Lusaka, July 26, 2019
As a collection of core interest groups, we want to express continued support for the e-voucher programme which empowers farmers to diversify their produce, respond to climate change and
increase their incomes; creates jobs through the delivery chain and reduces government expenditure. We call on government to commit to the e-voucher for the upcoming season and beyond – and to nsure that it is not scaled back from the current level of 60% of districts. With high debt levels, slowing economic growth and climate change threatening rural livelihoods, now is not the time to give up on this ambitious and effective policy reform.
Zambia’s traditional fertiliser subsidy programme (FISP) where the state procured and distributed fertiliser direct to farmers was riddled with problems: the subsidy was poorly targeted, costly, discouraged agricultural diversification; saw no improvement in rural poverty; crowded out the private sector and created considerable rent seeking opportunities along the distribution chain.
The e-voucher is therefore a better policy solution for the country. A study undertaken through IPSOS showed that farmers prefer it: following the 2017/18 season, 58% of farmers polled in
a nationwide survey by IPSOS preferred the e-voucher to traditional FISP, in spite of implementation challenges experienced that year. This consensus reflects that the e-voucher has solved the problems with the traditional FISP and more.
Firstly, it has provided farmers with choice over inputs, allowing them to diversify, which is even more important due to climate change, which has had a devastating impact on maize crops
in particular this season. Secondly, by using the private sector to procure, store and deliver inputs, it has created jobs: 23,000 in agro-dealerships alone following full rollout in 2017/18. Such private sector growth is even more important in an economic slowdown.
Finally, the use of the private sector has significantly reduced government expenditure by at least 15%. In the 2017/18 farming season, when the e-voucher programme was rolled out 100
percent, the Ministry of Financed saved an estimated K300 million.
This is particularly important considering the austerity measures Government has had to put in place to address unsustainable debt levels. Scaling back the e-voucher during a period of fiscal consolidation would be a step backwards in addressing the country’s key economic challenge: its debt levels. Furthermore, any decision
to decrease the proportion of the e-voucher will accrue further debt because contracts for inputs under the DIS are paid in arrears to fertiliser and seed companies. This is in direct contravention
of the MoF directive on 27th May 2019 to ministries not to contract goods and services without availability of funds.
Austerity means tough choices. The e-voucher presents a rare win-win that offers a better service at a lower cost. This means that the Ministry of Finance must prioritise and release available funds to the Ministry of Agriculture in time to successfully deliver the e-voucher to the districts that need it the most. Government should work on real-time payment; and to ease liquidity, farmer deposits should be ring-fenced to cover initial payments and create time to
generate the cash for further payments – this money needs to be prioritised ahead of the more expensive, debt-based DIS.
One of the biggest hurdles to the full implementation of the e-voucher is that the programmes requirement of pre-financing whereas DIS contracts are traditionally paid for in arrears.
Zambia’s growing fiscal pressure emphasises the need to fully commit to the e-voucher particularly in light of Government’s commitment to fiscal consolidation in the face of high debt levels.
Commitment to the e-voucher would send a clear message to external partners, such as the IMF, that Zambia is willing to make tough decisions and take the necessary action to put the economy back on track. Furthermore, as the new Finance Minister Dr Bwalya Ng’andu has noted, the IMF, donors and investors are looking to Zambia’s policy decisions to gauge whether it is committed to addressing debt levels: e-voucher shows this and increases chances of a support package.
We acknowledge Zambia’s liquidity position makes it difficult to fully implement the evoucher, hence the split in the FISP between the DIS and e-voucher. However, considering the positive impact the e-voucher has had on farmer welfare, is imperative that the Ministry of Finance prioritise and release available funds to the Ministry of Agriculture in time to successfully deliver the e-voucher to the districts that need it the most. Government should work on real-time payment: to ease liquidity, farmer deposits should be ring-fenced to cover initial payments and create time to generate the cash for further payments – this money needs to be prioritised ahead of the more expensive, debt-based DIS. As an effective policy reform that meets the need for fiscal consolidation, Government must commit to maximising effective delivery of the e-voucher in the upcoming season, recognising the harmful effects of any scaling back for farmers, agro-dealers and the Treasury and commit
to scaling the programme up in the 2019/20 season.d Kangwa Muyunda, Programme Officer
This statement has been endorsed by the following institutions:
Consumer Unity and Trust Society
National Union for Small Scale Farmers (NUSFAZ)
Oxfam
Centre for Trade Policy and Development (CTPD)
Rural Women Assemblies (RWA)
Young Emerging Farmers Initiative (YEFI)
Participatory Ecological Land Use Management (PELUM)
Agriculture Consultative Forum (ACF)
Heifer International Zambia
Civil Society for Scaling up Nutrition (CSOSUN)
Hivos
Civil Society for Poverty Reduction (CSPR)