Malawi - Interim poverty reduction strategy paper and joint assessment

21445 THE INTERNATIONAL MONETARY FUND AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION MALAWI Assessment of Interim Poverty Reduction Strategy Paper Prepared by the staffs of the International Development Association and the International Monetary Fund Approved by Callisto Madavo and Kemal Dervis (IDA) and Anupam Basu and Masood Ahmed (IMF) November 22, 2000 1. The attached Interim Poverty Reduction Strategy Paper (IPRSP) prepared by the Malawi authorities highlights the available knowledge on poverty in Malawi, discusses the Government's current development strategy and presents a roadmap for the development of the full PRSP. The IPRSP demonstrates the Government's balanced approach to public policy, including creating the necessary conditions for macroeconomic stability, a sector-focused program to promote growth, and social sector programs designed to improve human resources and protect the vulnerable. The IPRSP also incorporates a well-articulated action plan and well thought-out institutional structure for preparing the full PRSP. Since the advent of democracy in 1994, the government of Malawi has made poverty reduction the over-arching objective of its developments efforts and the attached IPRSP emphasizes the Government's firm commitment to reducing poverty. However, as the Government recognizes, its policies have not yet made a significant dent on poverty and more work needs to be done to develop a prioritized, costed poverty reduction strategy that can be realistically implemented and monitored given known institutional constraints. 2. From independence in 1964 until 1994, Malawi was a one-party state and pursued a set of policies that promoted estate agriculture and a small, concentrated modem sector. The fruits of economic growth benefited only a small segment of the population leading to social and income distribution indicators that were, and still are, among the worst in the world. Following Malawi's transition to democratic government, its development strategy has aimed to achieve macroeconomic stability, smallholder-led agricultural and private sector growth and a significant expansion of social services. 3. In an effort to dismantle the previous state-controlled regime, a wide range of structural reforms have been introduced. These include the introduction of free universal primary education, the dismantling of controls in the agricultural sector over prices, marketing and inputs, the ending of restrictions on small farmers with regards to growing and trading cash crops (especially the profitable burley tobacco), the abolition of  -2- subsidies and state-provided credit and the lifting of trade barriers. There has also been a conscious shift in expenditures towards the social sectors and the introduction of specific anti-poverty programs, including the Malawi Social Action Fund and public employment schemes. A decentralization process is also under way, with local elections planned for November 2000, which will be followed by the creation of District Assemblies responsible for the delivery of basic services. 4. The IPRSP is candid in its admission that progress in implementing the key components of Malawi's development strategy has been at best mixed. The main reasons are spells of macro-economic mismanagement, vulnerability to exogenous shocks in agriculture, growing population pressure, high prevalence of HIV/AIDS and weak institutional capacity. In addition, the IPRSP outlines a range of factors believed to be key in reducing poverty and generating growth in Malawi. These range from the need for export diversification, to controlling the HIV/AIDS pandemic, reducing infrastructure constraints, promoting mining and tourism and improving the environment. 5. The authorities correctly emphasize the importance of sound macroeconomic policies in achieving the country's growth and poverty reduction potential. High and volatile inflation rates have been imposing a considerable burden on the poor. The consequential high levels of interest rates have constrained private sector activities. At the heart of Malawi's macroeconomic problems lie its past failures to control and limit the size of its fiscal deficits. Achieving fiscal restraint in the future will require effective control and monitoring of public spending and the prevention of further accumulation of arrears. Although improvements have recently been implemented to the system for recording and controlling spending commitments, these have not yet been fully tested and continued political commitment will be necessary to ensure that they are not undermined by extra- budgetary provisions. The successful implementation of Malawi's poverty reduction strategy critically hinges on achieving macro stability. 6. It will, however, also be essential that the structural reform agenda, outlined in the policy matrix, does not falter. In particular, the poverty reduction strategy needs to address key structural constraints inhibiting private sector development such as (i) improving the provision of basic infrastructure (ii) promoting competition by reducing the domination of the formal sector by large oligopolies, and (iii) providing financial services to enable widespread access to credit and saving mechanisms. 7. While a marked shift in budgetary allocations towards health and education has taken place in the recent past, improving the quality of service delivery in the social sectors remains a major challenge and needs to be addressed in the PRSP. Policies to ensure effective deployment and management of qualified staff coupled with improvements in procurement of basic supplies (e.g. teaching materials, medical supplies) need to be carefully developed in the PRSP process. As the responsibility for the provision of basic social services is shifted to the District Assemblies, particular care will have to be paid to select fiscal and institutional arrangements, which allow an improvement in basic service delivery and accountability. 8. A further related issue is governance. Financial management and accountability issues need to be further addressed in order to reduce waste and fraud; the monitoring and control of public spending has been weak. Abuse of public office, corruption and fraud threaten to undermine attempts to reduce the burden of government and encourage private sector development within the rule of law. The PRSP needs to address outstanding issues such as the failure to recover lost resources and prosecute offences, promote preventive actions against further abuse and judicial reform more generally. 9. Malawi benefits from a significant amount of analytical work on poverty reduction and growth issues over the past five years. The IPRSP draws on this to some extent, but greater attention needs to be paid in the final PRSP to linking the existing and programmed analytical work with a coherent overall poverty reduction strategy. A nationwide household income-expenditure survey has just been completed and the government is currently in the process of undertaking a comprehensive poverty analysis, to be completed over the next few months. Analysis of the determinants of poverty, the mapping of poverty, the incidence of public expenditure and evaluations of the impact of policy reforms are examples of how this household survey should be used to significantly enrich the PRSP. The IPRSP identifies a large number of additional exercises, which will feed into the PRSP. These include on-going sector strategy work in education, health, agriculture and transport. A Public Expenditure Review (PER) was used for the 2000/01 budget and includes broad budgetary allocation and process issues highly relevant to the PRSP. A National Safety Net Strategy for the poor has also been developed and approved by Cabinet. 10. Whilst there is a significant body of analytical work on the nature of poverty, the IPRSP recognizes that there is still a need to identify which sectoral and structural reforms have the greatest impact on poverty. This will require additional in-depth analysis. A critical review of the successes and limitations of previous strategies and their implementation, including analyses of their impact on poverty, would also greatly contribute to the elaboration of the PRSP. Moreover, in order to pull together a national anti-poverty strategy, there will be a need not only to 'coordinate' sectoral efforts but also to prioritize interventions, both within and between sectors. In particular, it will be critical to cost interventions at an early stage of the PRSP process in order to show trade-offs and to ensure the consistency with the macroeconomic framework and in particular with the limited medium term resource envelope. Last, in light of the recurrent difficulties Malawi faces in actually implementing its strategies, it will be important to ensure that the full PRSP contains both overall strategies and specific implementation plans - containing details on the activities selected, their objectives and targets, the timetable and the actors responsible for their implementation, their cost and financing.  -4- 11. The staff view is that the IPRSP includes a detailed but ambitious timetable for the various components of the PRSP process. The authorities intend to have a first working draft by end-March 2001 in order to use the key findings for the 2001/02 budget. It is clear that at that stage, the thematic contributions will vary significantly and therefore it is highly likely that parts of the poverty reduction strategy will not be fully elaborated within this time-frame. However, a coherent expenditure program is likely to emerge from this process by end March 2001 and the implementation of the Poverty Reduction Strategy (PRS) will rely significantly on programs being incorporated within the budgetary framework. Hence the staff view is that the authorities ought to be encouraged to keep to the revised timetable in Annex 2. This will ensure that implementation of the poverty reduction strategy can begin thereby enhancing the credibility of the PRSP by strongly signaling that this exercise is focused on implementation. 12. The IPRSP sets out well-designed institutional arrangements for preparing the full PRSP. At the political level a National Steering Committee has been established, which will report to Cabinet. A Committee of Principal Secretaries is responsible for the overall leadership in the exercise, in particular for overall information and guidance, consultation of the major stakeholders, and dissemination of the PRSP. A Technical Committee will assist the Committee of Principal Secretaries. Civil society and donor representatives will be part of twelve thematic working groups, chaired by the relevant line ministry. 13. There has been a significant increase in openness since the political transition and Malawi has embraced a range of participatory processes in recent years. The IPRSP outlines the structure of new rounds of consultation with all key stakeholders - including the private sector, professional bodies, donors, civil society, religious authorities and representatives of the poor. The three-stage participatory process described in the IPRSP annex is a well-designed sequential structure to ensure wide ownership of the process. The IPRSP also describes the modalities for donor participation and technical assistance. The Government will nominate representatives of the donor community to participate in each of the twelve thematic groups and these groups will identify the analytical/technical gaps that need to be filled by donor assistance. 14. A key area that will need considerable strengthening in the PRSP process is the development of core targets and a system to monitor these indicators. The government could consider establishing an integrated monitoring system that draws on existing work in the line ministries, the National Statistical Office, the National Economic Council and civil society think tanks. It will need to define a limited set of targets on which it would want the PRS to be judged, and indicators that would measure progress towards them. It should also identify what kinds of information are appropriate for different types of indicators (input, intermediate, outcome) and the modalities of data collection and analysis. Further data collection efforts need to be based on a careful assessment of the potential and limits of the 1997/98 household survey, the follow-up panel survey, recent census, public expenditure data and sector specific data in  - 5- formulating the PRS. In order to promote accountability and transparency, it will be important that these data and the results of any analysis are publicly available. 