Poverty worsen in Malawi, headcount at 50.7%: World Bank suggest pathways to prosperity

The third Integrated Household Survey done by the National Statistics Office  has estimated that Malawi’s poverty headcount is at 50.7 percent.

The Wold Bank, citing NSO survey, said in its 2017 assessment of poverty in Malawi released on Thursday afternoon revealed that rural poverty continues to persist in the country with one in two people still poor, pointing out that since 2010, very little progress has been made in reducing poverty in rural areas where most of Malawians live, and is likely worsened by the floods in 2015 and the large-scale drought in 2016/17.

The bank has attributed the continued rural poverty to volatile economic growth, poor performance of the agriculture sector, high population growth, limited opportunities in non-farm activities, and inadequate safety nets within a context of high economic insecurity.

The assessment finds that poor performance of the agriculture sector which is the backbone of the country’s economy and on which more than 80 percent of the population depends, has contributed to the marginal decline of poverty over the years.

“Factors that have impeded agricultural growth include weather variability, declining soil fertility, limited adoption of improved agricultural technologies, inadequate provision of extension services, and restricted access to markets,” read in part the assessment which Nyasa Times has a copy.

The bank noted that despite an average 2.4 percent growth per year in GDP per capita for most of the period between 2004 and 2013, Malawi’s GDP was significantly more volatile than other countries in Africa.

“Issues that contributed to this volatility include macro-economic instability and large scale weather shocks such as droughts and floods that hit the country in recent years. These difficult conditions hit the poor harder.”

Meanwhile to reduce poverty, the bank has proposed a number of actions in the agriculture, financial and social protection areas, in addition to creating conditions for macroeconomic stability.

“Since agriculture is key, the assessment recommends raising the labor incomes of the poor through increasing the productivity of agriculture. This could be done through expanding access to new technologies to boost yields, scaling back the farm input subsidy program and focusing its objective on increasing productivity.

“Beyond agriculture, there is need to facilitate movement into new, more remunerative nonfarm activities. Access to credit backed by a functioning individual identity (ID) system and deepening financial inclusion through mobile banking could catalyze this movement. The Bank further recommends upgrading skills, promoting entrepreneurship, integrating value chains and reducing costs of logistics,” further reads the assessment.

On social protection, the World Bank has proposed to government to reform existing safety net programs to help protect incomes and assets of the poor against shocks, saying this could be done by giving the poor larger and well-directed transfers, scaling up unconditional cash transfers, enhancing the insurance role of the public works program to build responsiveness to large weather shocks and improve its targeting performance.

The bank has also proposed the need to have the value of the assets created through public works to be evaluated to determine if they are valuable, and if not, government should consider removing the condition to work to get cash.

The assessment recognized the importance of managing population growth in the fight against poverty and recommended expanding female secondary education and access to family planning by poor adolescents to reduce child marriage and early childbearing.

In Malawi, women with a secondary education have low levels of fertility at 3.6 births per woman compared to 6.9 for those with no education or incomplete primary education.

The 2017 poverty assessment was done from a combination of three analytical reports produced by the World Bank. These are The Malawi Poverty Assessment, the policy report Pathways to Prosperity in Rural Malawi, and the Poverty and Social Impact Analysis of the Farm Input Subsidy Program.

In Malawi alone, a 2015 study by Oxfam titled A dangerous Divide: The state of inequality in Malawi revealed that an estimated 9.5 million people will live in poverty by 2020 up from 8 million people in 2015.

Malawi’s gini-coeficient —a measure of the extent of distribution of income—jumped from 0.39 in 2004 to 0.45 in 2011.

Malawi’s poverty rate has been worsening in the past three years, captured at almost 70 percent as of last year, the recent World Bank reports in its recent bi-annual Malawi Economic Monitor publication.

The publication puts into perspective Malawi’s economy by monitoring trends to help guide policy interventions and economic planning.

The poverty rate had dropped to 69.3 percent in 2014 from a peak of 70.1 percent the previous year but since then there has been an upward surge to reach 69.6 percent, showing the country is losing the battle against poverty which the bank says is striking half of the rural population.

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