Resilience and Sustainable Poverty Escapes in Malawi

Since 2000 Malawi has achieved four of the eight Millennium Development Goals (MDGs) including those on reducing child mortality and combating HIV/AIDS, malaria and other diseases. The country started the MDGs with a particularly low base compared to other countries, making achievement of these four goals more remarkable. However, Malawi remains one of the poorest countries in the world. The incidence of ultra-poverty (consumption below the food poverty line) actually increased between 2000 and 2015 from 24 to 26 percent; absolute numbers of people living in poverty also increased during the 15-year period, as did the depth of poverty. Meanwhile, natural hazards and climate change are affecting the country’s predominantly agricultural economy, resulting in a series of economic losses, periods of food insecurity and humanitarian responses. Through the National Resilience Plan, Malawi has a strategy to move away from cyclical humanitarian response to resilient development, through strengthening coordination, pooling resources and prioritizing environmental management.

Research by CPAN supported by USAID’s Center for Resilience investigated the extent and drivers of transitory and sustained escapes from poverty across a series of country studies to better understand the sources of resilience that enable people to sustainably escape poverty given the complex risk environments in which they live.

Specifically, this research examined why some households escape and remain out of poverty (sustainable poverty escape), while other households escape it only to fall back into poverty (transitory poverty escape) and still others descend into poverty for the first time (impoverishment). Building on research conducted through the Leveraging Economic Opportunity activity in Bangladesh, Ethiopia and Uganda in 2016, the current body of research was aimed at expanding understanding of the drivers of sustained and transitory poverty escapes and teasing out policy and programming implications for USAID and other development actors.The Malawi report combines analysis from two rounds of the Malawi Integrated Household Panel Survey (IHPS, in 2010 and 2013) with qualitative research incorporating key informant interviews, life histories and focus group discussions in Balaka and Mchinji districts to investigate the drivers of poverty escapes. Analysis of the IHPS shows that while 15 per cent of households escaped poverty between 2010 and 2013, 14 percent moved back into poverty over the three years and 19 percent remained in chronic poverty.

Key findings to explain the reasons for poverty ascents and descents at the household level include:

Household resource base

• In the qualitative fieldwork, sustained escaping households concentrated investments in resources associated with non-farm activities including transport vehicles and properties alongside more limited investments in land, particularly in wetland.
• Regression results show that households with more livestock than the average over time experienced significant improvements in welfare across urban and rural areas. In the qualitative fieldwork small livestock (goats, chickens) were not as important as cattle in terms of transforming incomes.

• In the fieldwork, transitory escapers were more likely to take high interest rate loans than sustained escapers and this contributed to their descent back into poverty, frequently the result of confiscation of assets by financial institutions and private lenders.

Household capacities and attributes

• Regression results reveal that an increase in household size and dependency ratio is significantly associated with reductions in monetary welfare over time. Fieldwork supports this finding with sustained escapers tending to be nuclear households with a small number of dependents.
• The qualitative fieldwork showed how education has been a key factor in sustaining poverty escapes for the current generation of household heads, with secondary education in particular playing an important role in ensuring a household’s ability to escape poverty sustainably. Education as a key factor for household heads in sustaining poverty escapes is not reflected in the regression results, perhaps reflecting the short-term costs of educating children in the context of low-quality education in state schools and high costs of private schools.
• The fieldwork also revealed how the regularity of separation and divorce, and the subsequent withdrawal of spousal support, drive female breadwinners’ descents back into poverty. Key reasons include matrilineal norms regarding women’s responsibility for children’s upbringing and male migration.

Household activities

• The fieldwork revealed that in rural areas, those farmers who sustained poverty escapes did so through diversification within farm and off-farm activities and through the avoidance of tobacco farming, or quick movement out of tobacco when prices started falling. Farmers who sustained poverty escapes also invested in wetland crops; had a strong understanding of new techniques; recognized the importance of working closely with extension workers; exhibited high/appropriate input use; diversified into livestock for dairy or transport; purchased fertile land rather than farming clan land; and refrained from taking loans.
• Regression results showed how owning a non-farm enterprise is associated with an increase in monetary welfare, though this is only statistically significant for male-headed households and those in rural areas. Fieldwork highlighted that men tend to dominate more lucrative non-farm businesses, while women dominated petty trading activities.
• The regression results show that, overall, employment of the household head is significantly associated with improvements in monetary welfare. Specifically, employment of the household head is significant for male-headed households and those in rural areas and not for female-headed households and those living in urban areas. Qualitative fieldwork revealed how construction carpentry was a strong vocational skill that could contribute to sustained escapes in rural areas, with this being a predominantly male occupation.

Shocks and trends

• Price shocks were the most commonly reported shocks in the panel data, with the qualitative fieldwork also highlighting the importance of low and unpredictable crop prices (including for tobacco, pigeon pea and maize).
• Both the qualitative and quantitative findings revealed that, while one shock was not associated with declining welfare, households that experienced more shocks were significantly more likely to experience declines in welfare.

In this context, life histories indicate that the key strategy in sustaining escapes from poverty was through diversification in livelihoods both across and within sectors, together with the ability to maneuver into new economic activities quickly when prices change.

Download the full report, as well as the accompanying policy implications brief, from the sidebar.