External shocks challenge to Malawi’s poverty reduction efforts

Malawi continues to be stuck in a poverty trap as poverty reduction has been slow over the past decade with external shocks which have presented a significant challenge to the country’s poverty reduction efforts.

World Bank Country Manager, Greg Toulmin
National Planning Commission Director General, Thomas Munthali (l) with one of the officials

According to the Malawi Economic Monitor (MEM) Malawi’s poverty rate has since 2016/17 remained roughly unchangeable, standing in excess of 50 percent of the population.

The 9th edition of MEM which was launched in Lilongwe on Tuesday under the theme ‘Charting a New Course’ cites significant disparities in the rates between rural regions in different areas, with the highest rates in the rural South followed by the rural North.

Despite facing such challenges and the disparities which exist, poverty rate has remained roughly unchanged in rural North.

According to the National Statistical Office (NSO) Fourth Integrated Household Survey (IHS4) 2018, the poverty gap which captures the average shortfall of consumption of the poor as percentage of the poverty line, decreased slightly in the period from 2010/11 to 2016/17.

“Nationally, the poverty gap decreased from 18.9 percent to 16.8 percent over this period. The gap declined in both urban and rural areas,” reads the report in part.

World Bank Country Manager, Greg Toulmin said during the launch of the publication that Malawi’s vulnerability to climate related shocks limits the country’s progress in reducing poverty considering that a significant number of people reside in rural areas and are highly vulnerable to weather shocks.

He said the drought and floods that Malawi has experienced over the last two decades has contributed to negative consequences for food and water security as well as sustainable livelihoods for the rural population.

In March this year, Malawi was hit by Cyclone Idai which affected 17 districts. While the estimated growth impact is small, the post disaster needs assessment rates the overall social economic impact as significant and highest in districts with poorest populations.

Toulmin observed that adverse weather shocks may derail Malawi’s economic progression as seen in recent years hence the need to diversify.

“Without investing in the diversified economy outside rain fed, subsistence agriculture, the situation is likely to continue. This also ties with fiscal restraint which is needed in order to invest in resilience and diversification so that Malawi is no longer susceptible to weather shocks,” he said.

National Planning Commission Director General, Thomas Munthali emphasised on the need for Malawi to find a new course as far as poverty reduction is concerned.

“We need to change the narrative and look at how to create wealth for everyone. We cannot keep on looking outside for support,” he said.

He observed that support for the smooth attainment of Sustainable Development Goals (SDGs) approach is incumbent upon creation of wealth for the country’s citizenry.

As such, Munthali said coordinated mechanisms for sustainable development are vital and should be emphasized.

MEM is a biannual publication by the World Bank which aims to foster better informed policy analysis and debate on Malawi’s development challenges. It includes a review of recent economic developments, a macroeconomic outlook and a special topic key to longer term development.

The publication sets out where World Bank sees Malawi in terms of opportunities and challenges and offers some suggestions on ways to address those challenges.

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3 years ago

Malawians don’t just need to look at ‘external shocks’: they need to look at the succession of thieves in government who made matters worse, leaving Malawi crippled and unable to deal with external problems. That’s where the real problem lies.

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