Discussion Paper Malawi Case Study: Social Protection Measures and Labour Markets
November 2012 
                              
             Malawi is a Least Developed Country (LDC) with a predominantly rural population engaged in agriculture. The agricultural economy is dominated by small-scale farms (tended by people known as ‘smallholders’) that produce commodity crops (mainly tobacco, coffee and cotton) and food for subsistence (maize, pulses, roots and tubers). Most smallholders cultivate less than one hectare. Poverty is deep and widespread across the land. As a result of their weak asset base, low technology adoption, limited land and labour constraints, the majority of rural households are highly vulnerable to shocks, whether generalized (such as drought) or household-specific (such as death). This weak resilience has hindered the ability of smallholders to move out of poverty and of the country to develop rapidly. Despite these structural impediments, there is now quantifiable evidence that measures intended to reduce smallholder vulnerability have begun to pay off, resulting in a decline in relative and absolute poverty. The benefit seemingly extends to all strata of the Malawian poor, urban and rural. Strengthening small farms has contributed towards rapid economic growth within the agricultural sector and broader economy, whilst, at the household level, it has led to improved food security as well as asset accumulation (cash, livestock and durable goods).
This paper describes and analyses the impact that pro-poor programmes and social protection (SP) measures in particular have had on reducing poverty and mitigating the vulnerability of the Malawian poor. Social protection here refers to the broad range of measures designed and implemented by the state and its partners in development to reduce poverty and strengthen the resilience of the population to shocks. The case focuses on the agricultural sector and its labour market dynamics. Over the past 15 years, a range of SP measures has been instituted; the measures that have been most extensive in scale and scope, whilst having the greatest impact on poverty, are those that have sought to enhance the productivity of small-scale agriculture through input subsidies. The paper also examines the impact of these programmes and considers their potential to reduce poverty through providing decent work within the agricultural sector and through the role of agriculture as an engine of economic growth. 