15. The overall staff assessment is that the present document meets the requirements for an Interim PRSP, notwithstanding the risks outlined above. The government's commitment to reducing poverty is genuine, and the strategy being pursued - of macro stability, smallholder-led growth, private sector development, and expanded social services - is adequate. A critical mass of analytical work exists and will be ready in time for the PRSP and the Government is already engaged with the consultative process that is required. The staffs of the World Bank and IMF consider that Malawi's IPRSP provides a sound basis for the development of a fully participatory PRSP, for reaching the decision point under the HIPC initiative and for World Bank and IMF concessional assistance. The staffs recommend that the respective Executive Directors of the Bank and the IMF reach the same conclusion. Malawi Key Events December 2000-July 2001 Event Board Date World Bank adjustment operation FRDP III December 2000 International Monetary Fund PRGF December 2000 HIPC decision point document December 2000 World Bank CAS Progress Report December 2000 PRGF Review February 2001 Completion of the PRSP June 2001  REPUBLIC OFMALA WI INTERIM POVERTYREDUCTIONAND GROWTHSTRATEGYPAPER- A ROAD MAP AUGUST2000  MALAWIINTERIM POVERTYREDUCTIONAND GROWTHSTRATEGY INTRODUCTION Malawiis in the process of preparing and GrowthStrategyPaper a PovertyReduction (PRSP).The final PRSP will reflect detailedanalysisof macro-economic and sectoral policiesand the most recentdata on poverty. It will define Malawi'sgrowth strategy and make detailed recommendations for the prioritisationof public expenditureto addressthe targetsoutlinedin the strategy. Both Government and the donor communitywill use the PRSP as the key paper for programming.As such, it is vital that the new frameworkreflectsa broadconsensus on effective policiestargetedto growth and povertyreduction. In this regard, it is importantfor Government to assumefull ownershipof the processof developing the PRSP. The PRSPwill draw on existing work on policy formulationand budgetary analysis. The PRSPwill also include the most recent data on poverty from the Integrated Household Survey(IHS). The processof developingthe PRSP will require the broadparticipation of civil societyand otherstakeholders includingParliament, civil society institutionsand the poor themselves. This participationwill help to enhance commitment to povertyreductionandalsoto build ownership of the process. Consequently, the Government will embarkon a preparatory for the PRSP process and will ensurethat it containsthe followingelements: i) an updatedpovertyanalysis with a genderperspective; ii) an examination of publicexpenditure andits povertyimpact; iii) a commitment to the prindpleof povertyreduction; iv) an agreement on a soundmacro-economic framework; v) of detailedconsultation a process andspedficpovertyoutcomes/strategies. In the meantime, the Government has prepareda RoadMap outliningthe stepsto be taken in developinga comprehensive which will be developed PRSP, towards the end 2 of this year. It is important to stress that this is an "interim" paper intended to outline a "Road Map" for development of the final PSRP. Government to povertvreduction commitment presents The PRSP to re-visit its povertyreduction an opportunityfor the Government theme, there is needto strategy. While povertyalleviationhas beenan over-arching and sectoral strategies for improve the process of articulating macro-economic so asto havethe greatestimpacton raisingincomes investment of the poor. The Governmentarticulated its commitmentto poverty reduction in the Poverty Alleviation Programme of 1994. Since 1994, the Government has continued implementing a comprehensive and structuralreform programme.The PRSP economic to evaluatethe impactof the economic providesan opportunityfor stock-taking, and structuralreform programme programme and to re-focusGovernment's in light of this review. is intendedto be a well-focused The PRSP policydocument,which will promoterapid growth and ensurethat the benefitsof this growth are equitablydistributed. economic Sustainableeconomic growth is a pre-conditionfor poverty reduction, but it is to definea pattern of growth in which the poor can fully participate. Broad- necessary growth will requiremacro-economic economic basedand sustainable stability,prudent and soundstructuraland sectoralpolicies. This will fiscaland monetarymanagement of stability,low inflationand interestrates, which is conducive lead to an environment for robust private sector activity and investmentin employmentand growth. At the sametime, it is recognised opportunities povertyand lack of economic that entrenched canthemselves andassetendowments limit growth. of the PRSP The preparation will ensuretransparency in participation and broad-based the choiceof goals,the formulationof policiesand the monitoringof implementation. The strategy paper will ensure consistency and between Malawi'smacro-economic and the goalsof povertyreductionand socialdevelopment. structural policies 3 The preparationof the PRSPbuilds on the wealth of existing work by Government and sectoral performance. The aimed at developingprioritiesfor macro-economic Governmentstarted the process in 1996 with nation-wideconsultationswith dvil sodety in order to reachconsensus on nationalgoalsand aspirations.The Vision2020 completedin March1998reflectspeoples' Document aspirationsin the areasof good governance, population, sustainableeconomic growth and development, vibrant of economic culture,development food securityand nutrition,quality of infrastructure, achieving socialservices, science development, andtechnology-led a fair and equitable management distributionof incomeand sustainable of naturalresources.All thesewill of the plannedPRSP. be crucialcomponents will alsodraw on the wealthof subsequent The PRSP to articulate work by Government to reachthe goalsspedfiedin Vision2020. Theseinclude strategies the following: i) "Reachingthe Vision: An Analysis of Growth Options", National Economic 1999; Council, ii) Analysis "Policy May1999; Initiative",Officeof the VicePresident, iii) for HIV/AIDS", "NationalStrategicFramework Ministryof Healthand Population, October1999; iv) Paper",National "Draft PolicyFramework Council,November Economic 1999; v) Review", "PublicExpenditure Ministry April 2000; and of Finance, vi) The Medium-Term Expenditure Framework Review,Ministryof Finance, (MTEF) April 2000 The PRSPwill also draw on the detailed analysisconductedby the Ministriesof Education, and Irrigationfor andAgriculture Sportsand Culture,Healthand Population, the development of Sectoral Investment Programmes(SIPs) and Sector Wide (SWAPs). The PRSP Approaches will also include recent policy statementsfrom the Ministries of Commerce and Industry, Environmentand Natural Resourcesand 4  and PublicWorks. The PRSP Transport and reflectthe most will, therefore,incorporate on policyformulation recentthinkingby Government andexpenditureprioritization. Structureof the Paper The Interim PRSP - A RoadMapis structuredin four parts. PartOnereviewseconomic performanceand reforms since 1980 and incorporatesthe following sections: i) economicperformanceand ii) structural reforms. Part Two outlines the poverty situation in Malawi. It reviewsand evaluatescurrent initiativeson povertyreduction deficiencies andevaluates efforts. It presents in past povertyalleviation somedata on povertyand outlinesthe studiesthat will be usedfor the analysisof povertyduringthe an analysis of the final PRSP.PartThreepresents preparation of povertyreductionand growth options. It includesa section examiningoptions for growth and poverty reduction. The sectoralanalysisof growth and poverty reductionis in three areas: issues, super-sectoral economic the socialsectorsandsustainable growth. The section on super sectoral issuesincludesan examinationof HIV/AIDSand population. The sectionon socialsectorsincludes of education analysis and health,whilethe sectionon economic sustainable and environment, growth includesagriculture,naturalresources economic privatesectordevelopment, and economic diversification, infrastructure.The of the social and economicsectorsreflectsrecent analysisof issuesas is discussion appropriatefor an interim document. Sectoralprioritieswill be updatedin the final of the versionof the PRSP. Part Four outlinesthe RoadMap for the development PRSP. the institutional issuesrelatedto the outline of the final document, It addresses frameworkfor developingthe final PRSP and establishesmodalitiesfor consultations for the Poverty of the formulationprocess with the donor community. The discussion Reduction and Growth Strategy Paper outlines consultations planned and the for the which will be adoptedto determinesectoralrecommendations methodology, final document. PartFouralsoconcludes of timetablefor preparation with a provisional the final document. 5 PART ONE: ECONOMIC PERFORMANCEAND REFORMS SINCE 1980 Despiteperiodsof growth,Malawihas not beenableto resolvemanyof the economic it has been difficult to that emerged in the 1980s. As a consequence, imbalances achievesustainedgrowth in real output. The period has been characterisedby rate depredation. recurringhigh fiscaldeficitsandexchange A. Performance: Output,Inflationand Monetary Economic Developments Growthin real output had been moderatefrom 1980to 1989 with real GDPgrowth averaging remarkably 2.3 percent. Between1988and 1991,the countryexperienced buoyantgrowth. RealGDPgrowth grew from 3.3 percentin 1988to 7.8 percentin 1991. These gains were short lived as real output growth plummetedin 1992 and 1994due to drought. GDPgrowthwas a negative7.9 percentin 1992and a negative 11.6 percentin 1994. Averageannualgrowth in GDPwas 4.3 percentbetween1990 and 1999. The main challenges throughmost of the 1990swas high for Government rate depreciation. inflationand interestrates,fuelledby exchange B. Reforms Structural The major focusof the early Structure (SAPs) AdjustmentPrograms in the early 1980s included elimination of some structural impedimentsthrough decontrollingprices, parastatalsector reform, and fiscaland monetarysector reforms. The Government focused on the private sector as an alternative source of growth. Government on exportdiversification embarked of the country'sproductive and expansion baseand since 1988. Tax and tariff reforms since 1987 were promotedimport liberalisation intendedto rationalisethe tax base while reducingtax rates. Steady progresshas been achievedthrough the introduction of surtax, abolition of the poll tax and of tax administration. Reforms strengthening were supportedby the IMF's Enhanced AdjustmentFacility, Structural IndustrialandTrade Policy the WorldBank's Adjustment SectorAdjustment Creditandthe Agricultural Credit. 