FISP and MALATA

FISP and MALATA

The current DPP government has maneuvered itself into a tight spot. Because of its refusal or incompetence to improve the government financial management as well as crack down on corruption, it has no budget support from donors any more. Because of its excessive borrowing and reduced spending as well as pushing up of all kind of fees and taxes the economy is performing less and less, which results in less government income. It is killing the golden goose, and has no ideas how to reverse the trend. It is the classic problem of the Great Depression of the 1930s all over. Then the brilliant economist Keynes and the brilliant US president Roosevelt reversed the trend. However the Malawi government shows no signs of returning from the dark path of economic suicide.

malawi_farmer

In all the darkness of poverty for the large majority of the population of Malawi (the poorest country in the world!) there has been a little source of light in the form of Farm Input Subsidy Program (FISP). This program, invented by Bingu wa Mutharika of the DPP (the same that is ruling now!) made farm inputs affordable for the poor. This greatly improved the economic situation both on household level (the poor could eat) and on macroeconomic level: there were good agricultural yields that replaced imports and created exports. Good for the balance of payment, good for the stability of the currency and above all: good for the popularity of the President (Bingu). He consequently received several prizes for it.

Unfortunately Peter Mutharika has now gotten himself into such a tight financial corner, that he cannot finance the FISP fully. So even though it was called a government priority, the numbers of beneficiaries have been lowered and the prices the beneficiaries pay increased by 1700%! (Yes ladies and gentlemen, this is not a typo: 17 times as much. From K 500 to K 8500) This is a shocking decision for the poor, who always were the primary targets for the program.

At the same time, the Peter Mutharika administration has introduced the bright idea of Malata subsidy. This is subsidy on iron sheets and cement to make house construction more affordable (and as a side effect create jobs in construction, according to Honorable Atupele Muluzi, the UDF (liberal) minister who is implementing the program as far as the tight money allows.

So in effect, this DPP government is transferring money from the successful FISP to the controversial Malata program.

Nowhere have I seen an analysis from the government or anyone else, that this transfer is a good idea.

Can we get an answer from the President (or any other government representative)?

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