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World Bank says Covid-19 to fuel urban poverty

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The World Bank has said it expects the Covid-19 pandemic to accelerate urban poverty in the country.

The bank says the pandemic is expected to affect households’ incomes and employment, although the magnitude will vary depending on the nature and sector of employment.

In its latest Malawi Economic Monitor, the World Bank says, broadly speaking, the services sector is likely to be the most affected in Malawi, followed by the industrial sector.

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It says within the services sector, accommodation and food services as well as wholesale and retail trade are likely to shrink significantly if Malawi experiences wider community-level transmission.

According to the bank, most rural households engage in agriculture, hence the impact of Covid-19 on rural households is anticipated to be mild.

“Casual employment is expected to reduce, and self-employed businesses are more vulnerable. Those who rely on casual employment, both in urban and rural areas, can expect a substantial reduction in employment opportunities and incomes.

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“Land constrained and landless Malawians in rural areas rely on ganyu (informal or piece work) arrangements. Self-employed small business owners can expect a significant reduction in demand and market opportunities. These types of businesses, which are typically in informal retail trade and services provision, are common in urban centres,” the bank says.

It adds that wage earners and salaried employees will face uncertainty but was quick to note that the effect on wage and salaried employees in non-agriculture sectors depends on the terms of their contracts.

The Breton Woods institution says about 39 percent of the urban labour force depends on wage employment.

The Economic Monitor says when business slows down as a result of social distancing measures; those on short-term contractual employment could lose their jobs.

“There is a clear urban-rural divide in households’ reliance on incomes from jobs in the most severely affected services and industrial sectors. As a result, the economic impact of the pandemic could be different between urban and rural areas.

“About 75 percent of workers in urban areas are employed in the services sector, and another 10 percent are employed in the industrial sector. A large share of services sector workers engages in wholesale and retail trade, which are severely affected, and the accommodation and food services sub-sectors. This is more pronounced in large urban centres like Mzuzu, Lilongwe, Blantyre, and Zomba. Therefore, we can anticipate strong impact in urban centres,” the bank says.

As of Tuesday morning, Malawi had recorded a total of 5,419 confirmed Covid-19 cases of which 169 people have, so far, died.

Treasury Spokesperson, Williams Banda, was not immediately available for comment.

But, Presidential Taskforce on Covid-19 Co-Chairperson, John Phuka, said on Monday that Malawi is registering good progress on the pandemic and urged Malawians to continue practicing prevention measures to remain vigilant.

“The results of your efforts are beginning to show. Those that are not yet doing so, please join so that we should accelerate the gains being achieved. This is particularly important as we plan to open the economy especially as we are preparing to open our airports and preparing to open the schools soon,” Phuka said.

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