6 These reforms led to the gradual removal of several restrictionson smaliholder agricultureand allowedfor the participationby private traders and accessto burley households. This was the first explicitlypro-poor tobaccoproductionby smallholder operationin Malawi. The resultwas a substantial increase and tradingof in production farmersleadingto substantial cashcropsby smallholder in income. increases The financialsector reform programmeallowedthe entry of new bankinginstitutions Bankof Malawigreater independence into the financialsectorand gavethe Reserve in its supervisorypower over the the formulationof monetarypolicy and strengthened bankingindustry. A marketbasedexchangerate systemwas adoptedin 1994and the conductof monetarypolicy also shifted from direct to market basedinstrumentsof the numberof providersof credit to the private monetarypolicy. This has increased creation. Despitethis policy,high interestrates have had sectorto spur employment an adverseimpacton privatesectorinvestment. Recent reforms related to expendituremanagement,monitoring and control; civil servicereform; and private sector development,have been implementedwith the support of the World Bank'sfirst and secondFiscalRestructuringand Deregulation (FRDPI Programmes and II). The adoption of the Medium Term Expenditure Framework (MEFMI) was a in both fundamentalreform in 1997. The MTEFwas aimed at makingimprovements the allocation in view of the greatneedfor efficient and quality of publicexpenditures public services and the very limited financial resources, which are available. efforts have been made to strengthenexpenditureprioritisationand to Specifically, allocations increase and health. to education hasalso initiatedseveralmeasures The Government to improvefinancialmanagement and accountability. Progresshas been made in the design of a computerised Information System (IFMIS) to strengthen the Integrated Financial Management monitoring of expenditure, and an integrated fiscal reporting system linking the 7 Treasurywith the ReserveBankof Malawiand the line Ministriesto achievetimely of accounts. reconciliation Considerableprogress has been made in the areas of Civil Service Reform and Privatisation. The Civil ServiceReform Programmehas includeda census of Civil of 20,000temporaryemployees. In addition,strategic serviceand the retrenchment of Government and functionalreviewsof Ministriesform the basisof rationalisation throughcontracting overlaps.The Job out certainfunctionsandremovalof operational Evaluation Audit will allowfor Civil ServiceReforms Studyand Personnel to start from 2000. The overallobjectiveis to improvethe efficiencyand deliveryof public July 15t, services, to focusits thosebenefitingthe poor- by allowingthe Government especially with which efforts on the highestpriority functions,and by increasingeffectiveness expenditures are converted delivered. into services Programme The Privatisation foster competitionand is intendedto improveefficiency, establisha wider baseof share ownership.So far, about 25 publicownedenterprises or broughtto the point of sale. The intentionis to openup haveeither beenprivatised generationby the privatesector and to limit the to create employment opportunities burdenon the Government, on pro-poorpublic allowingit to focus more specifically services. to policyreforms Response The wide ranging economicand structural reform programme which has been implementedsince the early 1980s aimed at improving economic and sectoral performancehas had major impactson the economy. At present,there is limited analysisof the impact of economicand structural reforms on the poor. This is a complexarea of analysiswhich will be developedin detail over the coming months, of preparing duringthe process andGrowthStrategyPaper. the full PovertyReduction will examinethe impactof reformsin the agriculturaland privatesectors The analysis their impacton the poor. to assess 8 PARTTWO: THE POVERTY SITUATION IN MALAWI Introduction There is no universallyacceptedand agreed upon definition of poverty. Indeed, contraryto commonbelief,povertyis not easy to quantify. Most analystsand policy makersnow acceptthat povertyhasmanydimensions, whichincludeincomeand basic needselements and embraces "non-measurable" attributessuchasthe right to dignity, non-discrimination and socialinclusion. The most recentMalawipovertyprofile is five yearsold andis basedon data from 1993. Thereis still needto identifyanddefinethe poor. Recentcriticismof the PovertyAlleviationProgramme focused on this issue arguing that the poor were not definedcorrectly. There is, therefore,the need to arrive at a clear definitionof povertyand to consistentlyapply this definitionto the of data. analysis Since1997,Government hasbeencarryingout work intendedto obtain a clear picture of the povertysituationin Malawito understand how to reducepoverty. The first work in this area "A Studyto DevelopResearch Policyfor and the Operational Definitionof Povertyin Malawi"underscored the needfor somepovertydefinitionsin revealingthe dimensions andextent of povertyin Malawi. Povertyis multi-dimensional and its definitionneedsto be broad enough to include both income and consumption,socio-economic well being, empowermentand an enablingenvironment. Povertyis, therefore,centredon the deprivationof goodsand services.The final PRSP document will includedata and analysis from existingdata on the incidence and natureof povertyin Malawi'. Two other recentsurveyswill be used in the analysis. Theseincludethe Population and HousingCensusand the Integrated Household Survey(IHS). This data is currentlybeinganalysed and resultsfrom the Growth through Poverty Reduction, The Situation Analysis of Poverty in Malawi, A Profile of Human Resources and Poverty in Malawi, A Poverty Profile of Rural Households in Malawi, Policy Reform in Malawi, A Survey of a Decade of Experience, Participatory Poverty Assessment Using Participatory Rural Appraisal, Malawi Social Indicators Survey, Malawi Indicators of Poverty and Living conditions A Safety Net Strategy for the Poorest. 9 preliminary analysis are anticipated in June with the release of the 1998 CensusData and the 1997-98 IHS data. The two data sets will provide a much clearer picture of current living conditions. The data sets will be used to derive poverty lines. Analysisof both surveys will continue during the processof preparingthe Final PRSPDocument. Current initiatives on poverty reduction The Government is deeply concerned about the high incidence of poverty in Malawi. Despite the attainment of positive rates of economic growth, poverty remains very high. In responseto the high level of poverty, Government has implementeda number of programmes and policies. The Policy Framework for Poverty Alleviation was the initial attempt to highlight areas for action. The Policy Framework emphasised that poverty alleviation was a process by which the poor are empowered economically. It also included a Safety Net Programmefor those who are adversely affected either by the economic and structural reform programme or by natural disasters. Line Ministries have also reviewed their policies to determine strategies that reflect a poverty focus. The final PRSPwill outline macro-economic,structural and sectoral policies and assess the impact of these policieson poverty alleviation. The Government'spoverty reduction strategy consistsof a three-progged approach (i) an emphasis on smaliholder agriculture, to raise the productivity and income of the rural poor. (ii) Promoting private-sectorgrowth to expand off-farm employment; and (iii) Expandingsocialservices. Since 1994, the following measureshave been undertaken: liberalisingthe growing of burley tobacco (previously the monopoly of large estates); dismantling of Government monopolies and controls on agricultural marketing, trade and commerce; substantial investments in infrastructure, and gearing up to the private provision of infrastructure, especially in telecommunication; and introducing of free universal primary education, accompaniedby a doubling of expenditure on evolution and an increasein spending on health care. 10 In addition,the Government has launchedprogrammes to empowercommunities and developrural socialinfrastructure(the MalawiSocialAction Fund, Microprojects, and District Development Funds); to help smallholder farmers increase their own productivity (the Starter Pack Scheme, Agriculture Productivity Improvement (APIP),and establishment Programme and of the MalawiRuralFinanceCorporation); provided direct transfers to the vulnerable groups through the Public Works Foodfor Workand NutritionandFeeding Programme, Programmes. of deficiencies Evaluation efforts in past povertyalleviation A range of institutionaland structural issueshave had an adverse impact on the implementation successful of a povertyalleviationprogramme. These issueswill be examinedin greaterdepth throughan in depth literaturereviewduringthe preparation Theseissues of the final PRSP. will include humancapacity the following:i) inadequate at all levels,ii) poor incentivestructureswithin the civil service,iii) the difficulty of to poorest households, targeting programmes and iv) issuesrelated to appropriate of reformsandprogrammes. sequencing Povertydata This will be developedin detail followingthe reviewof the IHS data. The final PRSP Documentwill also includean in depth analysisof the nature of povertyand income informationon the extentof povertyin Malawidemonstrates levels. Available that over populationlive belowthe povertyline. Per capitaincomewas 60 percentof Malawi's estimatedat US$220in 1999. Income distributionis highly inequitablewith a gini- coefficientof 0.62. Populationdensityis high and data from the 1997/98IHS survey estimatethat 32.3 percentof smallholder cultivate between0.5 and one households and 24 percentof households hectare, arefemaleheaded. HIV/AIDS in Malawiwith the sero-prevalence is pandemic rate estimatedat 14 percent. hasfallen from 48 yearsin 1990to 43 yearsin 1997. Childmortality, Lifeexpectancy 11 estimatedat 234 per 1000, is one of the highest in the region. Less than half the population to safe water andtwo fifths of the populationare illiterate. has access The QualitativeImpact Monitoring with the poor have Study (QUIM)and consultations both been usedto give a clearerpictureof the povertysituationin the country. The resultsfrom qualitativeand quantitativeanalysiswill be usedto during the preparation of the final PRSPDocument. In addition, the causesof povertywill be examinedin greaterdepth followingthe analysisof recentdata from the IHS duringthe preparation Document. of the final PRSP The Situation Analysis of Poverty (1994) identified the following factors as key determinantsof poverty: low agriculturalproductivity,rapid populationgrowth, lack of off-farm employment low levelsof education,poor health status,limited opportunities, accessto credit and limited or inequitableaccessto productiveassets. Malawi's povertyprofile will be developedin more detail in the final PRSP.The following data setswill be usedto informthis analysis: - PovertyProfile(1996); MalawiPovertyand HumanResources - and HealthSurvey(1996); Demographic Malawi's * Accelerating Growth(1997); andAttitudesto Health(1997); * The MalawiKnowledge * MalawiSocialIndicatorsSurvey(1997); and Review * The PublicExpenditure (2000). 12 PART THREE: ANALYSIS OF POVERTY REDUCTION AND GROWTH OPTIONS Optionsfor GrowthandPovertyReduction hasdeveloped The Government andevaluated growthoptions(Reaching three possible the Vision, NEC1999).The first is an agriculturescenariowhich focusesmainly on agriculture and strategies sectorinterventions that directlytarget the poor. The focus is on improvingagricultural productivity,improving land utilisation,and developing safety nets for the poorest. The secondfocuseson stabilisingthe macro-economic increasing environment, and pursuingeconomicgrowth. The focus is on investment creatinga supportive environment, macro-economic savings increasing andinvestment, the financialsector,promoting strengthening industryand exportsandcommercialising agriculture.The third focuses and improving on socialdevelopment the socialstatusof Malawiansthrough the provision of infrastructureand investing in human capital (educationand health)therebyraisingproductivity in and living standards. Strategies providingbasicsocialservices this scenarioincludesupportinggood governance, and the environment supporting development. andnaturalresources analysisof the three potentialgrowth optionsdemonstrates The Government's that all are necessary.No singleapproachis sufficient. In the long term, three approaches worsethan expected the Growthscenarioperforms becauseit leadsto a declinein per capita GDPdue to the lack of investmentin social services(education,health and the best levelsof agricultural population). The agriculturalbasedscenarioachieves production. However,it doesnot performwell in any of the non-agricultural sectors. The social developmentscenarioperformswell in the social sectors. However,its impact on the economicsector is not felt until the long term. The results of the analysis further show that none of the scenariosfully satisfy all the long-term developmentaspirationsof the nation. Overall,their analysisimplies that difficult decisionsmust be made regardingresourceprioritizationif the aspirationsof Vision 2020are to be met. 13 Government that there is needto prioritiseinvestments concluded in all three areasin order to lead to growth. Broadbasedand sustainable economicgrowth will require macro-economic stability, prudent fiscal and monetarymanagement and a focus on priority investments. Economic growth also requiresa supportiveenvironmentwhere is consolidated, democracy wherethe rule of law prevailsand where the privatesector takesthe leadingrole. This will requireinvestment in humancapitalthroughimproving the quality of educationaland health services. The major constraintsto economic growth also have to be addressed. The HIV/AIDsepidemicthreatensto undermine growth prospectsand sectoralperformance. Populationgrowth impliesthat there is need to expand servicesto meet the needs of the growing population. Malawi's investment environmentis unattractivedueto very high internaland externaltransport costs,unreliablepower suppliesand the deterioratingsecuritysituation. This implies that there is needfor a