Hon. folks, A cursory look at the pre-budget narrative shows the APM administration isn’t just doing the public service reform. There is also a marked shift in the trend of thought on pro-poor funding within the rubric of subsidy review on public goods and services.
For the first time ever, a DDP-led government has not just opened its ears to a debate on how to ease the fertiliser subsidy burden but has also already fired warning shots, indicating hard choices will inevitably have to be made on the farm input subsidy programme (Fisp) package in the 2015/16 national budget.
Until now, it was taboo to question why, in the name of subsidy, the beneficiaries were only required to pay K500 for bag of fertiliser worth K14 000 or more. The good argument linked Fisp to food security which politicians, especially on the government side, felt adequately compensated for the allocation of as much as 10 percent of the national budget and more than 50 percent of Ministry of Agriculture’s time to it.
But the real reason for Fisp is obviously political. Through it, the party in government directly reaches to an estimated 1.5 million rural voters with a hand-out to remember and appreciate when casting the vote on elections day.
Fisp was no doubt the reason behind the massive votes Bingu wa Mutharika amassed across the country in the 2009 presidential election, a feat he accomplished despite his DPP having no structures in the centre and north and against the odd of facing an alliance of MCP and UDF.
But it’s now nine years since Fisp was introduced and it’s clear that its charm has lost potency. This year we have registered a 30 percent food deficit despite investing K60 billion of taxpayer’s money in the subsidy programme. Last year voters showed Joyce Banda the door despite that she supplemented a K61 billion input subsidy programme with another lavish K25 billion fertiliser loan programme.
I bet the APM administration, which made a pre-election pledge to maintain the subsidy programme, wouldn’t be exploring ways of easing the subsidy burden on government if it hadn’t been for Fisp’s diminishing political value.
There’s stubbornness in the DNA of DPP that makes it see things its own way. At first the debate was on whether Fisp should be targeted or universal.
Despite there being no objective criteria for deciding who among the rural poor is a deserving beneficiary, DPP upheld a targeted programme for years, ignoring suggestions by MCP to make it universal.
DPP maintained a targeted programme even when it became apparent that cronies were abusing their power to choose beneficiaries. DPP also kept the beneficiary contribution at K500 even when the rising cost of imports eroded its value. Today, beneficiary contribution remains K500.
Why? Players in Malawi’s multiparty politics have exploited poverty for sheer political expediency. For the entire period Malawi was a protectorate and for the 30 years of Kamuzu’s regime, paying tax was the duty of the citizen.
The hunger for votes changed all that in multiparty dispensation. Politicians declared that the rural folks were too poor to pay tax just as they were too liberated to indulge in self-help. Chamwaka was thrown to wind and later, even some urban folks in regular employment were also exempted from PAYE (pay as you earn tax).
Today, government has a population of over 16 million to provide with public goods and services, including free health care and free primary education and yet it collects tax from the earnings of slightly over 500 000 people only.
As for food subsidy, in addition to the 1.5 million households it supports with virtually free fertiliser, there are also 1.5 million people who look to it every year for relief handouts.
Obviously government missed a golden opportunity to review its extravagant pro-poor agenda when donors were willing to contribute up to 40 percent of the recurrent budget. That was the opportune time to listen those who criticised the deliberate use of public funds to nurture dependency among the rural folks who have 85 percent of voting power in Malawi. Now, any change when the economic situation is already hard, is likely to cause more untold suffering. That in politics has a price too.