Malawi government’s social benefits allocation has increased by 26 percent from K124 billion in the 2019/20 financial year to K246 billion in the current fiscal year, figures from the Ministry of Finance show.
Social benefits, which include the K140.2 billion Affordable Input Programme (AIP), pensions and gratuities as well as social cash transfer, are current transfers received by households to provide for the needs that arise from certain events or circumstances.
In an interview on Tuesday, University of Malawi Chancellor College economics professor Ben Kaluwa said an increase in the social benefits expenditure line can help boost household welfare, but expenditure mismatch could defeat the overall purpose.
He said: “These programmes once utilised properly, can help to improve household welfare. It becomes a problem when some beneficiaries use the same to spend on things other than their intended purposes.
“However, if used for its intended purposes, it could as well help boost economic activities as purchasing power for low-income families improve.”
Commenting on the same, Consumers Association of Malawi (Cama) executive director John Kapito said the increase is worrying as most of the money is spent on non-productive sectors, thereby defeating the purpose of alleviating poverty.
“The money is passed on to non-productive sectors, but if this was channelled to productive sectors, many people could have benefitted,” he said.
National Planning Commission Malawi 2020 Voluntary National Review Report for Sustainable Development Goals (SDGs) indicated that between 2004 and 2016, the population living below the international poverty line of $1.90 (about K1 500) per day declined from 72.8 percent to 71 percent.
World Bank figures show that in Malawi, poverty reduction has stagnated in the last 15 years and is expected to worsen with the Covid-19 pandemic, with 68.2 percent of the population living below the $1.90 a day threshold.
In its recent Malawi Economic Monitor, the World Bank highlighted the need for the 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 worsened due to the pandemic.
However, the United Nations Joint SDG Fund observed in its recent analysis that with more people expected to be hauled into poverty due to the Covid-19 pandemic, the social protection sector is moving towards becoming fully shock-sensitive.
In his 2020/21 Mid-Year Budget Review Statement, Minister of Finance Felix Mlusu stated that apart from ensuring food security, the budget which has huge chunk of social benefits at K142 billion, is expected to contribute significantly to the country’s economic growth, with positive spillover effects on the society, including job creation and economic empowerment.