Fiscal constraints in Malawi have made the fight against poverty difficult, with poverty headcount falling by about five percentage points since the early 2000s, the African Development Bank (AfDB) has said.
The headcount index (measured at $1.90 a day) measures the prevalence of poverty—that is, how many households are poor relative to all households.
In its recently published Debt Dynamics: The Path to Post-Covid Recovery in Southern Africa, the bank observes that while every country in the region implements social protection programmes, different outcomes on poverty reflect differences in the scale of the programmes—both the population covered and size of support.
Reads the report, in part: “Countries like Mauritius and South Africa, with more fiscal space, have far-reaching programmes that have substantially reduced poverty.
“Other countries, such as Malawi, Mozambique and Zimbabwe are fiscally constrained.”
According to the report, projections from the World Bank show that between 2000 and 2019, the poverty headcount fell by about 58 percentage points in Namibia to 13 percent; 56 percentage points in Lesotho to 29 percent; 50 percentage points in Mauritius to one percent; 49 percentage points in Botswana to 15 percent; 46 percentage points in South Africa to 19 percent, and 40 percentage points in eSwatini to 30 percent.
On the other hand, marginal reductions in poverty occurred in Mozambique (20 percentage points) to 64 percent and Malawi (five points) to 69 percent.
The remaining southern African countries saw poverty expand, with Zimbabwe showing the largest increase, by 85 percentage points to 43 percent, followed by Angola by 37 percentage points to 50 percent.
“Hence; their social protection programmes are modest. Moreover, some programmes are driven by donor support, and so not sustainable,” said AfDB in the repot.
In Malawi, the programme, which began as a pilot in Mchinji in 2006, has over 90 percent of the on-budget social protection resources coming from donors.
In the 2020/21 financial year, for instance, K37 billion (92 percent) of the on-budget social protection resources were financed through an on-budget grant with government contributing to the funding of only one district under the social cash transfer programme.
The other 27 districts were being funded by the World Bank (11 districts), the German Government, through KfW (seven districts), the European Union (EU), through KfW (seven districts) and the Irish Aid (two districts).
Minister of Finance Felix Mlusu is on record as saying the Covid-19 pandemic would make sustainability of the programme—oriented towards the extremely poor and covering about seven percent of the national population as of 2020—difficult.
He said: “Economies have to recover first.”
Meanwhile, AfDB director general of the southern Africa region Leila Mokaddem said despite the current low infection rates, the situation remains fluid given the threats of new Covid-19 waves and virulent variants.
“The magnitude of the socioe-conomic impact of the Covid-19 pandemic on countries in southern Africa cannot be over-emphasised—rising poverty, inequality and unemployment, among other economic malaise,” Mokaddem said at the launch of the Southern Africa Economic Outlook last month.
In the report, the 13 countries comprising southern Africa are Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Sao Tome & Principe, South Africa, eSwatini, Zambia and Zimbabwe.