COMMENTATOR (COMM):
The southern African country of Malawi is no stranger to poverty. It’s one of the poorest countries in the world, with over 60 percent of Malawians living below the poverty line. As a consequence Malawi has been home to successive, ambitious international projects, designed to kick-start its economy. So far, none of them have worked. Now there's a new poverty reduction scheme in motion, promising new solutions. Life visited Malawi to report on its progress.

In a radio studio in the Malawian city of Blantyre, they’re opening the weekly phone-in show.

TALK-SHOW PRESENTERS:
Good evening, and welcome to Clarity!

…I’m Mosie …

…and Edward Kamkomba…

This is a very very important topic as far as the development of Malawi is concerned, so call us, give us your inputs to make sure that we all forge ahead…

COMM:
On the agenda – the latest prescriptions for ending poverty in debt-burdened countries like Malawi …

EMMIE, Radio Actuality:
We are talking of strategies for reducing poverty? Who will carry this forward? The people who are oppressed, the people who can’t make ends meet? Who don’t have enough money to put bread on the table? To improve poverty, you really need good hospitals, you need nurses and doctors…but there’s a massive brain drain…

COMM:
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…

SUDHIR SHETTY, Sector Manager, Poverty Reduction Group, World Bank:
There was a sense in the late 1990s that many structural adjustment programs – not all but many in many countries – had not had the effects that those of us who had suggested them would necessarily have expected. And part of that was not so much the specifics of the programs but the extent to which these were owned by countries.

COMM:
The new strategy put the onus on the Malawian Government to draft its own PRSP – in consultation with civil society – which is then submitted for approval by the international finance agencies. Malawi’s PRSP, developed in the year 2000, sets out to fund pro-poor economic growth, health and education programmes, provide a safety net for the most vulnerable - and ensure the government protects and benefits the poor. In theory, once a country’s PRSP has been approved, it then qualifies for debt relief and lending at preferential rates to help finance poverty reduction. But theory is one thing, reality another for the Malawian government.

BEN BOTOLO, Secretary, Ministry of Economic Planning, Malawi:
We have the programme, which is a PRSP programme. But since the World Bank and IMF have not said to their board to give a green light to all bilateral agencies to support the programme, as prescribed in the Malawi Poverty Reduction Strategy Paper, then we have a problem in implementing what was written in the PRSP.

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:
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.

COMM:
But those issues also reflected the tug of war between Malawi's government and the World Bank over the past decade. Back in 1994, Malawi’s first democratically elected government had negotiated a series of loans from international donors to develop its economy. But those loans had come with conditions… the ‘structural adjustment programmes’, drawn up by the IMF and World Bank, that obliged Malawi to open up its markets to other countries’ goods. This ‘liberalization’ forced the government to cut spending and sell off any government monopolies, eliminate subsidies, and float the Malawian currency. The impact on Malawi’s farmers was devastating. As the currency shrunk, the price of fertilizers - an imported good - increased ten fold, and there were no subsidies to cushion the shock. Without access to fertilizers to enrich the soil, harvests of maize - the staple food - became unreliable.

Charles Chawanthat is typical of Malawi’s farmers. He grows enough maize to feed his family and some greens to sell in the market.

CHARLES CHAWANTHAT, Farmer:
Oh, these are my area where I farm now. I grow green vegetables - that's rape, mustard leaves, cabbages. When it rains we planted maize - we planted everything we need in our area. But the land was not much - the land dries fast. Two, three, four, five years back, the rain was good and we were, we were yielding much. Having no much crops in our area, the result is famine and hunger wherever.

COLLINS MAGALASI, Malawi Economic Justice Network:
Initially government of Malawi used to subsidize fertilizers, for example. 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. One such thing is that Malawi doesn’t produce fertilizers, we import fertilizers. So when we are having our kwacha, our exchange rate slipping, you can already see that this year things are going to be worse for the people because the cost of fertilizer is going to be high.

COMM:
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.

SISTER MODESTA, Nurse:
This is my first year since I came here in 1996 I have never seen people dying as they have done this year. And even I have never seen children like these ones malnourished as they are. This is also the first time seeing people eating what they’ve been eating. The roots, the leaves. They were poisonous, which was making the situation worse. Her husband died of hunger. Because he was also malnourished. Without a husband, without having the seeds to plant a garden, that’s why she’s now having this problem.

COMM:
Malawi could have staved off the worst of the famine… if it had had grain stocks in reserve. But 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. But the agencies had questions about the grain reserves - who had bought them, and where was the money? Dr. Ellard Malindi was at the ministry of agriculture at the time.

DR ELLARD MALINDI, Permanent secretary, Ministry of Agriculture:
I think in terms of the story that seemed to indicate that government was responsible in the manner in which it handled the strategic grain reserve, I explained earlier what happened. This maize was sold by tender - it was in the papers and people responded. And it's not a few people bought it, many people bought it - and companies. That - the, the second one is that we have carried out an audit, so the results of the audit will be published. Er we trust that will clear the air... Now.

COMM:
Unsatisfied with these answers, the donors accused Malawi of lack of transparency, and wasteful expenditures – and maintain to this day that the country lacks good governance. In the summer of 2002 the IMF withheld forty seven million US dollars, the European Union and the United States suspended twenty two million dollars and the EU asked for a further eight million dollars earmarked for Aid to be returned… This act was to have more far reaching consequences. 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… and the tug and pull between the elected government and the international donors has left the country stranded. Among the first casualties were the development goals of Malawi’s PRSP.

