Poverty levels are rising in Malawi and are estimated to have reached 71.7 percent in 2023 at the international extreme poverty line of $2.15 per person per day, the latest World Bank Malawi Economic Monitor (Mem) has shown.
The Mem was launched in Blantyre last Tuesday.
According to the bank, ganyu labour, the mainstay especially of poorer households, both pays less and has become scarcer, driving up poverty. “Ganyu, a term for casual labour in Malawi, is the main source of income, especially for vulnerable households (Benson and De Weerdt 2013). While in November 2022, 11.9 percent of households in rural southern Malawi reported challenges in finding ganyu during the previous week, that share increased to 20.0 percent in November 2023.
“Along with seasonality in the share of households engaging in ganyu across the season, the type of work performed changes. More than four in five ganyu labourers were working on farms in January 2023, while almost half of ganyu laborers were pursuing typically more profitable non-farm jobs in July 2023. This leads to fluctuations in wages,” the Mem says.
The bank notes that ganyu wages, while stable in nominal terms, have been trending down in real terms recently.
The Bretton Woods’ institution says in November 2023, a typical full days’ worth of labour brought in only K2,623 or just enough to buy 3.5 kilogrammes of maize at national average prices.
“Whether the hike in the minimum wage from K50,000 per month (K1,923 per day) to K90,000 (K3,462 per day) announced in January 2024 will make a noticeable difference in typical pay remains unclear,” the bank says.
The Mem comes on the back of another report by the bank, the Malawi Country Economic Memorandum launched in December last year, which showed that despite being home to only 0.24 percent of the world’s population, Malawi is home to 2.0 percent of the world’s extreme poor.
According to the memorandum, while Malawi has made strides in improving key human development outcomes, such as life expectancy, access to education, and health over the years, poverty reduction aims remain significantly off-track.
The report notes that slow economic growth is at the heart of persistently high poverty rates.
“Economic growth reduces poverty because it tends to lift income levels across the income distribution, lifting those living close to poverty lines out of poverty (Adams 2003).
“The relationship is strong enough that most other factors are secondary when modelling monetary poverty: a 1-percentage-point increase in economic growth is generally found to be associated with a 2 – 3 percent decrease in the proportion of people living in poverty (Bourguignon 2003; World Bank 2001),” the memorandum says.
According to the World Bank, two periods stand out in terms of growth performance: the post-independence honeymoon of between 1964 and 1979 as well as the post-Hipc boom of between 2006 and 2011.
Secretary to Treasury Betchani Tchereni said on Monday the fact that poverty is at high levels is not a secret and requires no brainer explanations.
“The MIP-1 is a plan that must be followed religiously. To this extent, as Treasury, we have proposed to allocate funding for production, import substitution and high impact social intervention areas.
“For example, our budget for the 2024-25 financial year is focusing on novel areas including establishment of the Mining Company embedded in the Malawi Development Corporation Holdings Limited, mega farms, winter cropping, high-class secondary schools and infrastructure development,” Tchereni said.
Delivering a State of the Nation Address at the start of the 2024-25 budget meeting of Parliament, President Lazarus Chakwera said Malawi is a nation in a state of great and compounded pain and that that calls for seriousness.
