World Bank assesses AIP impact
The World Bank says Malawi’s Affordable Inputs Programme (AIP), besides coming at a high fiscal cost, has done little to enhance food security, climate resilience, or productivity.
Instead, the bank says the programme, which subsidises maize seed, fertiliser and other agricultural inputs, has trapped many rural households in poverty by perpetuating a maize-based agricultural system and discouraged responsible land management.
In its analysis ‘Further AIP reforms can strengthen climate resilience’, the bank notes that currently, an estimated 16 percent of the agricultural households targeted by AIP are not economically productive and sell subsidised fertiliser for cash to meet their basic needs.
Reads the analysis in part: “Like previous agricultural subsidy policies, the AIP has largely failed to stimulate the agricultural transformation necessary to accelerate economic growth and job creation, and public spending on the program is only weakly correlated with total maize production, due both to sup-optimal targeting and the greater significance of other factors, like weather.”
The bank argues that tightening enforcement of AIP eligibility criteria and consolidating beneficiaries of multiple support programmes could generate an estimated $40 million (about K70 billion) in savings, which could be re-allocated to expand the coverage of the social support for resilient livelihoods project and shield poor households from the loss of the benefits they had been receiving through AIP.
In this financial year, Treasury has reduced AIP budget to K103 billion from an estimated K151 billion in in the previous year, a move the World Bank has described as “prudent fiscal choice”, at a time drought conditions has made it more difficult to convert subsidised fertiliser into increased yields.
In recent years, government has invested billions of kwacha in AIP and its predecessor the Farm Input Subsidy Programme with the aim of promoting food security, but millions of Malawians remain food insecure annually.
Resultantly, agriculture experts have been calling for a redesign of the agriculture sector as a long-term solution to the perennial food insecurity in the country.
Agriculture policy expert Tamani Nkhono-Mvula said government needs to address climate change issues “as effects of climate change have heavily affected the agriculture sector”, calling for the promotion of irrigation farming.
Earlier, President Lazarus Chakwera said government will redesign AIP to make it more targeted and efficient as it had become evident that ineffective targeting beneficiaries, high cost of farm inputs and delayed procurement have dogged the programme.
He said to address such challenges, the programme was undergoing reforms which will be effected in the new fiscal year to enhance its impact.
Meanwhile, through a pilot programme undertaken as part of the Malawi Food Systems Resilience Programme, the World Bank is supporting the design, implementation and assessment of alternative input subsidy schemes designed to generate greater value for money while accelerating the transition towards sustainable food systems.
Particular attention is being devoted to improving beneficiary targeting and promoting private sector engagement in input procurement and distribution.
The new interventions will leverage alternate means of supporting food security with a focus on agricultural commercialisation and climate resilience, improving the impact of AIP funds going forward.
