Aparajita Goyal

Pathways to prosperity in rural Malawi

By most accounts, rural Malawi lacked dynamism in the past 15 years. Growth was mostly volatile, in large part due to unstable macroeconomic fundamentals evidenced by high inflation, fiscal deficits, and high interest rates. Poverty remained high and its pace of reduction slow compared with better performers in Sub-Saharan Africa such as Ethiopia, Ghana, Rwanda, and Uganda. Malawi’s rural poor faced significant challenges in consistently securing enough food. Notwithstanding the improvements in non-income dimensions of poverty, monetary poverty in rural Malawi remains pervasive. Improving agricultural productivity is necessary to improve the welfare of rural households. Agriculture constitutes the backbone of the Malawian economy, contributing more than 30 percent of gross domestic product (GDP0 and employing 85 percent of the workforce. The accumulated evidence suggests three proximate causes. First, agricultural productivity is low, especially among the poor and when compared with other low-income countries in Sub-Saharan Africa. Second, opportunities for nonfarm self-employment (NFSE) are limited, and the returns to such activities are low, especially for the poor. Third, the most prominent safety net programs have low impacts or reduced coverage of the poor population. Accelerating the demographic transition will boost poverty reduction.

Reaping richer returns : public spending priorities for African agriculture productivity growth

Enhancing the productivity of agriculture is vital for Sub-Saharan Africas economic future and is one of the most important tools to end extreme poverty and boost shared prosperity in the region. How governments elect to spend public resources has significant development impact in this regard. Choosing to catalyze a shift toward more effective, efficient, and climate-resilient public spending in agriculture can accelerate change and unleash growth. Not only does agricultural public spending in Sub-Saharan Africa lag behind other developing regions but its impact is vitiated by subsidy programs and transfers that tend to benefit elites to the detriment of poor people and the agricultural sector itself. Shortcomings in the budgeting processes also reduce spending effectiveness. In light of this scenario, addressing the quality of public spending and the efficiency of resource use becomes even more important than addressing only the level of spending. Improvements in the policy environment, better institutions, and investments in rural public goods positively affect agricultural productivity. These, combined with smarter use of public funds, have helped lay the foundations for agricultural productivity growth around the world, resulting in a wealth of important lessons from which African policy makers and development practitioners can draw. The rigorous analysis presented in this book provides options for reform with a view to boosting the productivity of African agriculture and eventually increasing development impact.