The limitations of smart subsidies : a case study of Malawi’s Farm Input Subsidy Programme

Abstract

Malawi’s Farm Input Subsidy Programme (FISP) has contributed significantly to maize production and productivity and national food self-sufficiency, and has been coined as “one of the most successful smart subsidies of the day” (Mapila, 2013, p. 1). FISP, however, has increasingly come under fire for various inefficiencies, such as poor targeting and financial unsustainability. Given that these are the very challenges that smart subsidies are said to address, there is a need to re-evaluate FISP and assess the long-term developmental prospects of smart subsidies. This thesis argues that, while it has initiated significant productivity gains, FISP has not practiced pro-poor targeting, has not promoted private sector development in the subsidised fertiliser retail industry, and has been a significant fiscal burden on the state. FISP has not been successfully implemented as a smart subsidy, highlighting the limitations of successfully implementing such subsidy programmes in the SSA context.