The State of Poverty in Malawi

1
The State of Poverty in Malawi

• Results of the poverty analysis of the 1997-98
  Integrated Household Survey
• An activity of the Poverty Monitoring
  System,National Economic Council

2
Programme of presentations - I

• Institutional context of poverty analysis
• Dr. H. Ngombe, NEC
• IHS and poverty analysis methods
• Mr. C. Machinjili, NSO
• Poverty measures for Malawi
• Mr. L. Kachikopa, NEC
• Poverty profile of Malawi part I
• Mrs. P. Zimpita, NEC

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Programme of presentations - II

• Poverty profile of Malawi part II
• Mr. W. Kachaka, NSO
• Tea break
• The way forward against poverty in light of the
  IHS poverty analysis
• Dr. W. Chilowa, CSR
• General comments

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Objectives for this meeting

• Deepen our understanding of the living conditions
  of the poor in Malawi.
• Jointly propose and evaluate different strategies
  for reducing poverty in the country.
• presentation will review possible poverty policy
  areas.
• group discussions will work on details.

5
Poverty Alleviation Programme (PAP) of the
Government of Malawi

• Commitment made in 1994 to sharply reduce the
  level of poverty in Malawi.
• The PAP is the key policy framework to guide
  government development planning.

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Poverty Monitoring System (PMS)

• Established to provide monitoring and evaluation
  function for PAP.
• Monitoring the progress of poverty oriented
  policies, programmes, and projects.
• Evaluating them in terms of their impact,
  effectiveness, and efficiency.

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Poverty Monitoring System organization
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Activities of the core PMS institutions

• National Statistical Office
• Integrated Household Survey (IHS) 1997-98
• Participant in poverty analysis of IHS 2000
• National Economic Council
• Poverty analysis of the IHS 2000
• Qualitative Impact Monitoring Surveys (QUIM)
• Small Policy Studies
• Centre for Social Research
• Complementary Panel Survey 2000-2002
• repeated visits to 800 IHS households

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The 1997-98 MalawiIntegrated Household Survey

• The key socio-economic data set for the analysis
  of how Malawians lived in the late-1990s.
• Successfully conducted by the National
  Statistical Office.

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The 1997-98 MalawiIntegrated Household Survey
(cont.)

• Tool for analyzing the well-being of households,
  including their
• expenditure and consumption patterns,
• employment,
• health, fertility, and nutrition,
• education.
• Of value beyond poverty analysis.
• For example, will be used by NSO to develop an
  updated CPI series for monitoring inflation.

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IHS, why is it unique?

• Largest household survey on living conditions
  ever conducted in Malawi.
• 12,960 households surveyed in all districts from
  November 1997 - October 1998.
• Funded primarily using government revenue.
• Provides an assessment of individual welfare down
  to the district level.
• district-level estimates of aggregate poverty can
  be made from the IHS.

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Collaborative poverty analysis of the IHS

• Three institutions involved
• National Statistical Office
• National Economic Council
• International Food Policy Research Institute
• IHS data became available in May 2000.
• Preliminary poverty lines established in June.
• The analysis is well-documented so that the same
  methods can be used again in the future.

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Poverty analysis methodological details

• Uses per capita total consumption as a measure of
  household welfare.
• not income.
• Consumption made up of
• food.
• both purchased and that from own-production.
• non-food consumption.
• use value of durable goods owned.
• e.g. furniture, appliances, bicycles, etc.
• rental value of housing for household.

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Poverty analysis methodological details (cont.)

• Poverty lines are estimates of what it would cost
  to meet the basic needs of an individual.
• food and non-food basic needs
• food component based on recommended daily
  requirements for calories.
• non-food component based on actual non-food
  consumption of poor individuals.

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Poverty analysis methodological details (cont.)

• Poverty lines were calculated for four geographic
  areas
• Southern rural 3. Northern rural
• Central rural 4. Urban
• Different poverty line areas reflect different
  baskets of basic needs and regional price
  differences.
• No national poverty line, although an average can
  be computed.

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Poverty lines(April 1998 prices)

• Reflects both purchased andnon-purchased
  consumption.
• 60 of consumption is non-monetized in rural
  areas.

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IHS poverty headcount - 1998

• Individuals are less likely to be poor in urban
  centres.
• Population of Southern region overall is poorer
  than that of other regions.

20
District-level poverty headcount
21
Inequality in consumption levels in Malawi

• Greater inequality in urban areas than in rural
  areas.
• National Gini coefficient of 0.401
• Note, Gini of 1.00 is total inequality 0.00 is
  total equality.

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Where are people in relation to the average
poverty line?
23
Aggregate poverty gap

• Value of total additional consumption needed to
  bring all poor up to the poverty line
• MK 17 billion annually in current prices.
• US 325 million.
• about 19 of Malawis GDP.

