Belfast Telegraph

Thursday 28 August 2014

Zambia must end maize subsidy: MPs

A Commons' committee has dubbed the Zambian government's maize subsidy as excessive

The Government should urge Zambia to stop subsidising maize growers, MPs said, after discovering the initiative cost the African nation more than four times the British aid it received last year.

A report by the Commons International Development Select Committee found £225 million - 8% of Zambia's government budget - was spent on trading maize at a loss in 2011. This figure dwarfed the sum received in aid from Britain, Zambia's biggest donor, which stood at £55m last year.

The committee dubbed the subsidy, which was introduced by the last Zambian government, as excessive. Abolition could deliver free secondary education to 300,000 children, build 50 new high schools and recruit 10,000 more teachers, it said. Currently, education is only free until the age of 14 for Zambians.

The committee said: "Zambian revenues could be used much more effectively on public services if a number of significant inefficiencies in public expenditure inherited from the previous government were removed. The maize subsidy is one of the biggest issues which the Zambia government has to confront."

But the report conceded that withdrawing the subsidy would meet with great public opposition. Aid Minister Stephen O'Brien told the committee in evidence: "The question is what to do about it, and it is difficult, because it is ultimately a political decision within Zambia."

The hefty bill associated with the subsidy was exacerbated in the last two years by two consecutive bumper crops. In 2010 the Zambian government bought the harvest at a premium, making a net loss of around 140 million US dollar (£88m), a problem repeated the next year.

Wasteful expenditure inherited by the previous Zambian government also includes a high public sector wage bill and an expensive fuel subsidy, according to the report.

The recommendations came as the committee advised the Department for International Development to focus its spending on Zambia's poorest, who do not benefit from the maize subsidy.

A spokesman for the Department for International Development said: "Although the Government supports reforms of financial management programmes in Zambia, this valuable report from the Select Committee clearly demonstrates the challenges of working with developing countries.

"Securing real value for money for the British taxpayer is a key priority for all our aid programmes."

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