multi-sectoral approachto economicgrowth. Givenresource constraints,there is an urgent need to prioritise public expenditurein order to maximisethe potential for economic growth and development (Policy Analysis Initiative,VicePresident's Office, 1999). SUPER-SECTORALANALYSIS HIV/AIDS HIV/AIDSis havinga devastatingimpacton the economyand threatensto undermine for growth and povertyreduction. Malawi'sHIV/AIDSstatisticsare among prospects the worst in the Africa Regionand the World. Sero-prevalence ratesare estimatedat 25.3 percentin urban areas,21 percentin semi-urbanareas and 11 percent in rural areas. HIV/AIDSis reducinglife expectancy makingit an unprecedented in world catastrophe history. AIDStargetsthe most productive and activemembersof society,implyingthat AIDS has a uniquely devastatingimpact on development. Child mortality is rising, researchsuggests that by 2005to 2010,infant mortalitywill be 60 percenthigherthan it would be without HIV/AIDS. Worldwide, half of all infectionsoccurwithin the 15 to 24 age group, women are disproportionately affected. The diseasemainly strikes 14  the dependency peoplein their prime years. This increases ratio and deprivessociety of skilled professionals. Childrenare being orphanedin huge numbers. Care for orphansoften falls on extendedfamilies,stretchingthe capacityof these socialsafety nets. Nationalincome is affected as the illnessand death have a major impact on nationalproductivity is alsolikelyto drop, the benefits and savings. Labourproductivity are that wouldhave beenspenton investments of educationwill be lost and resources usedfor healthcare,orphancare and funerals. Savingsrateswill decline,and the loss for yearsto come. of humancapitalwill affect productivity In response launched to the AIDScrisis,the MalawiGovernment Response the National to HIV/AIDSin October 1999 and the StrategicFrameworkfor HIV/AIDSin January StrategicFramework 2000. The multi-sectoral for HIV/AIDSwas developedfollowing detailed consultationsat community and national level. The National Strategic wasdiscussed Framework at a Round Mobilisation Table Resource in March Conference the StrategicPlanto reducethe is fully committedto implementing 2000. Government devastatingimpactof HIV/AIDSin nationaldevelopment. Makingprogressin this area to the nationalpovertyreductionand growth strategy. is fundamental Population ratiosand of the IHS andthe Censusresultswill providedata on dependency Analysis mean householdsizefor urban and rural data. It will also give recent informationon populationdensityby Districtand Region livingwithin and the proportionof households urban areas and towns. This will enable Governmentto target interventionsmore effectivelyto resourcepoor households. The final PRSPDocumentwill includedata from the IHSon the abovevariables. THE SOCIALSECTORS Recentanalysisconfirmsthat ensuringuniversalaccessto an integratedpackageof basic socialservicesis one of the most effident and cost effective contributionsto poverty reduction. Providing basic services to children is key to building their to live in dignity. Childrenoften bearthe brunt of poverty,and this causes capabilities 15 lifelongdamageto their mindsand bodies.They are, therefore,likely to passpoverty on to their children. Povertyreductionmust thereforestart with children. However,it under-investin basicsocial is noted that one of the main reasonswhy Governments servicesis due to the cripplingweight of the external debt burden in the national budget. Externaldebt accountedfor an averageof 22 percentof Malawi'srecurrent budgetbetween1994/95and 1998/99. Education has increased Since 1995,the Government to the educationsector in line allocations with the Free Primary EducationPolicyand in recognitionof the key role which education plays in poverty reduction. Educationlowers fertility rates, improves earning power. There is a productivity,healthand nutrition and increases agricultural strongcorrelation headand the poverty betweenthe educationstatusof the household status of the household. Therefore,increasedaccessto education and improved quality of educationwill be key componentsof the poverty reduction and growth strategy. objective at the primary school level is to attain 90 and 95 percent Government's and retentionratesby 2003. Improvingthe qualityof primaryeducation enrolment is a key priority. Government policy in partnershipwith the private sector is to maintain accessand improve quality of education by providingthe necessaryinfrastructure, will equipment,teachingand learning materialsand qualifiedteachers. Government also develop and implementa curriculumthat addressesboth academicand non- needsof students. academic education,Government In secondary will create a secondaryschool systemthat will increase access focuswill be placed from the present16 percentto 23 percent. Special on improvingthe quality of Community Schoolsby improvingteaching Day Secondary quality and rationalisingallocationof resourceswithin the secondaryschool system. In this regard,it is importantto introducea greater levelof cost sharingin secondary education with progressiveremoval of subsidieson boarding costs in secondary 16 schools. Governmentwill also prioritise scienceand technologyand businessand schoolcurriculum. skilisin the secondary communications Tertiary education will continue to provide middle and high level manpower requirementsfor the management of the economy. Thereis an urgentneedto expand access to tertiary educationthrough expandingDistanceEducation in order to meet the manpower requirements of the country. Thereis alsoneedto removesubsidies on is committedto tertiary education. In the area of vocationaltraining,the Government implementthe Technical,Entrepreneurial and VocationalEducational Policy. These reformswill allowGovernment to promotequality in primaryeducation.The final PRSP will reflect recent analysiswithin the context of the Public ExpenditureReviewand andCulture. Science for Education, InvestmentProgramme Sectoral Health Malawi's major health problems include malnutrition, diarrhoea diseases; acute respiratoryinfections;high levelsof maternal,infantand childmortality;HIV/AIDS;and an increase in the numberof casesof Tuberculosis.Povertycontributesto these poor health statistics,while the poor health statusof the populationundermines prospects for growth and povertyreduction. Investingin basichealth careis, therefore,a crucial of the growth strategy. component The overallpolicygoal of the healthsectoris to raisethe levelof the healthstatusof all Malawians by reducingthe incidenceof disease and occurrence of death. To support this goal, Government has put in placea numberof policy measures,which will havea significantimpact on the health status of the Malawi population. In particular,the EssentialHealth Package(EHP) will focus on promotive, preventativeand curative health services. The BakiliMuluzi Health Initiative (BMHI) follows from the Primary HealthCare strategy,and focuseson makingfree selectedbasicessentialdrugs with the EHP. The EHPand BMI also focus on measures such as the promotionof clean water and sanitation, the Expanded Programmeof Immunization (EPI), family of malaria planning,treatmentand prevention and HIV/AIDS. 17 Other initiatives in the health sector include the introduction of a Sector Wide Approach, decentralisation of health care managementand the introduction and strengtheningof cost recovery/userfees. In this regard, all hospitals will be encouragedto establish fee-paying wards and Outpatient Departments (OPD-1) servicesfor userswith the ability to pay. Furtherreformsincludedrug administration and procurement and the introduction of drug revolving funds. In addition, Governmentwill consider introducing a national health insurance scheme. The Government has also recentlydevelopeda policyfor humanresourcesdevelopment in light of the critical human resourceconstraintsin the health sector. HIV/AIDs is a developmental issue,the responseto HIV/AIDSis through the NationalStrategicPlan as outlinedin the sectionon Super-Sectoral Issues. In the area of population,the focus of populationpolicywill be in line with achieving the overallgoal of raisingthe standardof livingof all Malawians.Strategieswill include the following: expansion and improvement of reproductive health facilities; strengthenedadvocacyon HIV/AIDS and reproductivehealth through information, educationand communication campaigns;and expansionof family life educationfor the youth on reproductivehealth issues. Initiatives in civic educationwill sensitise Malawians on gender issuesto minimisegender discrimination and on environmental protection. The final PRSP will developand refine the abovepoliciesto reflecton-going work throughthe PER, SIPSand SWAPs programming. SUSTAINABLE ECONOMIC GROWTH Aqriculture Eighty-fivepercentof Malawi'spopulationderive their livelihoodfrom agriculture. The sectoraccounts for over 30 percentof GDPand closeto 70 percentof export earnings. The sectoris thereforekey to sustained economicgrowth and povertyalleviation. Due to the dependenceon agriculture,the economyremains fragile and vulnerableto externalshocks. 18  overall policyobjective in the agriculturalsector is to Government's Correspondingly, improve the well being of Malawians through growth and poverty reduction. Governmentis committed to intensifying its efforts to tackle long-term structural constraintsfacing the agriculture sector and the farming community in particular. Governmentis also embarkingon a numberof programmes aimed at complimenting policy reform by cushioningthe effects of market liberalisationon poor households. which is likelyto be moretargeted,andthe Theseincludethe StarterPackProgramme InvestmentProgramme. Productivity Agricultural Governmentis committedto increasingagriculturalproductivityand to enhanced food security on a sustainablebasis. Soil conservation, promoting soil fertility and strengtheningenvironmentalconservation will be key. Other interrelatedobjectives include improving householdlevel food security and the nutritional status of the population, expandingand diversifyingcrop and livestock productionand exports. Government will also identify and developareasof irrigationpotentialand implement which focus on environmental irrigation schemes, and financialsustainability. These include the rehabilitationand construction of earth dams, support to indigenous of the privatesectorand costsharing. and improvedparticipation irrigationschemes The mediumto long-termstrategy is to increasethe role of the large scale sector in terms of national food security as well as a sourceof economicgrowth and inter- sectorallinkagesthrough water utilisationand commercialisation of agriculture. The major challengesin this sectorincludeimprovingsoil fertility, increasingland and water farmersand rural community useefficiencyand strengthening organisations. The issue of export diversificationalso needs to be addressedon an urgent basis. Malawiis over-dependent on tobaccoas a sourceof export revenue. This makesthe economyvery vulnerableto adversemovementsin the terms of trade and long term unfavourable for tobacco. In this regard,there is needto strengthenefforts prospects export base. Optionsshouldbe exploredto increase to diversifyMalawi's and diversify export production pulses in the followingareas:tea, coffee,sugar,cotton, groundnuts, and nontraditionalexportsincludingpaprika,cut flowersand horticulture. 