Disappointment was widespread when rapid economic growth since 2005, coupled with a smallholder-targeted fertilizer subsidy program, failed to significantly reduce poverty in Malawi. Official estimates for 2011 showed a 1.7 percentage point decline in national poverty between 2005 and 2011, while rural poverty increased marginally. In this study we estimate an alternative set of regional poverty lines using a cost of basic needs method that allows the consumption bundle to vary spatially and temporally while ensuring utility consistency. Our poverty figures suggest a substantial 7.3 percentage point decrease in national poverty over the analysis period, driven largely by a sharp reduction in rural poverty. These results are more consistent with the observed level of economic growth and improvements in several non-monetary dimensions of well-being. However, we find that extreme poverty did increase, suggesting that the most vulnerable people continue to be excluded from the benefits of economic policy and growth.
poverty measurement inequality cost of basic needs Malawi