COVID-19 Will Push More People into Poverty
The COVID-19 pandemic has claimed the lives of almost 2 million people to date and caused the harshest economic recession since 1929. According to the World Bank (GEP, 2021), the pandemic could push between 88 and 115 million people back into extreme poverty (<1.90/day) and many more back into poverty, especially in Asia and Sub-Saharan Africa, reminding everyone of the importance of effective, efficient, and timely social protection mechanisms.
A Focus on Financing
This is true also in Malawi, where the social protection sector is moving towards becoming fully shock-sensitive, but still grapples with key issues such as limited and fragmented funding and high levels of donor-dependence. The Social Protection for the Sustainable Development Goals Joint Programme, funded by the Joint SDG Fund and implemented by ILO, UNICEF, and WFP is one of the initiatives geared toward strengthening Malawi’s social protection system. One of the programme’s outputs focuses on social protection financing, specifically on supporting the Government of Malawi to finalize its social protection financing strategy. To do so, the Joint Programme has produced three documents, a Financing and Expenditure Brief, a Budget Brief, and a Fiscal Space Analysis.
Combined, the documents provide an analysis of the financing trends in social protection in Malawi over the past four fiscal years to identify the specific issues affecting social protection financing in the country, examining both on- and off-budget resources and the feasibility of increasing domestic resources coverage and the sector’s financing sustainability.
The Malawi Context
Of the four government social protection programmes currently functioning in Malawi, the Social Cash Transfer Programme (SCTP), the Public Works Programme (PWP), the Schools Meals Programme (SMP) and the Village Savings and Loans (VSLs) Programme, the last two are fully funded by off-budget donor resources and only the first two are on-budget and receive some funds from the government. Despite the steady increase of the government’s contributions, 93% of on-budget funding for social protection in 2019/20 came from donors (92% is projected for 2020/21). It is worth noting that the SCTP accounted for about 92% of the total on-budget funding for social protection in 2019/20 (92.5% is projected for 2020/21).
The SCTP is Malawi’s social protection flagship programme both in terms of outreach and budget. As of 2019, the SCTP reached an estimated 282,213 beneficiary households, benefitting approximately 1,194,473 individual members. As of 2019, the SCTP covered about 7% of the population and its coverage is limited to the 10% poorest of the population in each district. The current average SCTP monthly transfer value of about MK9,000 (~US$12) equals about 25% and 15% of the monthly equivalents of the national extreme and moderate poverty lines, respectively.
Data on off-budget funding for social protection programmes, except the SCTP, are scanty. The funding of the SCTP in Malawi is overwhelmingly dependent on donors. Out of 28 districts, 27 are funded by donors and one by the government. In relative terms, the government has been contributing an average of 5% to the funding of the SCTP between fiscal years 2017/18 and 2018/19, with 95% of the SCTP resources coming from donors. The SCTP is also fragmented in terms of funding channels, with four different modalities used by the donors and by the government and in terms of funding cycles, with each donor following its own. This negatively affects the efficiency, effectiveness, and transparency of the programme.
As it stands, social protection financing in Malawi, even just considering the SCTP, is so donor-dependent and fragmented that its sustainability is questionable, particularly in a situation of persistent global economic contraction that is likely to negatively affect official development assistance and remittances. The upcoming work on devising a sustainable financing strategy for social protection, in the framework of a wider attempt to roll out the Integrated National Financing Framework – or a whole-of-society approach to finance development for Malawi – is therefore momentous. The Joint Programme and the UN family will be actively supporting Malawi through this process and through the implementation of increasingly shock-sensitive and impactful social protection programmes, particularly the SCTP.
 January 2021.
 Global Economic Prospects, January 2021. The World Bank, 2021.
 (i) the World Bank (11 districts); (ii) the German Government – through KfW (7 districts); (iii) the European Union (EU) (7 districts) as well as (iv) the Irish Aid (2 districts)
 Funds from the Irish Aid are channeled to the MoGCDSW Account via the Reserve Bank of Malawi (RBM), while resources from the World Bank are channeled to District Councils via the LDF (now housed under the NLGFC (Vote 121)). Germany and the EU funds are routed through the KfW then the MoGCDSW, before being transferred to districts, and are jointly overseen by an external consultancy firm and the government. The government’s own contribution is being channeled through the MoGCDSW (Vote 320).
 This is happening with the support of a second Joint Programme, implemented by UNDP and UNICEF: Strengthening Malawi’s Financing Architecture at National and Local Level.