A cross-country summary of fertilizer subsidy programs in Sub-Saharan Africa

By the early 2000s, the urgency of arresting soil nutrient mining combined with rising fertilizer and food prices stimulated interest in ways to raise fertilizer use, leading to the re-introduction of input subsidy programs under a new "smart" guise. These programs aim to address missing or imperfect financial and insurance markets, easing risk for small-scale farmers. The design and implementation of input subsidy programs directly influence the demand and supply for fertilizer as well as the macroeconomy. Across countries in Sub-Saharan Africa, designs are complex and have changed over time with experience. Objectives are often "vague" and "variable," with goals that may not be "economic" in the strictest sense. "Universal" subsidies are in fact regressive, favoring those with more assets and more social standing. By restricting the subsidy to a particular crop or set of crops, a program is targeting an area, farming system, and group of households. Studies reviewed show positive effects on yield and production by the farm household. Crop planted has not always been investigated, but studies show mixed results. Incremental increases in crop production can, but do not necessarily lead to outcomes, such as higher farm incomes and greater food security. In most cases, with the exception of remote rural areas or those with poorer farmers, crowding-out is more likely to have occurred than crowding-in. There is relatively less information on the impact of fertilizer subsidies on intrahousehold equity, land use, labor use, market participation, and nutrition. The fertilizer subsidy program in Mali is likely to stay in the short to medium-term without an exit strategy in place. Key steps should be followed to maximize the positive impacts and minimize the negative impacts of such a program. Clear and non-contradictory program objectives should be stated, and various design and implementation approaches should be tested. The targeting outcomes and program design and implementation should be aligned with each other and with the program objectives. A strong monitoring and evaluation system should be installed, and there is a strong need for more empirical evidence to better understand the intended and unintended impacts of the program, including the new e-voucher scheme. The authors of this study, Melinda Smale and Veronique Theriault, are professors at Michigan State University, and the study was funded by USAID/Mali and The Alliance for a Green Revolution in Africa (AGRA). The study aims to situate the understanding of the fertilizer subsidy program in Mali within a broader policy context and to draw lessons on what might be done to improve it. The study reviews the pros and cons of input subsidies in developing agricultural contexts, comparative summaries of subsidy impacts in other Sub-Saharan African nations, and targeting or not. The study concludes with implications for Mali, highlighting the need for clear program objectives, testing of design and implementation approaches, alignment of targeting outcomes and program design, and a strong monitoring and evaluation system.