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E-voucher Delays: How and why they matterBy CUTS on 7 Nov 2019
While much of the country is waiting for rains to cool the current heatwave, many farmers under the e-voucher are hoping they will hold. Our recent field visit to e-voucher districts in Lusaka and Southern Provinces found delays in crediting farmers with funds and paying agro-dealer arrears, leaving 400,000 smallholder farmers under the e-voucher at risk of being unable to plant their harvest on time.
Various stakeholders including the Government itself has acknowledged the superiority of the e-voucher in delivering inputs under the FISP, especially in light of the threat of climate change – as have farmers, who, when polled by CUTS noted that the e-voucher allows them to diversify their inputs and select more drought resistant crops. However, implementation challenges, particularly the liquidity required to pay agro-dealers have meant that the programme has, disappointingly, be scaled back to 40 percent of beneficiaries. CUTS set out to understand how the programme has been implemented by visiting 5 districts (Chongwe, Kafue, Chirundu, Choma and Kalomo), and comparing preparedness for the farming season between the Direct Input Supply (DIS) a form of traditional FISP districts and the e-voucher districts, so that we can make recommendations to support government to scale up the cheaper and more effective e-voucher.
E-voucher has remained the preferred method of delivery of the FISP among farmers and findings on the ground show that farmers feel that the prevailing challenges with the system need to be addressed for them to harness the full benefits of the e-voucher programme. FISP preparations for the farming season on governments end are progressing well with around 80 percent of farmers on average having already made their deposits. In DIS districts such as Kafue, inputs have been delivered to the assigned warehouses and are ready for redeeming, however in e-voucher districts farmers are still awaiting the 1700 to be deposited to their accounts by the government before they begin to redeem inputs for the farming season. Government’s liquidity position has continued to undermine the implementation of the e-voucher. With rains predicted to start in the second week of November, there is a risk that farmers will not be ready to plant on time and maximise their harvest – particularly with threat of the rains stopping in February for the southern and western parts of the country.
The DIS has been shown to be more expensive than the E-voucher as government absorbs transportation, storage and distribution costs. Findings show that this year, the cost of fertiliser and the amount provided to farmers is much higher than under DIS than the E-voucher. The average market price of a bag of fertiliser is K350 – under the DIS when transportation, storage and distribution costs are factored in, the estimated cost of a single bag of fertiliser is K560. This means essentially that the estimated cost for a farmer that receives a 10kg bag of maize (K280) with 6 bags of fertiliser (at K560 each) is K3640 compared to the K1700 under the e-voucher. In a time of fiscal consolidation, government is paying 2 times more for the costs of inputs alone, as well as higher transactional costs.
In comparison to DIS, where farmers are set to begin redeeming inputs, farmers on E-voucher are waiting on government to deposit the K1700. The money on government’s end is not ready yet – therefore the full amount of the e-voucher has not reflected in farmer accounts yet, only their K300 contribution, which, following CUTS recommendation, have been ringfenced in a Ministry of Agriculture account. Farmers under e-voucher are therefore behind in readiness for the farming season as they are unable to redeem the full value of the e-voucher.
Agro-dealers are currently struggling under the burden of arrears from the previous season, which is further hindering preparations. Agro dealers are still owed an estimated K300 million with many agro-dealerships spoken to during CUTS’ FISP monitoring exercise expressing a lack of knowledge on when government would pay off the current arrears. In contrast to the DIS storehouses (that have already received inputs and are ready for distribution), many agro-dealerships were worryingly sparse: with such limited stocks, farmers may face limited choice, hindering diversification and delays in receiving their inputs, reducing their yields.
Governments liquidity position at present threatens to undermine the successful implementation of the e-voucher as it did last year. The DIS has been shown to allow for the implementation of the FISP as money can be paid to the large input suppliers at a later stage. However, what this entails is inputs under the DIS being more than 2 times more expensive than under e-voucher. In turn adding more debt, which has been one of the root causes of government’s liquidity crisis and crowding-out a cheaper and more effective programme in the e-voucher. In the immediate term, the government needs to clear agro-dealer arrears and begin to make deposits into e-voucher farmer accounts to allow them to begin redeeming. With about two weeks until the rains begin, time is of essence.Related Items
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