World bank Cautions Malawi
The World Bank has cautioned Malawi government to pay attention to poverty reduction policies such as social cash transfers as a means of reducing poverty levels and fiscal challenges which have been expanded by the Covid-19 pandemic.
In its Malawi Economic Monitor titled ‘Doing more with less: Improving service delivery in energy and water’ released on Tuesday, the Bretton Wood institution said fiscal challenges including inflationary pressures could emerge for both food and non-food inflation, which could increase poverty and food insecurity.
The bank said government—led by new President Lazarus Chakwera— must seek to support the most vulnerable and encourage an economic recovery though the country is facing a substantial domestic debt burden which severely limits its fiscal space
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“Considering Malawi’s susceptibility to compounded shocks this year government should also consider food insecurity emergency cash transfer responses in both rural and urban areas, building on functioning food markets.
“Efforts are needed to ensure regular monitoring of the trade and market situation in order to address potential blockages in food markets and trade. Government will also need to assess extending the ongoing moratoria on debt service for bank lending, while considering balancing access to credit, particularly for SMEs, with financial market stability,” said the bank.
The bank said the social cash transfers—social welfare services provided by government and other non-State actors—could help people escape extreme poverty, close the poverty gap and reduce inequality as well as build household resilience to respond to shocks across the life cycle, which is key to building human capital.
Over time, national poverty has remained high and persistent in Malawi, declining only marginally from 52.4 percent to 50.7 percent between 2004 and 2010. While urban poverty reduced by eight percent during this period, rural poverty increased marginally to 17 percent and 57 percent, respectively.
Compared to almost every other country in the region, Malawi faced the highest sensitivity to extreme dry events from 1980 to 2014 due to the high dependence on maize in terms of production and consumption.
Meanwhile government is set to roll out the K38.9 billion six-month social cash transfer programme aimed to relieve vulnerable urban dwellers from Covid-19 impact.
Ministry of Economic Planning and Development director of poverty reduction and social protection Patricia Zimpita earlier told Business News that what remained of the programme—which was scheduled to roll out in June—was approval of the targeting criteria.
She said: “We had to finalise some preparatory activities, especially targeting of beneficiaries as well as integrating Covid-19 prevention measures during implementation.”
In April, former president Peter Mutharika announced that the programme would target 172 000 households in urban areas with 80 178 in Lilongwe, 66 744 in Blantyre, 17 258 in Mzuzu and 8 703 in Zomba with K35 000 monthly stipends.
The programme is envisaged to target 35 percent of the urban population and its direct beneficiaries include people living in densely-populated peri-urban hotspot areas.
