The purpose of this study is to evaluate the experiences of recent applications of agricultural input
subsidies in Sub-Saharan Africa (SSA). Subsidising agricultural inputs is controversial. On the one hand,
agricultural input use in SSA is very low by international standards, and the hope is that subsidies may
induce farmers to adopt the use of inputs and thereby increase agricultural productivity. On the other
hand, many economists argue that agricultural subsidies of all kinds are expensive, mainly benefit the
wrong people, and distort agricultural markets by encouraging farmers to overusing whatever is
subsidised. The recent input subsidy programmes reviewed in this study attempt to meet these
challenges by introducing so-called “smart” subsidies, which are specifically designed to maximise
effects at the lowest cost (we will discuss smart subsidies in more detail below).
The overall objective of the evaluation study is to “...provide an assessment of smart subsidy
programmes in SSA, focusing on obtained results as well as the way results have (or have not) been
achieved, hindering and enabling factors, pre-conditions, etc.” (Terms of Reference, included in the
Appendix). We evaluate the overall performance of selected input subsidy programmes, identify the
most important factors affecting programme performance, and outline areas where knowledge is scarce
or non-existent.
We have selected agricultural input subsidy programmes in four SSA countries, Malawi, Zambia, Ghana
and Tanzania to form the basis for the evaluation study. The need to assess the subsidy programmes in
some detail dictates our focus on relatively few cases. The Malawi programme has received a great deal
of attention as an example of a successful input subsidy programme. It is massive in scale, targeting is
based on a voucher system, and delivery of inputs to farmers is largely state-managed. It is also
reasonably well documented in the literature. The large scale programme in Zambia provides an
example of an alternative non-voucher targeting system and features state-driven delivery. The Ghana
case demonstrates a relatively small programme with a very market oriented delivery system, and the
Tanzania case provides insights into the targeting performance of a voucher scheme. Together, the
selected cases provide considerable breadth in terms of differences in the scope, design,
implementation and outcome of the programmes, as well as surrounding conditions.
The evaluation study is organised as follows: In the next section we discuss what is meant by “smart”
subsidies. The economic philosophy which is the foundation of the concept of smart subsidies also
forms the basis for our methodology as outlined in section 3. Section 4 evaluates each of the four cases
and section 5 summarises the lessons learned and section 6 concludes.