Fertilisers in Nigeria

Can Centralised Distribution Systems and Technologies Control Leakages in Large-Scale Voucher-Based Fertiliser Subsidy Schemes?

Summary:

The project will examine centralised and technology-enhanced distribution modalities (e-wallet and parastatal fertiliser company respectively) that have recently been introduced into fertiliser subsidy programmes in Nigeria and Tanzania, two of the biggest in Africa. The new distribution modalities are intended to reduce leakage of vouchers via local government administrations by bypassing intermediations, but present their own challenges.

The corruption issue:

Fertiliser subsidies have seen a resurgence in popularity in Africa since 2000 where supposedly “smart” voucher-based schemes have come to account for a substantial share of total public spending on agriculture.

The technical merits of fertiliser subsidies as a means to stimulate smallholder agricultural growth remain hotly debated, with critics arguing that 1) their benefits are outweighed by (or barely exceed) their direct costs and, meanwhile, 2) they crowd out expenditure on more valuable public goods (Jayne and Rashid 2013). A factor that contributes to both of these points is that subsidies have also proven attractive to politicians at multiple levels as a means of garnering support. This means that:

  1. a) Fertilizers misallocation and capture: their distribution within the smallholder farming population does not conform to official targeting criteria, hence reducing poverty reduction or other anticipated impacts, and
  2. b) Resource capture and leakages along the central-periphery distribution chain: a significant proportion of vouchers never reach the target population as they are siphoned off by politicians and officials before they get to community level.

We are interested in both of these issues. However, whilst the former has already received a fair amount of attention in Nigeria, Tanzania and a number of other countries (e.g. Ghana, Malawi, Zambia), the latter is less thoroughly addressed, in part due to difficulties in data collection and the need of combining quantitative analysis with process analysis of corruption and political settlements analysis.

Theory of Change:

IF transparent local processes of beneficiary selection are combined with centralised control of fertiliser subsidy disbursement, THEN the efficiency of subsidy programmes can be maximised BECAUSE leakages to elite groups (politicians, administrators, better off farmers) will be minimised.

Research Methods:

The study will combine large-scale household surveys, key informant interviews at multiple levels, and detailed process analysis of corruption – rents mapping and leakages identification - along the distribution chain. Political economy analysis will finally help to frame issues arising from the prior quantitative and qualitative work, and assessing the feasibility of anti-corruption strategies. It will be amongst the first studies to explore the new modalities in both countries, will be unusual in its detailed comparative analysis of two major programmes, and rare in its combination of technical and political economy analysis of the distribution modalities.

Partners: Colin Poulton and Antonio Andreoni, SOAS University of London and Lucas Katera, REPOA Tanzania.

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