19 Governmentstrategy is also to enhancethe role of the private sector in agriculture through the liberalisation of agricultural marketing and pricing policies and and privatisation of state-ownedenterprises including ADMARC, commercialisation Smallholder SFFRFM, CropAuthoritiesand somelivestock will services. The final PRSP to reflectthe on-goingwork in the development developand refine agriculturalpolicies of MASIP from the PublicExpenditure andwill alsodraw on recommendations Review. and Environment NaturalResources of Malawi'snatural resources,includingland, forest and water is The management crucial to the achievementof sustainableeconomicgrowth and poverty reduction. Government has become increasinglyconcernedabout the deterioration and the associatedlossof natural resources.Currentinitiativesin this area includepromoting sustainableuse and managementof natural resources,facilitating restoration and of essentialecosystems maintenance will and ecologicalprocesses.The Government also focus on enhancing awarenesson the importance of sound environmental promotingco-operation management, localcommunities,NGOs, betweenGovernment, in sustainable the private sector and other stakeholders of the use and management natural resourcesand environment. Policieswill be elaboratedfurther in the final PRSP. Privatesectordevelopment recognises Government the role of the privatesector as the engine and acknowledges is aware that severalconstraintshinder the of growth of the economy. Government of the privatesector. Theseincludethe following: weak structureof the development environment,dependence private sector, non-competitive on a narrow product base, macro-economicinstability, a small domestic market, low productivity, legal and andproblemsin terms of access regulatoryconstraints, to infrastructure. The mainthrust of Government policyin the mediumterm for promotingprivatesector will include putting in place new policies,legislationand institutionsto development 20 support private sector development. The new policiesincludethe Integrated Trade and Industry Policy, Small and MediumScale EnterprisesPolicy,the Co-operatives SocietyAct and the Competitionand Fair TradingAct. Other on-going private sector development strategies include the PrivatisationProgramme designed to foster increasedefficiencyin the economy,increasecompetitionand reducemonopoly,and promote participation by the Malawi public in enterprises and raise revenue for Government. Further policies include investment promotion, industrial technology promotionand improvementof the quality of economicinfrastructureand effective with the privatesector in tradeand industrymatters. collaboration Foreigndirectinvestmentis the best way in which the wide gap betweenthe country's low savings rate and investment requirementscan be bridged in the short run. Therefore, efforts to make Malawi a conducive investmentenvironmentto attract private foreigninvestmentneedto be encouraged. In this regard, promotingmacro- economicstabilityand improvingaccess will be to and the qualityof localinfrastructure key. Policiesto promote private sector developmentwill be refined further in the of the final PSRP. development includingminingand tourism diversification Economic The miningsector in Malawicurrentlycontributesabout 3 percentto total GDP. The sector can play a significantrole in promoting economicgrowth and diversification. This will be achievedby reviewingthe legalframework with to improvecompetitiveness the sector to promote private sector investment. Governmentwill promote the exportation,exploitationand processingof mineralsto enhanceexports and import through privatesectordevelopment. substitution Tourism currently plays a relativelysmall role in the economyof Malawi. However, the Government recognizesthat tourism is critically important for the Malawi economy,perhapsmore so given the poor performanceof tobacco in recent years. Malawiis home to someof the most striking natural beauty in all of Africa, having a diversity of features like the lake, mountainsand national parks. Tourism can be an engine of growth, capable of dynamizingand rejuvenating other sectors of the 21 economy. It can significantly increasethe country's foreign exchangeearnings; it can provide immediate employment; and it can significantlycontribute to national income. Tourismalso has potentialfor growth and economicdiversification. Optionswill be exploredto promoteeco-tourismand adventuretourism. At present,the performance affectedby inadequate of the tourismsector is adversely and poor infrastructure,lack of clear investmentincentivesand problemsin accessing financedue to high interest rates. Improving economicinfrastructurewill be key to promoting private sector developmentand economicdiversification. Steps in this area are underway as the 2000/01 Budget has made provisions for the roads improvement programme to specificallytarget tourist resorts. Policiesin this area will be elaboratedin the final PRSP. Infrastructure Government'sbroad policy objective in the economic infrastructure sector is to encourageand facilitatecompetitionin the deliveryof utility services. To this end, the will establisha CompetitionAuthority and facilitate competition,private Government and greatercost sharingin infrastructure sectorinvestment maintenance.Internal and externaltransportcostscontinueto be one of the highestin the region. Hightransport costs are a constraint to economicgrowth as export competitivenessis adversely of importsis very high. Despiterecent affectedwhilethe externaltransportcomponent progress in telecommunication policy and liberalisation,telecommunications sector coverage growth. This is remainspoor and hasnot grown in line with overalleconomic evidencedby low telephonepenetration with other SADC ratescompared countries. In which is not financiallyviable, has increasinglyproved the power sector, ESCOM, unableto providereliableand efficientpowersuppliesresultingin lossesfor industry. Governmentis currently investigatingoptions to strengthen the managementand financialviabilityof ESCOMand to promote private sector investmentin generation, and distributionof power. transmission 22 To address constraintsin the areaof transport,Government hasimplemented the Road Maintenance Initiative aimed at improvingthe quality of existingroad infrastructure and addressing the maintenance backlog. The NationalRoads Authority(NRA)actsas an autonomous entity with a predominantly privatesectorboard. The NRAis partially financed by a fuel levy which ensuresfinancialsustainability. Governmentis also exploringoptionsto upgradethe NacalaCorridor whichwill be keyto promotingexport competitiveness and reducingimport costs. In telecommunications, Government has established an independent MalawiCommunications Regulatory Authority (MACRA) to regulate telecommunications, posts, broadcastingand radio. Governmentis also exploringoptionsto increase privatesectorinvestment in telecommunications. The final PRSP Document will updateinformationon strategies to improvethe quality of economic infrastructure as a crucialcomponent of economic growth. Decentralisation and PovertyReduction Malawidecentralisation process aimsto passon politicaland administrative authorityto the district level. The key objectivesof the policy include creating a democratic environmentand institutionsthat will promote good governance,developmentand communityparticipation.The policy seeksto eliminatedual administration existingat the districtslevelby establishing one unifiedstructure,the DistrictAssembly, to achieve cost effectivenessand efficiencyin service delivery. The policy seeksto promote accountabilityand transparencywith the purposeof assistinggovernment reduce people'spoverty. Progresshas been made in reviewingthe legal frameworkand proposalshavebeenmadefor the amendment andthe repealof someexistinglaws. As part of the decentralisation process, a numberof administrative reformshave been effected. In addition, Government has madea commitmentto ensurethat adequate resources are made availableto the assemblies. This has necessitated the designof a Local GovernmentFinancialManagement System. Governmentrealisesthat sector devolutionrequirestechnical expertise, consensus buildingandcommitment. 23  PARTFOUR: ROAD MAP FORTHE PREPARATIONOF THE PRSP PovertyProfile a section on the Poverty Profile will contain a sectoral analysis of In the final PRSP, poverty. Each of the sectors will analyse trends in sectoral performanceand identify key recommendationsfor implementation. It is noted already that although urban poverty is a growing phenomenon,the majority of the poor residein rural areas. Overallaims The Broad Vision Statementwill draw on the PRSPconsultative meetings, the Vision 2020 Documentand other key papers including"Reachingthe Vision" and the "Policy AnalysisInitiative". This section will identify and define the degree to which poverty should be reduced by 2020. This section will also articulate the overall multi-sectoral strategy for providing for the poorest. This will provide a pragmatic assessmentof what is desiredand what can be achieved,givencurrent resourceconstraints. SpecificSectoralStrategies This will reflect recent policy analysis and refinement of recommendationsdue to a processof consultationsscheduledbetween May and November2000. The PRSPwill identify strategiesand targets for implementation. Recentanalysisthrough the Public Expenditure Review and the Medium Term Expenditure Review demonstrate that improvingthe quality of macro-economicmanagementand budgetary implementation will be key to assuring growth and poverty reduction. There is, therefore, need to invest in upgradingcapacityfor policy analysis, Strategiesfor poverty reductionand growth This chapter is the key to the PRSPDocument. The strategieswill draw on the key Government documents outlined above but will also reflect the outcome of consultations with civil society. The definition of appropriate poverty alleviation strategieswill require considerable analysis. Sectoralbench-markindicatorsfor poverty 24 alleviationwill be established. A specifictimetable will be establishedfor each of the targets identified. Where possible, short and medium term targets should be established to allow mid-term assessment of the implementation of the poverty alleviationpolicies. StrategicPrioritiesfor PovertyReductionand Growth This analytical input will be necessaryto determine which of the potential policies should receive priority in the final PRSP. In this regard, the previous chapter should also be limited to those policies, which have been demonstrated to have the most potential to reducethe level of poverty. The IHS data will be analysedto identify key determinants of poverty. This will be modelledto simulatethe impact of changes in key variables on sectoral and macro-economicperformance. This analysis will be complementedby additional data from the line Ministrieson the potential impact of poverty alleviationstrategiesproposed. Institutional Framework The implementation of the activities proposed for each strategic component of the PRSP the existenceof an institutionalframework in line with the proposed presupposes objectives. Both Government ministries, decentralised local authorities and implementingagenciesneed an appropriateorganisationalstructure to enable them to perform efficiently, effectively and within the timeframe proposed. The institutional framework requiredto implement the PRSPneeds to be able to command sufficient resourcesto meet agreed objectives and deadlines. The institutional framework will also require a strong, rapid and effectiveco-ordinatingstructure. National ownershipof the programmingexerciseis key. However,there is need to establish modalities for consultation with the donor community through the Aid Co- ordinationGroup. This is judged to be more effective than individual donors requiring consultations with the team tasked with preparation of the PRSP. The Technical Committeeon the PRSPand the Aid Co-ordinationGroup will agree on a timetablefor such consultations. 