The Effect of Digital Targeting on Subsidy Efficiency and Welfare Outcomes: Towards a Reform Roadmap for Malawi's Farm Input Subsidy Programme

Abstract

Purpose: This study evaluates whether digital beneficiary targeting, comprising biometric registration, proxy means test selection, and mobile money e-voucher redemption, can improve
the efficiency of Malawi's Farm Input Subsidy Programme and the welfare of its beneficiary households, and it proposes an econometric evaluation strategy that future research can apply once the reform is implemented.

Methodology: The study synthesizes evidence from peer reviewed literature, independent programme evaluations, and comparative digital subsidy reforms in Nigeria, Ghana, Kenya, and Tanzania, and it develops four hypotheses concerning targeting accuracy, distribution timing, welfare outcomes, and infrastructure moderation.

Results: The synthesized evidence supports the hypothesis that biometric registration under an independent targeting commission reduces elite capture and ghost beneficiary rates relative to community administered selection, that mobile money
e-voucher redemption compresses distribution timelines, and that timely input delivery is a necessary condition.

Conclusions: A phased three-pillar digital reform, if
implemented with adequate telecommunications coverage and safeguards against exclusion, can plausibly restore a large share of the programme's fiscal and welfare value.

Limitations: The absence of Malawi-specific household
outcome data limits causal inference.

Contributions: The study offers a testable econometric roadmap and a comparative evidence base for sequencing digital agricultural subsidy reform in Malawi.