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Malawi relies heavily on tobacco for export earnings. One strategy for promoting a more stable and vibrant economy is to diversify away from tobacco and broaden its export base to high potential commodities like soya. However, we hypothesize that there are institutional barriers impeding consistent growth in soya exports and seek to identify the critical ones. This study undertakes an institutional analysis of the soya export sector. Using a qualitative research approach based on semi-structured interviews, we examine: a) the policy environment, b) the exporters and the regulatory actors, c) the framework of legal rules and requirements for exporting soya, and d) the ways in which the policy environment and regulatory framework influence actor behavior. We find a highly centralized policy and governance environment that, when faced with a decision, is more likely to add layers of regulation than rely on market forces, in spite of low enforcement capacity. Regarding actors’ behavioral responses to the regulatory framework and the policy environment, we find inconsistent application of rules and regulations, highlighted by time variations, perceived discretionary power, and lack of enforcement; these inconsistencies are driven by lack of capacity to implement the requirements effectively due to understaffing and infeasibility of enforcement.
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Challenges to Soya Export Promotion in Malawi: an Institutional Analysis of the Soya Export Sector
Noora-Lisa Aberman, IFPRI-LilongweBrent Edelman, IFPRI/Consultant
Study Rationale • Malawi relies heavily on tobacco (and a few other key
cash crops) for export revenues (tobacco 60%) (WB 2010), leaving the economy vulnerable to exogenous shocks• Soya is identified as high-potential crop in NES• Has potential to:• Improve incomes/decrease risk for small farmers (93% of
soya production)• Improve diets• Improve soil quality
• In spite of regional demand and increased production, exports are variable
Challenges to Promoting Soya Exports
• Trade literature typically focuses on tariff and non-tariff measures as impediments to exports• In the developing country context, there may be even
more limiting for the business environment, such as the implementation and enforcement of the formal rules and requirements• As such, this study takes an institutional approach,
examining the formal rules as well as HOW they are fulfilled.
Study OverviewInstitutions systems of established and prevalent social rules that structure interactions of economic actors (Hodgson 2006). This study takes an institutional approach, examining:
1. The broad policy and governance environment,2. The actors (exporters and the regulatory actors) and their
characteristics, and 3. The framework of legal rules and requirements,4. The way in which the first 3 influence the behavior of
actors*based on analytical framework from Kirsten, Dorward, Poulton, and Vink, 2009.
Study Overview, cont.• Qualitative methods better for assessing issues of
enforcement and implementation, etc. (Buchanan, Chai and Deakin 2013)• Applied the Net-Map interview method, which assesses
the actors involved in a given issue, their interactions, their power, and other relevant actor attributes. • Semi-structured interviews with exporters (9) and policy
stakeholders (govt, private, dev partners, 8). Results triangulated in structured interviews with regulatory body representatives. Interviews continued until saturation.
Study Overview, cont.• Collected actors’ narratives on formal requirements and
the policy environment in, and quantitative information on: • Costs and time requirements for completing formal export
requirements;
• Perceptions about the amount of discretion that regulatory actors take in the soya export process, quantified into a score of 1-5;
• Social network data reflecting policy actors involved in pressuring for—or blocking—reform of the formal export requirements.
1. The broad policy and governance environment
Policy and Governance Environment• Made up of fundamental political and social ground
rules in which institutions are developed (Kirsten et al, 2009)
• Centralized, top-down government decision-making structure. • More likely to add layers of additional regulation than
rely on market forces, in spite of low enforcement capacity.
2. The actors (exporters and the regulatory actors) and their characteristics
ActorsKey actors and their characteristics play an important role in the institutional landscape.
•Few, large-scale firms engaging in export sector•Key regulatory actors: MoIT, MRA, Plant Protect Serv, Reserve Bank & MoAIWD. •Domestic consumption primarily industrial – poultry industry & soya processors
Policy Position LegendSupportive Opposed Conflicted Undecided
Actor Power and Policy Positions
3. The framework of legal rules and requirements, and how they are implemented
Regulatory Framework for Soya Exports
Discretionary Power
The Case of Soya Export Bans• Export bans have been periodically put in place at the
request of influential industrial soya consumers, to the detriment of farmers and exporters • These actors tend to bypass open fora (e.g., PPD
forum) and take concerns directly to ministerial/presidential level• Reform took place, but not through proper channels
(easily reversed) so exporters feel environment is still uncertain
4. The way in which the institutional landscape shapes the behavior of actors
Navigating the institutional landscape
• Tendency to add layers of regulation even in a context of institutional weakness indicated by inconsistency of implementation and lack of enforcement • Lack of clarity about how to comply with requirements
acts as barrier for new entrants to the sector and may create opportunities for rent seeking• Exporters cope with inconsistencies through
patronistic behavior – make use of personal connections to make process easier and more predictable
ConclusionsInstitutional capacity is challenging to address! Better clarity/articulation of the rules will decrease need for patronage• Increase transparency and consistency of information about
process
Make regulatory environment more consistent• Get rid of requirements that are not enforced, or invest in
them if important • Make export license reform more permanent
Decrease need for back-door bargaining• Promote and legitimize institutions for PP collaboration
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