Thursday, 20 June 2013

Malawi economy on the up: what does it mean?

It's heartening to see that this time round during my trip to Malawi there is something of a different feel to the place (at least in the capital and from a distance). A few weeks back the World Bank approved a $50m grant in budget support. It has now claiming that official figures show Malawi's economy is recovering. Expected growth is 5.7 percent in agriculture and more than 6 percent in manufacturing.

However, I anticipate that I will find things are very different for the majority of the population; those in the rural areas. After last seasons poor rains, in many parts of the country farmers have found that, even if they could access fertiliser through the subsidy programme (it's hard to get it without given that it costs around 15,000 Kwacha per 50kg bag - around £30 and well out of reach of most smallholder farmers) they were able to grow little if anything. I was speaking to someone from Dedza yesterday who said that during last season they had not had rains since February which meant that in some parts people were simply left with nothing. Nothing to eat, nothing to sell. "The people there are suffering" I was told. It makes me wonder how much of the growth in agriculture will be due to tobacco production, which I understand was better this year (tobacco crops can more often benefit from irrigation and more intensively applied inputs). This leaves an untold story of the ordinary Malawian smallholder who tries to grow enough maize to feed himself/herself and the family and make it through the year without going hungry.

It is important to note that this is not an argument against the Farm Input Subsidy Programme. Indeed, without fertiliser and without improved maize seed and legume seed most farmers really would be suffering. The point is that inputs such as these cannot be seen as a silver bullet in and of themselves. Lessons must be learnt from the earlier Green Revolution that occurred across Asia where fertiliser and seeds were but one part of a much wider package of government support which included access to subsidised credit, irrigation and investments in roads and research and development. Without these complementary policies it is difficult to imagine people escaping the low productivity trap they find themselves in.

All this serves as a reminder that while the health of the macroeconomy is obviously crucial and intimately linked with the fortunes of those in rural areas (e.g. fertiliser must be imported which requires foreign exchange) what really matters for much of the population is having the means to grow food for themselves.

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