Fighting, measuring poverty

Malawi launched the Malawi Growth and Development Strategy  (MGDS) III as a tool to spur economic growth and reduce poverty levels.

The launch of MGDS III came against a background of revelations towards the end of 2016 in a series of news stories The Nation carried on poverty, mainly focusing on the expiry of MGDS II implemented between 2011 and 2016.

Briefly, the conclusion was that MGDS II, as a tool to fight poverty, failed to deliver on a number of set targets.

Implementation of MGDS III is expected to cost about K8.6 trillion over a five-year period.

Malawi is rated as being among the 10 poorest countries in the world. In fact, in that unenviable bracket of poorest countries, Malawi tends to “jostle” for better positions among mostly war ravaged nations despite the country enjoying peace since independence.

What is poverty? How is it measured? Why should people and nations care anyway about ending poverty? These questions often come to mind whenever people discuss how poor or rich a nation is or indeed its people are.

In economics, poverty is widely defined as a situation when it is not possible for people to meet the most basic needs in life. These include food, clothing and decent housing (shelter) over their heads.

Founding president Hastings Kamuzu Banda (may his soul continue resting in peace) used to describe decent shelter as: “A house that does not leak when it is raining”.

There is absolute poverty and relative poverty. By definition, poverty is said to be absolute when it is measured by set standards such as housing, shelter and food. It is relative where one’s economic situation is compared to another person’s.

In terms of measurement, experts use poverty headcount—a fraction of a country’s population living below the poverty line. According to a World Bank definition, one is said to be living below the poverty line where they live or exist on $1.90 (around K1 300 at current exchange rates) per day.

MGDS II failed to reduce poverty in general and worsened deprivation in urban areas where headcount poverty remained-largely unchanged in a statistically significant way between 2010 and 2013, standing at 40.2 percent and 38.7 percent, respectively.

Between 2010 and 2013, urban poverty surged 8.3 percent from 17.9 percent to 26.2 percent.

The sharp jump in urban paucity has presented a fresh headache to policy makers who have traditionally invested a lot of thoughts and resources in tackling rural poverty while giving the urban poor a cursory glance.

During the same period of implementation of MGDS II, rural poverty marginally improved from 44 percent in 2011 to 40.9 in 2013. However, looked at proportionally in terms of the urban-rural population, the situation is much worse in villages.

To achieve the rates of poverty alleviation envisaged in MGDS II, Malawi’s economic growth was supposed to average about 7.2 percent per annum between 2011 and 2016. But, in reality, growth ranged from 1.9 to 5.7 percent with an average of 4.2 percent over the implementation period.

Based on the 2012 population projection—where the average population growth rate was estimated at 2.8 percent—under MGDS II, growth in output per capita would range from -0.7 to 2.9 percent with an average of 1.8 percent, according to the report.

Unavailability of opportunities to earn income, unequal access to income earning opportunities, failure to take advantage of opportunities and misfortunes in life have often been mentioned as some of the contributing factors to poverty.

In other words, poverty levels can be reduced where people are empowered to own assets and an environment is created to entice more investors to create jobs. Transparency should guide recruitment, especially in the public sector. People should be employed because of the qualifications and expertise they have, not whom they are “connected” to.

Safety nets have also been used to tackle poverty usually in the short-term. Here, public works programmes and cash transfer schemes come to mind.

For the record, since 1962, Malawi has had 11 development plans whose key objective has been to grow the country’s economy at an average of six percent and tame inflation rate to six percent by 2016.

MGDS III, like its predecessor MGDS II, is one step in the right direction as it seeks to guide the country to have focus and direction in terms of planning and implementation of development projects. However, clear financing for the capital intensive projects outlined in the strategy will be critical to success.

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