25 The Ministerof Financeand EconomicPlanningwill have the overall responsibilityover the PRSPprocess. A NationalSteeringCommitteewill comprisethe Ministerof Finance and EconomicPlanning; the Governor of the ReserveBank of Malawi; the Director General of the National Economic Council; the Minster of Education, Science and Technology; the Minster of Health and population; the Minister of Agriculture and Irrigation; and the Minister of Transport and PublicWorks. This Steering Committee will be chaired by the Minister of Financeand EconomicPlanning. The Minister of Financeand EconomicPlanningwill report to the Cabinet Committeeon the Economy and the Cabinet. This Committee will be assisted by a Committee of Principal Secretariescomprising the Secretary to the Treasury; the Secretary to the National EconomicCouncil;the GeneralManager(EconomicServices),ReserveBank of Malawi; the PrincipalSecretary, Ministry of Agriculture and Irrigation; the PrincipalSecretary, Ministry of Health and Population;and the PrincipalSecretary, Ministry of Transport and PublicWorks. This Committeewill be chaired by the Secretaryto the Treasury. The PSRPprocesswill call for enhancedcapacity in both human and financial resources and sustained investment in economic capacity building in the key economic managementinstitutions. The Committeeof PrincipalSecretarieswill overseethe work of the Technical Committee on the PRSPdrawn from the National EconomicCouncil, the Ministry of Financeand EconomicPlanningand the ReserveBank of Malawi. Other the Committee than drawing its membershipfrom the three institutions/organisations, will also coopt members from the sectoral ministries on a need basis. This Technical Committeewill be led by the National EconomicCouncil. The TechnicalCommitteewill, among other things, be responsiblefor carrying out nation-wide consultations, doing analytical work and drawing up strategies with the guidance of the Committee of PrincipalSecretaries. The Monitoring and Evaluation Division of the National Economic Council will be responsible for monitoring and evaluating the implementation of the PRSP. The National EconomicCouncil, in collaborationwith the Ministry of Financeand Economic Planning, will identify resource requirement for PRSPpreparation following detailed 26 sectoralanalysisthrough the identificationof strategicpriorities for Growth and Poverty Reduction. for the PovertyReductionand GrowthStrategy Paper FormulationProcess Necessaryactivities include consultationswith the groups, which have been identified for consultation. These will include political parties,the private sector, NGOsand civic societies. The processwill also includeconsultationwith the poor. The consultations with the poor will develop and amplify the results of QUIM2 and Outcome of with the Poor. Consultations A great deal of work has already been done on sectoral assessmentthrough Vision 2020; the PolicyAnalysisInitiative; the Task Forceon SIPs and SWAPsin Education, Agriculture and Health and other line Ministries; and through the Public Expenditure Review. Existingwork will be used in the design of strategy such that the PRSPwill not duplicateexistingwork or "reinventthe wheel". Whilethe PRSPwill draw mainly on existingdata, scope existsfor additional analysisto of which policieswill be done with existingdata, particularlyin undertakingassessment be the most productive in alleviating poverty without reducing growth prospects. Specific poverty analysisis also plannedfor the IHS Data between May and October 2000. Additional data sets will be used where appropriateto facilitate the processof prioritization. TIMETABLEFOR THE PREPARATIONOF THE PSRP The Interim PovertyReductionand Growth Strategy - A RoadMap was discussedand endorsed at the ConsultativeGroup Meeting held in early May, 2000. Since the ConsultativeGroup Meeting,a list of stakeholdersfor consultationhas been drawn-up. Guidelinesfor consultationshave been establishedand a schedule developedfor the processof consultation. 27  becomes As the PRSP moredeveloped, of povertyin cleargapsin our understanding policies Malawiandthe impactof Government on povertywill becomemoreapparent. Thesegapswill needto be identified analysis and appropriate to fill will be conducted for the required the gaps. Datasuitable assessmentwill be collated. The IntegratedHousehold Survey(HIS) data will be usedto establisha povertyline and povertyprofilesas a basisfor drawingstrategies are and targets. Consultations for the periodbetween scheduled and October2000,andthesewill include September roundtablediscussions. The final PRSP 2000. The will be drafted during a period startingin November, drafting will be done by the Technical Committee.The Technical Committeewill be guidedby the Committee of Prindpal in undertaking Secretaries this exercise. These will bring togetherall the information analysisof household from consultations, data will be made material povertyanalysis/profiles and pastpolicyanalysis.Moreextensive availableas the IHS data is discussed. Detailedoutlines will be preparedand discussed. The draft PRSP will be discussedat a seriesof workshopswith NGOs, traditional authoritiesand local administrativeofficers. Previousgroups will be for a second consulted time. TIME TABLEFOR COMPLETINGTHE PRSP to draw sectoralstrategies process for the consultative 1) August - Preparations on both economic a) Public Sector: For sectoralstrategies growthand povertyreduction, includingsafetynets sectorstrategies b) NGOs: Social c) Privatesector: For privatesectordevelopment growth,povertyreduction d) Donors: economic 2) gthAugust- Establish level of resources work. Issues paper requiredfor PRSP drawn ready. List of stakeholders 3) 16th briefing. AugustDonorconsultation 28 4) gth August - Initial poverty line-based poverty analysis results from the IntegratedHousehold survey 5) 20 th August 2000 IHS povertyanalysiscontinueddrawing poverty profilesand identificationof determinants of povertyat all level. 6) 3 1 st August, 2000 - Government establishedthe desired poverty reduction levels for the next ten years 7) September, 2000Commencement of a seriesof consultations Thesemay take a variety of forms: Roundtablediscussions in the line ministries and workingsessions.Workshops with NGOs.Districtworkshops with traditional authoritiesand localadministration officers. All consultations transcribedand synopses prepared. 8) October,2000-continuation of consultations - analysis of sectoralstrategies Bring together all the information that was collected from the previous consultations,analyses,and past policy analyses. More extensive poverty analysis/profile materialwill alsobe availableas the IHSanalysisprogresses. 9) EndNovember, 2000-Draftdiscussed and revised Draft institutionalframeworkfor managingand coordinatingthe implementation of the PRSP. Costingof all the strategies and determine the resources requirement and gaps. Seriesof workshops donors,government,NGOsand the Privatesector,Cabinet, Parliament, publicto discussPRSPdraft 10) Mid Jan. 2000 - draft PRSPdocumentofficially submittedas a draft working documentto all stakeholders 11) MidFebruary, 2001National Symposiumon the PRSP 12) EndFebruary, 2001FinalRevision 13) EndMarch, 2001submitto cabinet 14) July,2001PRSP readyfor implementation Note: Please seeAnnex2 for PRSP Process Proposal 29  Annex 1: IPRSP MATRIX Sectoral Issues Strategiesand Measures Timing Objectives and Policies 1. PovertyReduction-Broad Strategy 1.1 Developfull Poverty ReductionStrategy Developstrategybasedon Complete on detailedpovertyanalysis 2000 September, povertyanalysis basisof IHS data; producepoverty lines andpovertyprofiles. Complete analysis of of effectiveness October,2000 PovertyalleviationProgram,1995-2000 Consultwith all stakeholders 2000 November, to increase 2000-2001 Draw up sectoralstrategies povertyreductionimpact. Undertake analytical research on 2000-2001 povertyissues (e.g. socialsecurity,criteriafor poverty focus,labourmarketissues). Set targetsfor reductionof level To be determined in contextof of poverty preparation of the Povertyreduction StrategyPaper ImprovePovertyand Programme Put monitoringandevaluationsystems On-going monitoring in placeandcreatedata bank 2000-2002 1.2 SocialSafety Nets targeted Introduceand implement Management 2000 Disaster Drawa National and safetynets mechanisms, ActionPlan emergency relief. Adopteda safetynet strategywith June 2000 clearlydefinedinstruments, and coverage for targeting poorgroups. ObtainCabinetapproval for the by end 2000 strategy Expand publicworksprogram,develop childnutritionprogram,orphansupport program,andselectedcashtransfers with safetynet strategy, Consistent 2000 December, developNationalFoodReserve Agency (NFRA) asdisaster relief agency SectoralIssues TStrategiesand Measures Timing Objectives andPolicies I 1.3 Growth and Income Distribution a. GrowthRaise growth annual macroeconomic Maintain stability, rate to 6% reduce and increase distortions, competition.(seePrivateSector Development andeconomic management sections) b. MoreEquitable and Income Complete landreformpolicy of on basis Ongoing Assets findings Commission of Presidential on Lands. Increasedaccessibility to technical On-going vocational entrepreneurial education andtraining(TEVET) facility Micro-credit accessibility increased;adopt microfinance selectively strategy, financially expand viableprograms. Providedirectedsupport, social infrastructure, andempowerment to poorercommunities,throughMASAF, microprojects, anddecentralization process. Equip poorfor long-run income growth vialarge-scaleinvestment in education (see SocialSectorssection) 1.4 FoodSecurityand Agriculture of chronic a. Reduction and Increase useof hybrid seeds maize and 2000planting transitory foodsecurity bysmallholders. fertilizer Implement season targeted starterpackscheme and revised APIP Improvestorage to minimize - losses through useof NFRA efficient and promotionof community banks. storage Targetfoodinsecure households through food-for-work,cash-for-work, andinputs programs. for assets Improve marketingof grainbyletting On-going market forcesworkeffectively,through commercializationandprivatizationof ADMARC. 3 Sectoral Issues Strategies and Measures Timing Objecties and Policies b. Increaseagriculture production Improved provisionof inputs 1999-2004 Increasethe use of hybrid maize seeds and fertilizer by smaliholders Reducepost harvest loses Promote irrigation c. Strengthenlivestock Promoteartificial inseminationservices On-going development. as well as encourageprovisionof mini dairies Promotean expandedlivestockfeed On-going industry c. Agriculture Credit Credit availability and accessibility On-going improved through financial institutions such as Malawi Rural Financeand Agricultural ProductivityInvestment Programme ? Seek strategic partner for MRFC Restructure APIP program to provide financing to intermediary organizations financial intermediation. 2. Social Sector Development 2.1 Education Reduceilliteracy Maintainthe budgetary allocationfor recurrent budget for the Ministry of Educationto at least 23% Improve teaching and learningin Establisha medium-termteacher 1998-2001 Schools developmentprogramme to train 6,000 per annum Improve retention and completion Reducepupil-qualifiedteacher ratio to rates in primary 60:1 acrossall standards Construct 8,000 classroom 1998-2001 Train more teachers at all levels Provideteaching materials 4 SectoralIssues Strategies and Measures Timing Objectives and Policies Shift to wider and more egalitarian Construct - new SecondarySchools coverageof secondaryschooling Reduceboarding subsidy 2000-2001 Increase universityintake Improve administration Approve PolicyInvestment Framework 2000 Planningand efficiency of (PIF) for education sector. Schools Developcosted PIF implementation 2000 plan. Undertake institutional policy implementationcapacity development 2000-01 program. Technicaland VocationalEducation Technical,VocationalTraining Systems 2000-2003 & practiceschanged to be demand driven not supply driven. Create Labour MarketInformation Dec 2001 System EncouragePrivateSector participation On-going in TEVETsystem including the TEVET levy 2.2 Health Improve primary health care Introduced Essentialhealth care 2000 services Package(EHP) Introduce RevolvingDrug Fundsat Dec. 2000 clinics: Complete the Central MedicalStores 2000 reform analysis. Implement CMSreforms 2000-01 Improve the availability and Establishmentof paying wards an OPD- On-going efficient use of resourcesincluding 1 servicesat district hospitals drugs Reducestaff shortage Implement managementand incentive On-going reforms 5 SectoralIssues Strategiesand Measures Timing Objectivesand Policies 2.3 Population Reduce population growthby Introduce and a comprehensive 2002 December reducingfertility ratesfrom 6.7 to integrated community-based 5.0 distributionsystem. 2.4 AIDS/HIV Implement plan Mainstream Aids/HIVStrategic Aids/HIVin all sectorsand improveorphancare Intensifyeffortson primaryprevention IntegrateAidsandTB Control programmes Strengthen Aids Secretariat 2.5 CommunityServices Improvethe welfareof nationalcommunity Establish based disadvantaged groups,orphans, programs reformatory 2000 juveniledelinquents destitutes, Increase assistance and to destitutes familiesin socialdifficulties 2001 Improvesurvival,protection, Raise careandeducation 2002 earlychildhood anddevelopment participation of from under1% to over 30% children Mainstream genderissuesin all Strengthen and the implementation On-going government policies monitoring Gender of National Policy Raise the awareness of genderissues, Ongoing women's legalrights,and economic empowerment of womenreduced rate of genderimbalances Develop capacityof peoplewith Promote access to equitableand On-going to participate disabilities meaningful vocational, pre-employment effectivelyin economic & on job trainingfor persons with development. disabilities Develop skillsincludingadultbasic On-going education. 3. EconomicManagement 3.1 Fiscal Policy Promote macroeconomicstability Reduce domestic budgetdeficit 2000101 and reducethe sizeof grants)to 1.2 percentof (excluding government. GDP in 2000/01. Extend the surtax to wholesaleand 2001 6 SectoralIssuies Strategiesand Measures Timing Objectivesand Policies retail stage. Authorityfully MadeMalawiRevenue operational 2000 February, Expenditurepolicy Reduce currentexpenditure by a 2000/01 Reduce while re- total expenditure phased reductionof low priority orientingthe structuretowards outlays,includingoutlayson traveland socialsectors embassies abroad. Revitalise the medium-term expenditure framework in all ministriesandprioritize expenditure by line items. 