The World Bank has underscored on the need to cushion the poor from sliding into poverty through provision of productive social protection systems to help them recover from different types of shocks.
The bank’s Country’s Manager Hugh Riddell made the remarks in Lilongwe during the launch of the 15th edition of the Malawi economic monitor (MEM)
Among others, the publication indicated that a series of external and domestic shocks are putting acute pressure on Malawi’s macro-economy thus increasing the urgency to protect essential services for the vulnerable.
He indicated that following the COVID-19 pandemic and economic slow-down, what countries need is buffers to help them respond to these shocks and bounce back.
The Country Manager challenged the private sector to be active in creating jobs, generating foreign exchange and revenues that government can then invest in human capital development and social protection for the poor.
Riddell said ultimately over the medium to long term, what is needed is to stop people sliding into poverty through economic opportunities.
“But in the short term what we need to do is bolster social protection systems so that when people do fall into poverty, they have some safety nets that stop them from selling off assets and becoming really extremely, vulnerable and dependent.
“We as the bank we’re investing much more in social protection but not just cash transfers which is good; but also public works to make sure people have productive employment opportunities that are focused on restoring the climate resilience in their local areas.
“So restoration of land and vulnerable hotspots, restoration these kinds of activities; this is gonna create not only short term productive activity cash for households but also longer term resilience against these kinds of shocks that these communities are dealing with so regularly these days,” said Riddell.
He stressed that export growth will be critical for the medium and long term in Malawi as the economy lacks fiscal and foreign exchange buffers.
According to Riddell, Malawi needs a proactive policy approach to attract foreign direct investment (FDI) and domestic investment.
In the context of these financial constraints, the 15th edition highlights the importance of deepening fiscal decentralization, strengthening the intergovernmental fiscal transfer system and delivering quality services which reach the poor and vulnerable households.
Local government Minister Professor Blessings Chinsinga welcomed the report saying it highlights issues which the Ministry needs to attend to ensure that decentralisation is implemented in a way that benefits all Malawians.
“So going forward you should expect the Ministry to go flat out to ensure that all the necessary outstanding policy, legal institutional issues are addressed so that we create an environment in which decentralisation is successful.
“As a Ministry, our belief is that expenditure on social protection depends on the underlying goals and objectives and therefore it is necessary in some cases to ensure that an economy recovers to ensure that we have people who are healthy, well-fed active and who can in turn therefore participate in the development processes."
The publication also cited the people’s lack of trust in local government systems leading to low investments and services not being fulfilled.
Responding to the issue of trust between the central government and local government Malawi Local Government Association director Harrod Mkandawire acknowledged it stems from the fact that central government feels like the latter lacks the capacity to handle public finances well.
He nonetheless stated that one of the World Bank programmes implemented by councils has a component called performance based grants where they get funds for complying well to the public finance management legal framework.
According to Mkandawire only two out of the country’s 28 councils are failing and believe this should be a blue print that government should adopt by abandoning its cautious approach of fiscal devolution.
“The report responds well to the challenges that have been there in terms of fiscal devolution and service delivery because fiscal devolution is well tagged to improve service delivery that would be able to satisfy the basic minimum needs of the citizens. You talk about basic health care, primary education minimum needs these are the basic minimum needs that citizens at the local level need to be given at every point in time because local government is a government that is very close to the people”.