World Bank Advises William Ruto To Scrap Fertiliser Subsidies, Give Kenyan Farmers Cash

• World Bank, in its latest economic assessment of Kenya, noted the government should focus on investing in key infrastructure and research and development
• The lender said giving cash to low-income households will make them effectively plant and invest based on their available assets
• President William Ruto's administration introduced fertiliser subsidies to enable farmers to buy at low prices and enhance their production

TUKO.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

The World Bank has advised President William Ruto to do away with farm input subsidies and instead give farmers cash.

In its Kenya Poverty & Equity Assessment 2023 Report published on Tuesday, December 12, the Bretton Woods institution noted the government should focus on investing in key infrastructure and research and development.

The international lender, which has been influencing critical decisions by the state, said giving cash to low-income households will make them effectively plant and invest based on their available assets.

"Shift away from input subsidies to farmers and toward removing market distortions, investing in key infrastructure, and research and development. Swapping vouchers for inputs with vouchers for an equivalent amount of cash can also allow poor households to make efficient planting and investment decisions tailored to their asset endowments.

Domestic fertiliser prices are subject to global conditions, and the promotion of local (or within Africa) production of fertiliser potentially offers a less distortionary way to make this input affordable," the World Bank stated.

Why William Ruto introduced fertiliser subsidies

President William Ruto's administration introduced fertiliser subsidies to enable farmers to buy at low prices and enhance their production.

He insisted his government would focus on subsidising production, not consumption, which he described as costly.

In July, he announced the reduction of fertiliser prices to KSh 2,500 from KSh 3,500, having reduced the cost earlier from a high of KSh 7,000.

"We agreed to reduce the cost of living. The cost of food cannot be reduced by subsidising consumption... that is why we introduced fertiliser subsidies," Ruto explained.

Unga prices in Kenya

On Thursday, November 30, Ruto affirmed that the cost of living had dropped, with unga retailing between KSh 130 and KSh 140.

The head of state said the result was realised due to the fertiliser subsidies his Kenya Kwanza administration provided.

Ruto noted that the country's economy would stabilise gradually as the government continues to enhance food security.