A new political economy case study on Malawi shows how corruption can distort public policy, holding back policies that could change the lives of the poor in favour of those that benefit the political and business elites.
In Malawi’s case the policy choices are between giving the poor cash or maize supplies. Malawi’s elites, according to the new case study, have found ways of profiting from the buying and distribution of maize and fertiliser. So much so that Malawi ignores the global evidence that suggests that when structured well, cash transfers would be far more effective as a poverty and hunger relief instrument.
Malawi, a country in which 80% of households work in rain-fed agriculture, is prone to droughts, cyclones, floods and tropical storms. These cause devastation, resulting in the need for large-scale aid. Poverty is also high, with more than 75% of Malawians surviving on less than $3 a day (R51).
The new case study on Malawi is by the Open Political Economy Analysis (Open Pea) programme at Oxford University’s Centre for the Study of African Economies and the Blavatnik School of Government. The basis for the newly launched Open Pea is that politics is often the hidden determinant of success or failure.
“Decades of technocracy have typically overlooked power elites and their incentives, leading to disappointment, wasted funds and missed opportunity — from infrastructure that fails to catalyse growth to chronic absenteeism that pulls down public services.”
In Malawi’s case, the programme finds politicians have patronage networks and “strong ties” to the business elite, which they use to serve their personal and political interests. South Africa has similar networks, as evidence before the Madlanga commission of inquiry shows.
A growing body of global evidence suggests cash transfers can reduce poverty and hunger efficiently and effectively. Malawi, according to Open Pea’s case study, runs a cash transfer programme but it is deliberately starved of resources by government in favour of the maize programme, from which politicians and their business associates reap huge rewards.
“Many politicians benefit economically or politically from redistribution mechanisms, particularly the procurement and delivery of maize and fertiliser.”
At the centre of all this is the government maize policy, which covers the purchase of maize from smallholder farmers, its storage and sale at subsidised prices during the lean season. The lean season is the period between planting and harvesting when people have exhausted their food stocks from a prior harvest.
The case study points to non-transparent practices regarding the buying of maize by the state-owned Agricultural Development & Marketing Corporation. The corporation buys maize from smallholder farmers, stores it in community depots, and sells it at subsidised prices during the lean season.
But farmers have no clue when, how much or from where the corporation will buy maize. This, according to the case study, opens the door for some traders to buy maize from smallholder farmers below the minimum maize price during the lean season, a period when smallholder farmers are most vulnerable. In 2020, for example, 75% of maize farmers sold their stocks for an average 75% of the official minimum price.
Contracts for buying and transporting fertiliser are also reportedly inflated, benefiting networks of businesses with political connections.
These practices distort incentives, reducing the incentive for smallholder farmers to become commercial producers and to diversify into other crops. All of which perpetuates food insecurity and poverty, a situation from which politicians and their business associates benefit.
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and South African Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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