2 out 5 Malawians earning K10 000 monthly in informal sector
Despite a set government minimum wage of K15 000 per month, 2 out of every 5 people in the country’s informal sector are earning far less than figure, a study on financial inclusion by the Johannesburg-based Finmark Trust has revealed.
The Finscope survey is carried out by the Johannesburg-based Finmark Trust and recently revealed growth in the country’s financial inclusion to 54 percent with the banked population jumping by 14 percent.
Government recently raised by 75 percent the minimum wage to K551 per day (K15 000 per month) but the study indicate that the informal sector is still mostly paying below the set minimum wage.
The development comes as a recent Centre for Social Concern (CfSC) Urban Basket Needs survey revealed that the cost of living in the cities of Lilongwe, Zomba, Blantyre and Mzuzu was K124 503, K112 940, K131 545 and K113 207, respectively.
But the Finscope study reports: “Farming and ganyu (piecework) are two livelihoods strategies that are often related to low levels of income with about two in five adult Malawians earning less than K10 000 ($23.8) a month.”
It further adds: “The survey indicates that Malawians save and borrow for similar reasons; i.e. mainly for living expenses, farming and medical expenses. Evidence from FinScope surveys suggests that this is often the reason people resort to informal mechanisms.”
The Study further calls upon the formal sector to find ways of leveraging the informal sector through, among others, providing services to savings groups but warns this should be done without creating usage barriers for those who depend on these mechanisms.
Last month, Finance and Economic Planning Minister Goodall Gondwe called for more action on ensuring financial inclusion saying government would do its best to create an enabling environment.
“This is a welcome development but we need to do more to ensure inclusive growth,” said Gondwe.
He further said both government and private sector need to increase efforts in ensuring the remaining population is accessing bank services to ensure economic empowerment and inclusive growth.
