This study builds a profile of the status of poverty and vulnerability in Malawi. While this report focuses on the least-well-off sections of the population, the analysis provides valuable information to accelerate wealth creation and economic growth for the whole of Malawi.
The report has three main sections. The first five chapters comprise the first part of the report, where we take an in-depth look at poverty on the household level. Chapter One provides an overview of the income and non-income dimensions of well being in Malawi, including progress towards the Millennium Development Goals (MDGs). Chapter Two builds a profile of poverty and models the determinants of poverty at the household level. Chapter Three looks at the role of risk and vulnerability to shocks in both causing poverty, and hindering the ability of households to break free of the poverty trap. Chapter Four and Five take a more detailed look at two of the most severe and prevalent types of shocks faced by households, namely those relating to food security and the impact of chronic illness, respectively.
Part II of the report, comprising five chapters, focuses on the macro-level and provides policy recommendations to address some of the key findings of Part I of the report. Chapter Six briefly overviews macro-economic policy in Malawi and its bearing on economic growth, and identifies the large role of weather-related shocks in determining economic performance. Chapter Seven looks at the smallholder agriculture in detail, given the predominant role of agriculture both in household income and the economy at large. Given the sector’s high degree of susceptibility to weather shocks, policies to mitigate climate shocks are explored. Chapter Eight looks at ways to boost trade as a poverty reduction strategy, focusing on the main export crop, tobacco, as an example. Chapter Nine examines the current social protection system in Malawi and recommends ways to improve the social safety nets, both to mitigate chronic poverty and as a means for breaking the poverty trap. Chapter Ten focuses on access to public services, (namely, health and education services), and looks at the distribution of public expenditure on these services across the population’s income distribution.
In Part III of the report, Chapter Eleven looks at the role of monitoring and evaluation systems in measuring poverty and in targeting and tracking poverty reduction efforts to maximize their effectiveness, and suggests ways to improve monitoring and evaluation in Malawi.
The main source of information used in this report is the new second Integrated Household Survey 2005 (IHS2), carried out by the National Statistical Office (NSO) in 2004/05, with technical support from the World Bank. This survey provides a wealth of information on household living conditions. The information has been analyzed to identify the major characteristics of poor households and the main constraints to wealth creation in Malawi. In addition, other data from the 1998 first Integrated Household Survey (IHS1 1998) is used to see how poverty and its characteristics have changed over time. The analysis has also been complemented with information from other sources, including the 1998 Population Census, the 2004 Malawi Demographic and Health Survey (MDHS 2004), as well as previous MDHS in 1992, 1996 and 2000.
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