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Prospects for Poverty Reduction in Malawi:
A critical analysis of the Poverty Reduction Strategy Paper (PRSP) process and outcomes


AFRODAD

April 2003

SARPN acknowledges AFRODAD as the source of this document - www.afrodad.org
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Preface

In September 1999 the World Bank and the IMF approved the Poverty Reduction Strategy Papers approach. The PRSP outlines a national programme for poverty reduction that is the foundation for lending programmes with the IMF and the World Bank and for debt relief for Heavily Indebted Poor Countries (HIPCs). The Bank and Fund invented the PRSP to ensure that debt relief money would go to poverty reduction. To address the issue of the tension between qualifying for debt relief and allowing time to develop a good PRSP, countries have been allowed to develop Interim PRSPs (I-PRSPs). I-PRSPs are required to diagnose poverty in the country and outline a consultation process for the drafting of the final PRSP. Malawi is one of the poorest Sub-Saharan Africa countries that had to comply with this World Bank and the IMF programme beginning March 2001.

This study noted that the Malawi PRSP just like the New Partnership for African Development (NEPAD) emphasizes the need for good governance as the centerpiece to attract foreign investment. It makes no direct reference to the UN Millennium Development Goals but carries a considerable resemblance of that. The Malawi PRSP is also presented as a mixture of structural adjustment programs, the pro-poor growth sentiments and social development strategies. Its macroeconomic framework aims to attain reduction of government deficits, deregulation, liberalization, public expenditure management, a stringent monetary policy to contain inflation and fiscal austerity.

The government of Malawi was responsible for spearheading the writing of the PRSP and for commissioning and organizing technical and donor input into it. While social impact analysis was part of the PRSP logic from the start, progress has been very slow and it will still take time before it is mainstreamed. The Malawi PRSP process confirms the claim that civil society participation has been limited to consultation and provision of information. It is largely confined to analyzing the extent and causes of poverty, suggesting some priority actions, as well as monitoring programme implementation and, in some cases, impact. There was little civil society capacity to engage in macroeconomic analysis, modeling and detailed policy analysis. Thus, civil society participation was confined to issues pertaining to the social sector consultations, and not higher-level policy formulation.

During the onset of the PRSP process in March 2001, that included the drafting of the interim PRSP, the Malawi civil society was excluded from participating until they demanded inclusion through the Malawi Economic Justice Network (MEJN) in October 2001. The interim PRSP was ‘extremely non-consultative’ done by government, the World Bank and the IMF. At local level consultative meetings were dominated by elected people such as traditional leaders with the most vulnerable people –women and the poor underrepresented. However, the civil society input in the PRSP document is believed to have led to changes in statehood expenses, and increase in budgetary allocation to infrastructure costings and national prioritization agreements with clear timeframes. The whole process is believed to have resulted in the concretization of national policy and strategy towards poverty reduction across sectors and into the domain of public expenditure.



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