A sweeping government overhaul of the fertiliser subsidy program has resulted in the loss of approximately 200,000 jobs across Kenya’s agricultural supply chain, a new World Bank report has revealed. The move, intended to make fertiliser more affordable, has instead sidelined thousands of local agro-dealers and transporters.

The report, titled “From Barriers to Bridges: Procompetitive Reforms for Productivity and Jobs in Kenya,” scrutinises the second phase of the National Fertiliser Subsidy Programme (NFSP-2). This policy shifted distribution from a vast network of private, last-mile agro-dealers to a centralised system managed by the government and a handful of contracted importers, effectively cutting out the small businesses that connected farmers to inputs.

Under the previous voucher system, farmers could redeem subsidies at their local agro-dealer. The new model, however, restricts the sale of subsidised fertiliser to the National Cereals and Produce Board (NCPB) and a few approved vendors. The World Bank noted that this exclusivity has generated “distribution inefficiencies and crowded-out equally efficient competitors.”

The Hidden Cost for Farmers

For the ordinary farmer, the change has meant more than just a loss of jobs in their communities; it has directly translated into higher costs and greater difficulty in accessing the crucial farm input. The centralisation has forced many to travel significantly longer distances to get their supplies.

The World Bank study highlights a stark contrast:

• The average distance a farmer must travel to an NCPB depot is now 18 kilometres.
• Previously, the average distance to the nearest private agro-dealer was just 6 kilometres.

This tripling of distance has more than doubled transport costs for many small-scale farmers, eroding the savings the subsidy was designed to create. This logistical hurdle not only puts a strain on their finances but also risks delaying planting schedules, which can significantly impact harvest yields.

Undermining a Decade of Growth

The report suggests the current programme undermines years of progress in building a competitive and efficient private sector distribution network. The previous voucher system was seen as a success story on the continent for how it empowered both farmers and small businesses. By contrast, the World Bank warns that the new centralised model has failed to deliver cost efficiencies, with the all-in landing costs for fertiliser being “roughly equivalent for NCPB and private players.”

The multilateral lender has urged the government to redesign the programme, recommending wider and more flexible participation for the private sector. Analysts suggest that re-integrating local agro-dealers could not only restore the lost jobs but also improve efficiency and reduce the burden on farmers. As of the publication of this article, senior officials from the Ministry of Agriculture had not issued a formal response to the specific job loss figures cited in the World Bank report.

The findings place the government's policy under intense scrutiny, questioning whether the pursuit of lower fertiliser prices has come at an unacceptably high cost to the very rural economies it is meant to support. The path forward, the report suggests, lies in leveraging market competition, not replacing it.