2000-2002 recommendations Incorporated of Review PublicExpenditure in FY2001 budget Complete reviewof development budgetprojects,adequately fund priorityprojects,restrictentry of new _rojectsto highestpriority expenditure Strengthen control Introducednewsystem to monitorand July, 2000 andmonitoring controlspending commitments, including monthlyreportsto the Ministry of FinanceandEconomic Planning 2000 Quarterlypublicreportingof revenues, October, and parastatal expenditures, accounts 3.2 MonetaryPolicy Reduce 12-monthinflationto 19 Reduce the growthof reservemoneyto 2000-2001 percentby end 2000and 10 14 percentper annumendof 2001 percentby end 2001 7 Sectoral Issues Strategies and Measures Timing Objectives and Policies Improve effectivenessof EstablishedMonetaryPolicyCommittee April 2000 monetary policy and liquidity management;encourage Reducethe cash reserve requirement secondarymarket development by 5 percentagepoints June, 2000 Providea ceiling to the provisionwhich July, 2000 allows depositsof commercialbanks with CDHto be counted againsttheir reserve requirement. 3.3. External Sector Exchange rate policy: Increasethe flexibility in exchange Encouragedevelopmentof an inter- 2000 rate. bank forex market and broaden participation of the private sector. 4. Private Sector Development 4.1 Trade Policy Reducebarriersto trade to offset Maintainthe lowered levelsof tariffs as On-going high transport costs approved in the Customsand Excise (tariffs) Amendment no.2 order of 1998 4.2 Industry Sector/Investment Promotion Promote manufacturingfor Strengthen export promotion activities On-going exports; product diversification and market development; Reduce Accelerate processingof licenses, 1998-2003 start-up time for the permits, land approvals establishmentof new investment 4.3 Competition and Consumer Protection Increase efficiencyand broaden Privatizenon-core operationsof May 2000 the ownershipbase by privatizing ADMARC and Malawi Development public enterprises Corporation(MDC) Eliminatedgovt. involvementin purchaseand marketingof petroleum May 2000 products PCCacts solelyas a regulator May 2000 8  Issues Sectoral and Measures Strategies Timing andPolicies Objectives Encourage competitionand fair a Competition Establish Authority 1999-2000 trading consumer Facilitate protection Expedite of Consumer enactment 1999-2000 ProtectionLaw 4.4 MiningSector Promoteminingby the private Revisethe relevantActsand enhance 2000 sector exploration Strengthen the capacityof support institutions 4.5 TourismSector Formulatea tourismpolicy and adoptionof the draft Finalization 2000 tourismpolicy activities Intensifypromotional 5.0 Infrastructure 5.1 Transport Improvethe operations of the Institute mechanismsto ensure 1999-2002 transportsystemand reduce the adequate andsustainablefundingof costof transportservices the RoadFundfor roadmaintenance and rehabilitation Implementstrategies to improveroad 1999-2001 safetywith definedtargets reformsto private Malawi Finalised 1999-2000 Railways reformsto introduceprivate Finalise 1999-2000 sectorparticipationin the operationof laketransportandfacilities Consolidate reformsto deregulate the air transportindustryand privatizeAir 1999-2002 Malawi Initiate work on the of some commercialization/privatization 1999-2002 airports __ ____ 9  SectoralIssues Strategiesand Measures Timing Objectivesand Policies 5.2 Communications Improveviabilityof postalservices Deviseand implement measures to 2002 improvethe financialpositionand of postalservices sustainability Improvetelecomservices and Grantedlicencefor a secondmobile 1999 reducecostsby encouraging telephoneservices privatesectorparticipation postalfrom telecomservices 2000 Separated Secureprivatestrategicpartnerfor MalawiTelecomm 2000/01 entryof internetservices Liberalise 5.3 Energy Formulatea NationalEnergy Establish a mechanism whichwill 1999-2000 Policy facilitatethe formulationof the National EnergyPolicy Improvethe operations of the Implementmeasures to reduce 1999-2002 powersectorand increase electricitylosses coverageof the operations Electrifyruraltrading Ongoing centres/institutions Implementreformsto allowfor entry of 1999-2002 privatefirms into productionof electricity Establish to utilise mechanisms 1999-2002 _________________ ______________ electricity from neighbouring countries Improvethe efficientuse, security Devised and implemented a petroleum 1999-2000 andavailabilityof petroleum pricingformulaeto allowfor flexibilityin products response to procurement costsand products Developand promotesustainable Encourageand supportprivatesector 1999-2002 and renewableenergysourcesin and NGOsinvolvementand renewable Malawi energysub-sector 5.4 Lands,Housingand PhysicalPlanningPolicy 10  Issues Sectoral and Measures Strategies Timing andPolicies Objectives Createa dynamic,efficientand delaysin title registration Reduced 2000 equitableurbanland market Transferstocksof Government 2001 land to localauthorities residential Decentraliseland registersandcreate informationsystem Amendthe Land,SurveysandTown and Country Planning Acts, respectively 5.5 HousingPolicy to land by low- Improveaccess Issue longterm leasesto residentsof On-going incomehouseholdsandvulnerable TraditionalHousing Areasand other low groups income settlements Introducesafetynetsthrough land Ongoing reservations to vulnerablegroups Improvecompetitionin the Establisha discountfacilityto serve 2000 housingfinance conventional housingfinanceinstitutions, and market establishinga mortgagebank Improveaccess to housingfinance Promotethe formationof housing Ongoing by low and mediumincome cooperativesandtheir affiliationto groups MUSCO Improvethe qualityand Encourage of moreNGOs participation 2001 performanceof RuralHousing and Privatesectorin the deliveryof Programme rural housing 6 Natural Resources and Environment 6.1 Forestry Enable and promotethe Encourage co-management of forest 2001 of localcommunities andforest resources participation and foster in improvingforest conservation ownership; andmanagement a fund to supportlocal Establish 2001 community forest activities 11 Sectoral issues Strategies and Measures Timing Objectives and Policies Empowerrural communitiesto Introduce regular local meetingsto Ongoing manageforest resources,foster discussand explain changesin the ownership and rights of trees ForestryPolicy; Encourageand promote fuelwood sales from planted trees; Introduce marketing and pricing reforms. Promotethe leasingof plantation areas for tree planting and managementby the private sector; 6.2 Water Resources Improve and strengthen water Conductstudies on developmentof On-going resourcesmanagement resources Review and revise policy and legislation 1999 StrengthenWater ResourceBoard On-going EstablishCatchment Management On-going Authorities Conductan environmental audit related 2003 to water resources degradation and pollution Catchment protection On-going Expandand rehabilitate existing water On-going resourcesand monitor network 6.3 Fisheries Promotethe developmentof Conductresearchon integrated Ongoing aquacultureproduction systems aquaculturesystems Disseminate technologiesto the 2000 farming communitiesand promote commercialfish farming Promote community fisheries managementin Lake Malawi 12 Sectoral Issues Strategies and Measures Timing Objectives and Policies Developguidelinesfor the study 2000-2001 Improve infrastructure in the Upgradeaccessand game viewing On going ProtectedAreas in Malawi roads in all protected areas Developcollaborativewildlife Reviewguidelinesfor Collaborative 2000-2001 managementwith local Wildlife Management;establish communities incentivesfor stakeholdersparticipation 6.4 Environment Promotethe sustainableuse and Promotecommunity basedprojects on 2000 managementof natural sources Natural Resources Facilitatethe restorationand Reviewof policy and developmentof 2002 maintenanceof essential legislationon Waste Managementand ecosystemsand ecological Sanitation processes Undertakestudy on requirementsfor 2000 legislationon air and noise pollution Conductresearchon bio-diversity 2000 endangeredspecies 7. Governance and Public Sector Management 7.1 Civil Service Reform Establisha lean, more qualified, Maintain a temporary freeze on hiring, On-going and better motivated civil service, except for essentialfunctions, until with greater focus on priority decisionsare taken in light of the areas by rationalizinggovernment ongoingfunctional reviewsof major ministries,departments,and ministries agencies Completedetailed functional reviews of June 1999 all ministriesfollowing the completed strategic reviewsof functions and take decisionson recommendations arising out of the reviews Completethe rationalizationprocess On-going (outsourcing, privatization, elimination, and redeployment)basedon recommendations arising from the completed strategic reviews 13 Sectoral Issues Strategies and Measures Timing Objectives and Policies Introduced performance-related July 2000 contracts for senior civil servants Rationalizedremunerationstructure by November2000 monetisinghousing allowancefor all civil servants Undertakea Civil ServiceTraining 2000 NeedsAssessment 7.2 Public Sector Transparency and Accountability Anti Corruption Reviewwork methods& systemsto On-going eradicatecorruption opportunities Conductmanagerialaccountability& transparencyworkshops Investigating corruption cases& Investigation units establishment On-going prosecutingoffenders Liaisonwith offices of Director of Public Prosecutions Provisionof adequate legal adviceto investigation Educatingmembersof the public Reorganisationof resourcecentres for On-going on the causes& effects of media preparations corruption on society and soliciting their support in fight against corruption. Strengthenthe role of anti- Set up specialisedcourts for fraud 2001 corruption Bureau cases to improve transparency& accountabilityin private & public ReviseFinance& Audit Act to facilitate sector. prosecution Developmentof policy to direct Legislationon public procurement, attainment of accountability, guide lines on ethics, review of transparencyand financial probity administrativeproceduresand in public institutions identification of weaknesseswithin institutions of governance Improve public sector accounts SeparateFinanceand Audit Acts 2001 and audit functions Introduce IFMIS system 2001-2002 14 Sectoral Issues Strategies and Measures rTming Objectives and Policies Improve transparency efficiency, a newProcurement Establish Codeand 2000-2001 in the andaccountability a newProcurementAuthority procurement process Improvepolicyframework Establish mechanisms for improving On-going employer/employee relations, strengthen capacityandeffectiveness of trade unions,developimprovelegal framework Improvesecurityandsafety Implementpublicawarenesscampaigns and strengthen policing. community 7.3 Decentralization and LocalGovernment Strengthenthe legalandfinancial Review in conflictwith the legislation 2000-2005 frameworkfor local-authorities LocalGovernment Act fiscaldecentralization Determine arrangements Develop implementation planfor next stepsin decentralization. Transferof powerandfunctionsto Conductinglocalgovernment elections; November2000 localassemblies Merging and local districtadministration government; 2000-2005 Sectorministries functionsto devolving 2000-2005 localassemblies Promotelocalgovernment buildingin development Capacity 2000-2005 developmentmanagement management for localassemblies Enhancing networkbetween the to ensurelocal Civiceducation 2000-2005 Officeof Ombudsman and empowerment andparticipation employers Human rightsservice delivery 7.4 HumanRightsand ServiceDelivery Train membersof Appointmentsand 1999 Committees Disciplinary on effective complaint resolution Promote advocacy on the Sensitize of the media members 1999 functionsof the Officeof the On-going Ombudsman andthe Human RightsCommission 15 Sectoral Issues Strategies and Measures Timing Objectives and Policies Intensify investigationon Receiveand investigategrievances maladministration Strengthenthe capacity to Policyformulation and priority setting On-going develop, managean effective national Civic Education and Developmentand implementation of a Human Rights protection NationalCivicEducationand Human Programme rights promotion, protection and enforcementprogramme. 