Fertilizer policy reforms in the midst of crisis: Evidence from Rwanda

Abstract

Fertilizer subsidies are a prominent feature of many agricultural development strategies in sub-Saharan Africa, but few countries have the necessary data to make rapid decisions about their management in the face of exogenous shocks. This was the case in Rwanda following the rapid increase in international fertilizer prices in 2021–22. Working within a constrained fiscal space that followed the economic downturn caused by the COVID-19 pandemic, the Government of Rwanda aimed to revise its fertilizer subsidy system to accommodate higher fertilizer import pric-es without compromising progress against its agricultural growth targets. This paper explores both the economic analysis and policy process that shaped decision-making around Rwanda’s fertilizer subsidy system during the period 2020–23. The paper centers on the design and application of a microsimulation model that estimated—almost in real time—the impact of increased fertilizer prices on crop production during this period. It then explores the policy outcomes that followed, emphasizing the scope for subsidy reductions even in the midst of crisis, the critical importance of strengthening agricultural data systems, and lessons for countries facing similar challenges.