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Poverty reduction strategies

• In assessing poverty reduction strategies, need
  to consider whether it is a better policy to
• raise the consumption of the poorest so that they
  are in a less-poor condition, or
• raise the somewhat poor to a non-poor
  condition.
• To reduce poverty, both targeted growth
  strategies and social safety nets should be
  considered.

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Poverty reduction strategies (cont.)

• In the case of Malawi, eliminating poverty for
  the least-poor 10 of the poor leads to an
  overall poverty gap reduction of less than 2
  percent.

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Poverty reduction strategies (cont.)

• In contrast, eliminating poverty for the
  most-poor 10 of the poor leads to an overall
  poverty gap reduction of 19 percent.

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Poverty reduction strategies (cont.)

• 29 of pop. are ultra-poor.
• Raising ultra-poor consumption to above
  ultra-poverty line reduces total poverty gap 22.
• Ultra-poor still will be poor, but their poverty
  will be less severe.

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Poverty reduction strategies (cont.)

• With limited resources, it is more desirable to
  reduce poverty for a larger number of the
  poorest, rather than to eliminate poverty for a
  smaller number of the poor.
• Clear that we need to target our efforts among
  the poor.
• It is also important to look at the depth of
  poverty the location of the poor below the
  poverty line.
• We need to consider more than simply the poverty
  headcount.

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Looking at poor households

• How do poor households differ from non-poor
  households in term of their
• demographic composition,
• educational level of adults children,
• health and fertility, and
• economic activities, including agriculture.

31
Demography household size

• Poor families are larger.
• Poor families have more dependants per worker.
• Poor 1.05 dependents per worker
• Non-poor 0.65 dependents per worker

32
Sex of household head

• Greater proportion of poor households are headed
  by women than is seen in non-poor households.
• However, most poor households are male-headed.

33
Poverty measures by sex of head of household

• Poverty is deeper and more severe in
  female-headed households.
• Poorest of the poor are more likely to be living
  in female-headed households.

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Education

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Education level of adults, by wealth group

• Standard VIII attainment generally sufficient to
  get above the poverty line, but few attain that
  level.

36
Education levels of household heads - rural

• Only slightly higher bars for non-poor with
  increasing education.
• In the countryside, small welfare advantage from
  higher education.
• There are few economic opportunities in rural
  areas for which lack of education is a barrier.

37
Education levels of household heads - urban

• In the cities, clear welfare advantage to
  households heads who have attained higher levels
  of education.
• As is common globally, it is in the cities that
  Malawians can use their education to their own
  economic advantage.

38
Childrens education- net enrolment

• Net enrolment indicates access to schooling.
• Relatively high access is seen across wealth
  groups, sexes, and rural-urban.
• Universal free primary education provides quite
  high access to schooling for all.

39
Childrens education- gross enrolment

• Gross enrolment rates above 100, as in all cases
  here, indicates poor quality or late enrolment.

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Health and fertility
41
Number of children ever born to women aged 15-45,
by mothers educational level

• Poor women tend to have more children than the
  non-poor.
• The more education a woman has, the fewer
  children she will have.

42
Immunization coverage

• Health services appear to be doing a good job in
  providing immunization to all children,
  regardless of wealth status or location.

43
Nutrition rural food consumption relative to
recommended daily requirements (RDR) for calories

• Rural population as a whole gets majority of
  calories consumed from own home production.
• But not sufficient calories.
• Rural poor are not consuming sufficient calories
  from all sources to meet recommended calorie
  intake level.

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Proportion of total calories consumed, by food
type

• Cereals dominate the diet.
• Pulses important for rural households.
• Sugar and cooking oil important in urban areas.
• Fish and meat are more commonly consumed by the
  non-poor, particularly urban.
• Non-poor have more diverse diets.

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Summary on health and nutrition

• Fertility
• The higher the education level of the mother, the
  fewer children she has.
• Immunization
• Good coverage over all areas wealth groups.
• Nutrition
• Subsistence production remains very important for
  good nutrition, but is not sufficient for the
  poor.
• Cereals important source of calories, but
  importance declines with increases in income and
  urbanization.

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Making a living Agriculture other economic
activities

• Agriculture
• Non-farm business
• Sources of income

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Agricultural land use

• Poor more likely to depend on agricultural land.
• Land is critical to the well-being of the poor.
• However, the pattern also demonstrates that
  agriculture is an activity for the poor.
• The non-poor more likely to derive their welfare
  from other activities than agriculture.

49
Agricultural landholding size

• Non-poor have larger per capita land-holdings
  than the poor.
• Southern region has smallest landholdings overall.

50
Cropping patterns Food crops

• Hybrid maize more commonly grown by non-poor,
  while local maize is grown by the poor.
• With other food crops, no apparent barriers to
  cultivation.
• Find the poor and the non-poor equally likely to
  cultivate them.