BEN BOTOLO, Ministry of Economic Planning:
Things have been getting worse and worse for Malawi, definitely. If you look at the growth which has failed, it’s because of the high interest rates. High interest rates are hampering new investments in the economy. Why are there high interest rates? Because government is borrowing on the financial markets and competing with the private sector overcrowding the market. That is pushing the interest as high as possible because the private sector knows the government is desperate for money. [If we had all the resources coming in then the banks would be under pressure to reduce their interest rate. The growth at the moment is less than 3 per cent. Malawi needs a growth of over 6.5 per cent to start reducing poverty . Six per cent will just maintain the current levels of poverty.

COMM:
The way forward for Malawi – in theory - had been the PRSP. It’s part of a bigger strategy known as the Highly Indebted Poor Countries (HIPC) initiative to reduce poor countries’ external debt to manageable, sustainable, levels. 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 in Malawi and elsewhere 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… To achieve these goals, however, requires donor funding in the first place….

COLLINS MAGALASI:
The IMF/World Bank would only assist a strategy that is in line with their own beliefs. They are attaching debt relief to PRSPs, which is not correct in my view. When you link PRSP to debt relief and find that the PRSP - like in the case if Malawi - is not fully implemented, because donors have not given the funding that they had pledged to Malawi . What that means - we are not implementing the PRSPs 100 per cent . And then you come back and say because you didn’t implement the PRSP fully satisfactorily, then you are not getting the debt relief. So who is to blame?

PART TWO

COMM:
In the village of Mitusi, in southern Malawi, people have gathered to work out solutions to their daily problems. It's a world away from the decision makers of the Malawian capital, Lilongwe and Washington DC. But reducing poverty is also top of their agenda.

MAN:
It took us a long time to learn that we have rights, and that our rights are being violated. Because not to live in poverty is a human right.

GIM CHINGAMBA YAKIT, District Chairman:
So what would you tell people, like the IMF or World Bank for example, about how to reduce your poverty.

MAN:
We need businesses so that we can have money for our families.

WOMAN:
Well education, people go to school but there’s no work, no jobs.

WOMAN:
Well firstly I would tell them to reduce the price of fertilizer.

GIM CHINGAMBA YAKIT:
The problem people have in this area – people are in poverty, in hunger. We are facing hunger every year where the community is really starving. From August, people go hungry up to January, February, March, when they will get ready for harvesting.

COMM:
In Mitusi, 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:
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.

SUDHIR SHETTY:
I don’t think we go into a country and say this is the mantra of the PRSP - liberalize everything. I think the one change we’ve made in the PRSP process is that - if there’s strong domestic opposition to particular liberalization policies, we need to understand where that opposition comes from. We need to understand which groups could be adversely affected. We need to be much more precise about the benefits to be expected. So I don’t think there is an ideological blueprint behind PRSPs.

COMM:
But for the people of Mitusi, reducing poverty has to start out with consultations at village level. Now, facing a food crisis, they want their voices are heard.

VILLAGE CHIEF:
We people in the villages, we want these things to be starting from here. And if the IMF had come here and asked these volunteers how they could reduce poverty in this area, they would understand what poverty is. That's why I say things should start in the village and not in town.

COMM:
For Nancy Alexander, the problems facing Mtusi village are typical of the problems of the poverty reduction strategy. She studies the activities of the international donor agencies.

NANCY ALEXANDER, Citizens Network On Essential Services, Washington:
What the donor community want is for citizens’ groups to be monitoring and implementing social action programmes. That is the sand box in which citizens’ groups are supposed to play. Picture a big estate in which all of the donors and creditors are walking through the rooms of the large mansion, and arguing about who should call the shots for a government in the developing world. Meanwhile out in the back yard there’s a little sandbox in which the citizens of that country play…

COMM:
Two years after the food crisis of 2002 Charles isn’t worried about the arguments over the PRSP – he just wants a guarantee that he and his family will grow enough food to survive the year.

CHARLES CHAWANTHAT:
For food we have at least, as compared with last year - at least we have now… But I assure you that will not take up to December. No.

BEN BOTOLO:
We have all these well-intended activities to address poverty. But if these activities are not implemented as they are supposed to be implemented, we have a problem, we cannot go anywhere else. We’ll just be stuck where we are. Actually if we see now the trend taking a different shape altogether, it will be as well poverty worsening.

COMM:
But the PRSP does have its supporters - in principle – if not in practice. For the Malawi Economic Justice network, 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:
We are here in Mzumu Village where we have one of the development through radio – DTR - clubs. 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.

WOMAN:
We asked for clean drinking water… So the water board came and started drilling some bore holes and laying some pipes. Then they installed pumps - So we now we have clean drinking water.

COMM:
Participating in the PRSP 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. So while Malawi continues its fight to restore donor funding to achieve its PRSP, it may well have had the financial resources to reduce poverty without donor funding in the first place…

COLLINS MAGALASI:
It’s quite funny, you know when you look at these PPEs - the funding for these PPEs… The budget is not huge. The total of all these, in a year, you are talking of less than six billion kwacha, which is close to one million US dollars - all of these Priority Poverty Expenditures that I’m talking about. Now government of Malawi collects about 32 billion kwacha in domestic revenue, and they’ve been collecting this for years. But whether we need to wait for the PRSP, and to wait for debt relief, and to wait for donors to fund these Priority Poverty Expenditures, is very difficult for some of us to understand! It needs very serious political will. 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. The point is the government of Malawi needed to have started funding this long, long ago. We have done that only for a year now, but you can already see that this initiative is doing great work on the ground.

COMM:
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.

END

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