Institutional Sustainability in Agriculture and Rural Development: A Global Perspective

By Derick W. Brinkerhoff; Arthur A. Goldsmith | Go to book overview

8
Policy Reform as Institutional Change: Privatizing the Fertilizer Subsector in Cameroon

Tham V. Truong and S. Tjip Walker

From 1972 through 1987 the government of Cameroon relied on a public monopoly to finance, import, and distribute subsidized fertilizer. In 1987 it took that monopoly twelve to fourteen months to supply 64,000 tons of subsidized fertilizer. The fertilizer cost an average of $0.18 per kilo to be manufactured and delivered to the port of Douala and an average of another $0.22 per kilo to be delivered to farmers ( IFDC, 1986). Farmers paid only $0.15 per kilo. The total cost to the government for the subsidy program was approximately $20 million.

In 1988, the private sector (commercial banks, private importers, and cooperatives) assumed the financing, importation, and distribution of subsidized fertilizer. Under this new arrangement it took only six to eight months to provide 63,000 tons of fertilizer. Due to increased world prices, the fertilizer cost an average of $0.22 per kilo, but only $0.11 per kilo to be delivered to the farmers. The subsidy rate had been reduced, so farmers paid an average of $0.18 per kilo. The total cost to the government was $6.7 million. In sum, in the one year it took to dismantle the public monopoly and replace it with a privatized system, delivery times were cut in half, in-country distribution costs were reduced 16 percent, and $13.3 million in budgetary savings was realized ( Abbott, 1989).

The source of these dramatic results was the Fertilizer Sub-Sector Reform Program (FSSRP). The FSSRP is a five-year policy reform program supported by USAID undertaken by the government to establish a private fertilizer marketing system in Cameroon that is competitive,

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