Subsidy programme is no-go zone
In the awake of the International Monetary Fund’s revelation that the economic programme in Malawi is off-track, the World Bank wants government to review some policies to improve economic performance. The Bank is concerned about government borrowing, the huge wage bill and the subsidy programme. In particular, the IMF has singled out the K50 billion Farm Input Subsidy Programme (Fisp) as one of the costly subsidies in the budget that need to be reduced.
There is now pressure for government to meet these conditions to access credit facility. As government revises the budget to cut down on expenditure, care must be taken that the reduction does not affect the lives of ordinary people. Whatever budget cuts Treasury is working on, Fisp should not be tampered with. Reducing the resources to the programme will negatively affect food security and lead to mass starvation. The World Bank and other local detractors have criticised the subsidy programme as unsustainable. That they want the programme to be drastically reduced or scrapped off completely is not strange.
Unfortunately, the number of commercial farmers who produce maize and other food crops is negligible. Poor farmers in rural areas actually grow food. They feed people in our cities and towns. But smallholder farmers do not have access to credit or farm inputs to boost agricultural production.
If government reduces resources to Fisp, there will be serious deficit in food production both at household and national levels. It will be a national food crisis and the vicious circle will be difficult to break.
As Civil Society Agriculture Network (Cisanet) national coordinator Tamani Nkhono-Mvula has rightly observed: “The agriculture sub-sector in the country can never survive if Malawi can do away with farm input subsidies and that there is a great need to increase consumption of fertilisers if we are to maintain productivity.” Farmers cannot do without subsidy programme.
It is important that when government is looking at areas to cut, it should look at non-essentials. There are so many areas that government can cut expenditure. For example, government should completely stop spending millions of kwacha on State banquets (Mapwevupwevu). This is not time for partying. Similarly, the President should not travel with huge delegations or prolong his external travels. He needs to demonstrate seriousness in cutting expenditure. The huge fuel and other allowances paid to ministers and parliamentarians should also be reduced.
Fisp has become expensive largely because government is involving the private sector to buy fertilisers. Fisp has become a cash-cow. Many of these companies overcharge government for the fertilisers, not to mention the corruption behind the scenes.
Why government is not using Admarc to procure fertilisers one cannot understand. Admarc has capacity to buy and distribute fertilisers because it has structures throughout the country. If Admarc was used, government would save billions of kwacha. The private sector can only be used to transport the inputs to various destinations.
Government should learn to manage public resources prudently. One way is to use parastatals to implement projects. The Malata and Cement Subsidy Programme is failing because of involving the private sector when Malawi Housing Corporation (MHC) should have been used to buy the building materials. Why does government do things retrogressively?
