To fulfil the Millennium Development Goals, many poor countries are implementing Poverty Reduction Strategy Programmes, or PRSPs. They are supposed to be ‘home grown’, developed by both government and civil society and emphasize pro-poor economic growth. But in Malawi, PRSPs are viewed by many as merely a new version of old World Bank policies, with decisions ultimately being made in Washington rather than by the country’s own citizens. This Life report investigates the PRSP process and its effectiveness in Malawi. We interview Malawian government officials, civil society campaigners, World Bank Economists and critics of World Bank policies, as well as visiting rural communities to ask how they themselves would eliminate their own poverty.
The experience of countries trying to implement PRSP’s, however, tells another story. In Malawi, poverty reduction is now part of a national debate – talked about across the airwaves, in the fields and villages in this country of 11 million. Since the introduction of its ‘Poverty Reduction Strategy Paper’, or PRSP, it’s become a priority in Malawi’s corridors of power. PRSPs are a new strategy designed by the World Bank and IMF to help countries like Malawi reduce poverty – and so meet the Millennium Development Goals’¦ They’re an admission that previous strategies didn’t work well enough’¦ because they were felt to have been imposed by outsiders rather than initiated by the country itself.
For the Malawi government, moreover, the PRSP has not resulted in World Bank and donor funding being restored. This has led to the country having to take out high interest bank loans which produces negative growth. For many Malawians continued dependence on the World Bank and IMF is viewed as hindering rather than promoting alleviation of poverty.
For Ben Botolo, Secretary at the Ministry of Economic Planning, it has been a frustrating experience: ‘We expected there to be results after six months. But then the review team came in and said there are issues to be resolved. Then another team came and said there are still issues to be resolved. And now have a new team altogether who say there are some issues to be discussed. So it’s a game which is continuing and we don’t know when they will resume this flow of aid. So it seems to have become a political question rather than a technical question.’
Sudhir Shetty, Sector Manager, World Bank Poverty Reduction Group, explains: ‘There were issues primarily around the overrun of government expenditures, and issues of transparency around government spending. That led to a suspension of the IMF programme, and a considerable part of support that was provided by other donors.’
For the ordinary people, the devaluation of the Malawi currency imposed by the IMF had a devastating effect. The local price of fertiliser, which is all imported, went up tenfold, and there were no subsidies to cushion the shock. Without access to fertilizers, harvests of maize – the staple food – became unreliable.
Collins Magalasi, Malawi Economic Justice Network, explains: ‘Initially government of Malawi used to subsidize fertilizers. Because there are people in there who do not have any source of direct income, and all they do is farm, garden and what they have gardened, it is for consumption. They don’t sell it. Now we liberalize the economy and everything is gone.’
In 2002 disaster struck. With farmers already struggling to produce enough to eat, extensive floods stopped maize stalks maturing. The resulting harvest was 1.9 million tonnes – about a third less that the previous year. Not only did farmers suffer a loss in income, but with maize prices rising from 5 to 50 cents per kilo, people couldn’t afford to buy food. By mid-2002, up to three million Malawians risked starvation – and the government declared a national emergency.
The country had no emergency grain stocks – these had been sold off – ostensibly to pay some of the country’s massive debt. The agriculture ministry then decided to import grain and asked the donors to foot the bill. The donors accused Malawi of lack of transparency, and the World Bank, the US and the EU withheld massive amounts of aid. With no funds, a lot of debt and an impoverished population, the government borrowed from private banks at high interest rates’¦ it blamed the donor agencies for the situation, the agencies blamed the government.
The way out should have been the Poverty Reduction Strategy Paper (PRSP). If poor countries had their international debts reduced, or even cancelled – so the theory went – the money saved from servicing those debts would be freed up to invest in their own economic and social programmes. But critics say the PRSP – which is Malawi’s only way of applying for new loans from the donor community – is a Catch 22. To get the lost donor funding back Malawi must prove it has achieved the goals of its PRSP, but to achieve these goals requires donor funding in the first place’¦
In the village of Mitusi in southern Malawi, they’re following the PRSP prescription – debating how Malawians should deal with poverty in their own community. But many of the civil society groups which contributed to Malawi’s PRSP are becoming disillusioned. Some claim the new strategies impose the same conditions as the World Bank’s previous Structural Adjustment policies.
Emmanuel Ted Nandolo, Council for NGOs in Malawi, claims it’s just structural adjustment in disguise: ‘This is still the same approach but quoted differently. It’s probably chocolate-coated this time by calling it a home-owned document. But basically it is still under the authority of the IMF… what I am saying is that it is the IMF who will decide whether the document fits into the IMF programme or doesn’t.’
But the Malawi Economic Justice Network believes that the programme is at least forcing the government to identify poverty reduction targets – or priority poverty expenditures (PPEs). And identifying those priorities has led to more opportunities for people to make their voices heard through projects like ‘development through radio’ on the shores of Lake Malawi. Stella in Mzumu village explains: ‘What we do is we teach the women to make programmes on the radio on issues affecting their daily lives. I can say that radio helps reduce poverty in such a way that they use the radio to bring necessary development in their areas. Through the programmes they make they target decision makers. Most of the programmes are developmental. They ask for social amenities. They ask for safe drinking water, they ask for health clinics. Good roads, schools, issues like these.’ As a result, Mzumu now has clean drinking water.
And participating in the PRSP has meant that, for the first time, people outside government had access to accurate figures on spending and budget allocations. They were surprised to find that even with existing commitments, the government still had adequate funds available to meet many poverty reduction targets. Collins Magalasi says the cost of all the PPEs is 6 billion kwacha, while the government of Malawi collects about 32 billion kwacha in domestic revenue. ‘Yes, we have a very small economy, we’re not raising enough. But at least those Priority Poverty Areas, we need to be funding them by ourselves.’
For Malawi, the PRSP may not have restored donor aid and reduced debt, but it has created a national debate where, for the first time, the voices and demands of the poor are being heard.
The Bretton Woods Project, which works as a networker, information-provider, media informant and watchdog to scrutinise and influence the World Bank and International Monetary Fund (IMF), has published a Civil Society Briefing on the Malawi Economic Justice Network.
For a description of the Develment through Radio project in Southern Africa, go here.