2011/2 Agricultural input subsidies in Sub-Saharan Africa

Recent years have seen an increase in the interest in agricultural input subsidies as an instrument to promote agricultural development in poor rural economies in Africa. However, such subsidies remain controversial among many economists. On the one hand, agricultural input use in e.g. South-Saharan Africa 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 overuse of the subsidised inputs. This study provides an assessment of the overall performance of agricultural input subsidy programmes in Malawi, Zambia, Ghana and Tanzania, where so-called “smart” subsidies have been introduced in an attempt to maximise effects at the lowest possible costs. The study identifies the most important factors affecting programme performance, and outlines areas where knowledge is scarce or non-existent.

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