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Wednesday, April 17, 2024

AIP marred with ambiguities – World Bank Report

File: AIP beneficiaries waiting for their turn

By Lovemore Khomo

The World Bank report has revealed that the Affordable Inputs Program –AIP is marred with ambiguities such as selection of beneficiaries, which may constrain agricultural output.

In a new report launched on Tuesday in Lilongwe, the World Bank indicates that the AIP Implementation Guidelines leaves a lot to be desired on how beneficiaries were selected, citing a variety of selection methods and uncertainty on mechanism to address fiscal shortfalls in the program.

The 2023/24 AIP was launched in October 2023, intending to target 1.5 million of the more productive farming households, based on continued efforts to streamline and reform the AIP. The government indicates that the program is on track, having reached 84 percent of beneficiaries as of early January 2024.

In the report, the Bank has pointed out that Malawi’s maize farmers face quadruple challenge of low per capita production, sparse harvests in 2023, high prices, and high susceptibility to El Nino impacts.

“Although maize serves as the primary source of calories across much of Malawi, significant variations in maize cultivation and markets exist despite the relatively small geographic scale of the country. For instance, the most productive Kasungu Agricultural Development District (ADD) is estimated to have produced more than three times as much per capita as the least productive ADD, Blantyre.”

“Rapid price increases and limited employment options have led to a rise in food insecurity and poverty in Malawi as many Malawians feel the squeeze from the scarcity of available jobs and pressures on real wages”, says the reports.

However, World Bank has commended government for taking important steps in macroeconomic recovery as growth remained low amidst delayed steps towards the country’s macroeconomic stabilization.

These actions include an adjustment of the exchange rate, the announcement of increased flexibility of the kwacha, the agreement on an Extended Credit Facility (ECF) with the IMF, a reform program supported by World Bank Development Policy Operation.

The bank recommends government to bolster macroeconomic stability through ongoing macro-fiscal reforms which need to be sustained and fully implemented, focusing on rebuilding foreign reserves, enforcing fiscal discipline, enhancing public financial management, improving debt management, and increasing flexibility in exchange rate management.

“Creating the foundations for export-led growth through key measures include stimulating growth of the agriculture sector by advancing with reforms of the AIP and commercialization initiatives, incentivizing exports by reducing non-tariff barriers, and supporting development of an efficient and transparent mining sector.”

It has also recommended that Malawi should build resilience and protect the poor to cushion the heightened risk of extreme weather events and food insecurity, which will be essential to move forward with the implementation of the expanded social cash transfer and climate-smart public works programs, as well as to strengthen the functioning of agricultural markets.

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