi rst for subsidy programmes to effectively deliver their stated objectives of incremental production, and then for them to contribute to the wider processes of pro-poor growth. Recognition of the importance of consumer price benefi ts and of the ‘price productivity tightrope’ is particu-larly important here. Druilhe and Barreiro-Hurlé (2012) also note the ten-dency to focus on producers, production objectives, and expansion of input access, and argue that there is insuffi cient attention paid to improved soil fertility and health, to development of private sector input supply, to com-plementary investments raising input productivity, to effective programme implementation (with more secure entitlement systems, better targeting, better monitoring and evaluation), and to phasing out and exits for input subsidies. However Druilhe and Barreiro-Hurlé (2012) themselves make lit-tle mention of programme benefi ts for consumers and for wider economic growth, and provide no discussion of farm level (as opposed to input supply) processes whereby subsidy delivery may lead to reduced need for and benefi ts from subsidies.
Fourth, and related to the previous two points, there appears in some pro-grammes to be an unfortunate lack of interest in improving effectiveness and effi ciency. This is evident from the limited monitoring, evaluation, and audit systems in some programmes, limited cost benefi t and fi scal effi ciency anal-ysis, and limited attention to problems of late delivery, displacement, and leakage. Challenges from fi scal constraints, likely rising fertilizer prices, and the effects of climate change will make it even more important that in the future governments improve the effi ciency and effectiveness of input sub-sidy programmes in both raising productivity and promoting wider pro-poor growth within and beyond agriculture.
Limited apparent interest in exits and graduation is also common. In the examples where this is not the case (Tanzania and Zambia) there appear to be diffi culties in implementing this. This may be related to an apparent and indeed remarkable lack of attention to the question of why and how scaling back, graduation, and exit should and could occur. In the Tanzanian case, for example, farmers are to access subsidies for a maximum of three years. It is not clear how or why farmers will no long need access to the subsidy in a
fourth year, but this raises important questions about the processes of change needed for this (in farmers’ livelihoods and resources, in local economies, in input supply systems). Similar questions arise regarding the development of private sector input suppliers.
Two notable commonalities observed across programmes are (a) the lack or limited focus on replenishing soil fertility and (b) a strong (almost univer-sal) prevalence of heavy subsidies (50% to 100% subsidy rates) on rationed inputs. This commonality occurs despite differences between programmes as regards fi rst relative emphasis on improving national food security (and total input use and production) as against improving household food secu-rity (and helping food-insecure households) and second relative emphasis on supply system development. Political objectives and strong political infl u-ences on programmes are explicitly mentioned in only some of the pro-grammes reviewed, but the scale of resources allocated to these propro-grammes and their continued implementation suggests very strong political interest in and commitment to these programmes—even if the implications of this for programme design and implementation are not generally given very much emphasis.
When compared with the earlier review by Dorward (2009b), this review suggests that there is increased implementation of important aspects of smart subsidies, but there are still weaknesses in design and implementation, par-ticularly late input delivery. There is also a continuing lack of emphasis on improving programme effectiveness and effi ciency, limited attention to grad-uation processes, and inadequate attention to integration with complemen-tary policies and programmes for improving achievements of both direct and indirect benefi ts of input subsidy programmes. The mixed record of input subsidies continues.