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Cropping patterns Cash crops

• Overall, the poor and the non-poor are able to
  engage in cash cropping to the same degree.
• Only with tobacco cropping do the poor appear
  disadvantaged.

52
Cropping patterns Benefits from tobacco

• However, the non-poor derive greater benefits
  from tobacco than do the poor.
• Why? Poor likely have
• fewer economies of scale,
• lack of information on growing marketing the
  crop effectively,
• credit and cash constraints,
• poor access to auction floors.

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Non-farm businesses

• Rural Non-poor and Urban Poor most likely to own
  non-farm businesses.

54
Type of non-farm businesses

• Trade is the most important non-farm business
  regardless of location.
• Handicraft production is also important for rural
  individuals, especially the poor.

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Industry of main occupation,by rural/urban

• Contrast in industry of occupation is stronger
  between rural/urban than between poor/non-poor.
• no surprise that principal rural occupation is
  agriculture.
• However, agricultural employment is more common
  among the rural poor than the rural non-poor.

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Sources of income - rural

• 60 of rural income accounted for in consumption
  of own production.
• Salaries wages second most important source.
• higher levels among the rural non-poor.
• The low proportion of income from net
  agricultural sales is surprising.

57
Sources of income - urban

• for the urban poor, salaries and wages are most
  important
• likewise for the non-poor, but non-farm business
  sales are much more important for the urban
  non-poor than for the poor.

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Options for policy, programs and future research

• Ways to move forward from the IHS poverty analysis

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Key points from presentations

• Much clearer, detailed picture of poverty has
  been obtained from the IHS.
• Poverty is as deep and pervasive as found in
  previous estimates.
• Gloomy poverty situation underlines the
  importance of visionary and quick action.
• to reduce poverty levels significantly, and
• within an acceptable time frame.

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Major pointers for the way forward

• The poverty situation calls for
• Firm national commitment.
• Commitment to Vision 2020 is important starting
  point.
• We need to get out of our trance and
  immediately take steps to realize this vision.
• Committed government.
• PAP is like an architects design it needs to be
  transformed into a physical structure.
• What is missing is implementation.

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Overall strategy for poverty reduction

• Accelerate rate of economic growth.
• Poor need jobs and income.
• Only equitable and broad-based economic growth
  will create jobs and generate income for the
  poor.
• Agriculture-centered growth is more equitable.
• Require higher rate of investment.
• Incentives should be in place to facilitate such
  investments.

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Overall strategy for poverty reduction (cont.)

• Develop essential human capital
• to enable poor to effectively participate in the
  growth process.
• increase investments in education and health.
• Design well-targeted safety net programs.
• targeted to the poor unable to benefit from the
  growth process.
• development-oriented, rather than
  relief-oriented.
• develop an in-built exit mechanism, so that the
  system is not over-burdened.

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Sectoral PoliciesAgriculture

• Overwhelming role of agriculture
• productivity increase in agriculture will be one
  of main engines of income growth in Malawi
• Poor are doubly-burdened
• farms are small and soil fertility is poor
• lack superior technology

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Sectoral policiesAgriculture (cont.)

• Sustainable gains in productivity made only when
  inputs are optimally combined
• soil fertility
• irrigation
• fertilizer
• seeds
• Balance between long-term and short term policies
  have to be struck.

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Sectoral policiesAgriculture (cont.)

• Markets that provide adequately remunerative
  prices
• Long term solution hinges on infrastructure
  development
• In the short-term, increase competitiveness among
  market intermediaries
• provide better prices and choices for the farmers

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Sectoral policiesAgriculture (cont)

• Livestock sector
• Considerably underdeveloped now scope for
  growth is large.
• needs to be integrated in a sustainable way with
  agricultural production.

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Sectoral policies Education

• Primary education matters.
• Few have attained even this level.
• More incentives are needed
• Food for education to encourage children to go to
  and stay at school
• Adult education programs
• Introduce compulsory education?

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Sectoral policies Education (cont.)

• Quality at all levels, especially at the primary
  level, should be improved.
• Without minimum quality, investment will be
  wasted.
• Girls education is especially lacking.

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Sectoral PoliciesHealth

• Leading causes of morbidity and mortality are
  malaria, diarrhea and malnutrition.
• Scope for low-cost preventative measures.
• HIV/AIDS, though pandemic, can be contained.
• Timely immunization and completion of full course
  should be emphasized.
• Rather than mere coverage.

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Future Research Areas

• Use the IHS data for deeper sectoral studies.
• Extending analysis to new areas
• gender dimensions of poverty.
• intra-household dimensions of poverty

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Future Research Areas (cont.)

• IHS a good starting point for studying poverty
  dynamics.
• Coupled with smaller complementary surveys and
  new rounds.
• Important issues remain unresolved in the health
  sector.
• Interactions between socio-economic status and
  health outcomes needs to be further investigated.