16  Annex 2 - PRSP Process Proposal The primary objective of the PRSP process is to design a Poverty Reduction Strategy that will be implemented. A key element in ensuring implementation is building broad Malawian ownership of the strategy, together with consensus over the measures proposed. However, building ownership and consensus is not as simple as holding "consultations" to validate a strategy prepared by a small number of civil servants and donors. Instead, all stakeholdersmust be included in all stages of the PRSP process, through a mobilisation, preparation and validation process. In fact, the PRSP mobilisation, preparation and validation process should not be seen as distinct from the PRSP process. The overall objectives of the mobilisation, preparation and validation process are to: I. Build broad Malawian ownershipof the PRSP. 2. Build consensus on Malawi's Poverty Reduction Strategy in order to enhance likelihood of policy adoption, implementationand sustainability. 3. Ensure donor "buy in" to PRSP process to improve donor co-ordination 4. Meet donor requirements for participatory processes and thereby avoid later duplicationof effort. In order to achieve these objectives,the PRSP process must include a broad range of stakeholders and offer these stakeholdersgenuine opportunities to provide input into the process. In order to achieve this, the proposed process is divided loosely into three segments: firstly, mobilisation of key stakeholders, particularly within Government,to contributeto the design and implementation of the PRSP. Secondly, preparation of the strategy with the participation of all stakeholders. This segment consists of two parts: an initial information gathering part where the thematic working groups 2 seek informationand inputs into the prioritisation process from other stakeholders. Where significant work has already been done, for example in the education and health sectors, this part may be minimal. Once sufficient informationis in place, the working groups will then draft the thematic contributions,with technical assistance where necessary. The third segment consists of validating the draft strategy, largely focussed on a National Symposium. Overall, the process is designed to be iterative, both between Government and other stakeholders and between the Central PRSP Committee Structure (including the secretariat) and the sectoral working groups. This is demonstrated in the diagram below. 2 For details of the proposed working groups, see "Guidelinesfor Sectoral Contributions". Essentially,the working groups will consist of representativesfrom the relevantministries for each contribution,together with a small number of other stakeholdersas appropriate. 17 Iteration - both between Government and other stakeholders, and between overall and sectoral strategy; the position of the activity indicates which groups are the focus of the activity. Central Government Sectoral Ministries Other Stakeholders Government > A 50 Internal of Mobilisation Mobilisation dnr 0 ; 1il 3gm of working Formation contributions groupsforsectoral Mobilisation of all AW~~~~~~~ ~~~~~~~~~stakeholders lit (official ~~~~~ ~~~~~~~~~ ~~~launch and media ~~~~~~ ~~~~~~~~~~~ ~~~~~briefings) t F "vGap working forsectoral filling"- Advice/training l_ and 01 strategy ~ resource ~ ~ ~ ~ etorl traeg ~~~"a ~ constraint d;:1~ - dietann orscoaokn subrecositesyio written Bj ~~~~~~~~ratiion o isto contributions, draftof sectoral | | ~~~~ 0]~ ~inldn of prirstt actiitie compitiio povert focus n fl11 ationalSypsu twj Final~~~revision of full PRSPPt 10 Past experience with consultative processes and experience in other countries with the formulation of the PRSP suggest that there is need to carefully design the mobilisation, preparation and validation process, with a clear notion of the objectives of each activity. Government should resist the temptation to consult for consultation's sake to pacify the donor community. In particular, it is important not to create excessive expectations amongst those consulted and to avoid "consultation- fatigue". Most stakeholders in Malawi have been repeatedly consulted, for example during the Vision 2020 preparation process, in the preparation of sectoral strategies (e.g. PIF, NHP), during the Consultative Group Meetings, before the 2000/2001 Budget and as part of the Policy Analysis Initiative (PAI). If these groups are to be involved in the PRSP process, there is need to ensure that there is something new that Government is seeking from their participation. The case of the private sector is a clear example of the problems of excessive unfocussed consultation - having been consulted on many occasions, there is now clear evidence of "consultation fatigue" and recognition that consultation does not necessarily involve participation in decision making. As a result, Government needs to adopt a new and flexible approach to mobilisation, preparation and validation, and clarify to participants what is new both about the PRSP itself and about the process. In the matrix below, mass activities of the type usually associated with consultation in Malawi are limited to the initial official launch (mobilisation) and the final National Symposium (validation). Stakeholder input into the PRSP process is intended to come through preparation activities - participation in working groups, the submission of written comments, and focussed sectoral specific sessions as necessary. These activities have been largely left to the discretion of the working groups, subject to the approval and budget constraints of the PRSP Secretariat. Mobilisation The timing of the activities involved in the mobilisation, preparation and validation process is crucial to the success of the PRSP, particularly in building ownership and support that will ultimately be translated into implementation. The most important starting point for the process is to ensure that all areas of Government "buy in" to the PRSP process. If sectoral ministries and local governments see the PRSP as a donor- driven, Ministry of Finance owned process, implementation of the resulting document will be very difficult. In order to ensure this buy-in, there is need for mobilisation sessions as soon as possible. As a starting point, all PSs would be briefed on the PRSP: what it is, why it is necessary, how it will be prepared, how it fits in with other initiatives and so on. The PSs will then be responsible for disseminating this information in their ministry and to their Minister. Once there is broad understanding of the PRSP process across Government, Government would brief the donor community on the Malawian PRSP process. After this, other stakeholders and the general public would be informed through the official launch of the PRSP process. In summary, the specific objectives of the mobilisation segment of the PRSP process are as follows: 1. Create awareness of the PRSP process and its implications. 2. Reach consensus on the understanding of poverty in Malawi. 3. Encourage stakeholders to focus on poverty reduction. 4. Inform potential contributors of how they can participate. 19  5. Create awareness of potential trade-offs and the need to prioritise given limited resources. Mobilisation of stakeholders and explanations of how the PRSP process will proceed should be based on a number of papers to be distributed. Distribution of the papers should be done in advance of the mobilisation sessions, to allow time for the stakeholders to read them, make comments and form opinions on the issues raised. A. Mobilisation paper - Brief introduction to the PRSP process, answering such questions as: What is the PRSP? What is new about the PRSP? How does the PRSP fit in with other initiatives? B. Issues paper - outline of the current poverty situation, review of past and present strategies and discussion of challenges. C. Outline of the mobilisation, preparation and validation process - edited version of current paper D. Guidelines for thematic contributions E. Thematic group preparation outline - to be determined by lead ministry in thematic group and detailing membership of thematic group, involvement of other stakeholders (timetable, objectives, format of inputs). Preparation The preparation of the PRSP should include a broad range of stakeholders through a number of channels: membership or representation in the thematic working groups, participation in workshops or roundtables on overall and theme-specific strategy, submitting written comments and so on. The focus of the preparation phase will be on the thematic working groups, which will have significant discretion over the methods used to draw up their contributions to the overall strategy, guided by the guidelines on thematic contributions and the secretariat and overall committees. Where gaps exist in knowledge, analysis or capacity of the thematic working groups, .'gap filling" sessions or technical assistance (funded where possible by donors) should be employed. In summary, the objectives of activities held in the preparation phase are: 6. "Brainstorming" - develop new strategies 7. Prioritise overall strategy 8. Prioritise thematic strategy 9. Secure focussed and targeted information 10. Set realistic targets 11. Design implementation and monitoring system and enlist support. 12. Ensure consistency of the proposed strategy Validation The third phase of the PRSP process is intended to obtain validation of the strategy from the stakeholders involved, and to disseminate the final PRSP as well as to define the way forward. In summary, the objectives of activities held in the validation phase are to: 13. Obtain validation of the proposed strategy 14. Define and explain the way forward 20  Activity t e Specific Obiectives Activity title/Other remarks Group Information > X o-D 'X Week r 49 w cs o g = rr~~~CD 0 < -" 9)w.D.~ CD *r 0 * ~ ~ * ~~~ 0 - ~~ ~~~~~~0 5 einn o rcs.Ned ob hie _ _ _ _ _ _ _ __~~~~~~~ 2 Cabinet C)w Hericials Secrthearies r r vDadlm Criticr for successiandmus thapenmati bregaainigof process. Neesintonbe chairedsn l l ll l _______~ ~ grous ~ ~ (donoric-|] l l ll |l * l lllll _____ to o Min by stakhler,sTwiTh Mnstkhlers Neeadln othe papers wtorthe)ppes toranticipateionor quvestiosy eplafine 1 Datonors ll wher cantget inolstaehod;tess needto giver Cordnationgrup |l ___ ___ apr to bul stutue tim in govellrment _______ ~ ~ _ *Ini[- * |t Ofiiate Officiale workngs lauknch of themticProups;-first of theati Proess tofb -fBrief PoliTemtica PoflTemtica * of Proesenatonb strat~~~~~~~~~~~~~~~eginnin NEed chaiedt 11 4 2 Headrs, Donors, _ * 11 workinggroups - - - Dearineing for submissioan mof thematic 3 Helad oef rthatic triasktesg of thematic I|]* /) prepartinson priocetss,on NGrOus, eproil ___Caine *|___ posvty byMnstrucur ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~mmeshiptofrou etc. Expl| for stubissionof 3 Donors( N Council grup o- a Eoomicedadline n 4 General r | (via | public | ***** | | e npepratio * * Identooifyil andEP,dscsrease sEC, Waitofficial staur oremedia Pre~~~~~~~~~~~~~~~~~~an prlc(va** launch sson in desgowth bridefinge deeasignonc -othe olown srefntolwn -Pessmedite 3 medi 3 mPsdithematic Hall o a ) U - - - - - - - - - riinng povertymfocusnintthematic Wai_tu_ntfiallauisinch Deadl. dGoups,privats/) groups ~ ~ ~ ~ ~ ~ *profraie; facitaessdesgrou discussdionds; thesi ofmeeingh prioritisationpoess, ast pofl . n ChaIred Ib MI fof Dedisusione gI I tar E subitable poets _ _ sECtoretc. NatonlEonmi I Ofntfyinga sources of gRProwths -Bre 4 MoFEPs, NEitc,l pRtie, MedaL, prtiM, MedAI, * of papers Presentationaddscuso presentationsaddsuso of ditiutd(nwe papers oitiutd(nwe oet souresatof growth;go prioritisation; dNGors,Priv.tSector rigfocus. fcs no hmai ___ CAMA thmti Timing Grou Information Activit t se Specific (betives Activit title/Other remarks Week _ 0 _… -o CD~~ = "I ' ! 6 Poor Deadline for completion of documentation of consultations with the poor; disseminate, _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ esp. toworkingogroups. 6-7 Local Government * ** *** **Regional workshops? If so, need to work (District Chief - asap on logistics. Need to clarif objectives Execs., Traditional andform of discussion. Focus on how PRSP Authorities) fits into decentraisation and identifying - - - -_ _ __ - _ _ _ * * - * * _ _ L _ _ _ _ _ _ local priorities. 7-10 Thematic of draft Inputinto preparation first of stakeholders - * - - - * * _ sthematicstrategy - range of activities to be 23 All stakelders_deterrn inedorganised by thematic and sigroups (subjectto approvalby secretariat)- _ - _ _ - [ - * _ ~~~~~~~~~~~~~~~~see guidelines. to All thematic working groups _______**____ * _l*consistent thematic *_Tcontributions are with national strategy and l _Ensuring - - { { _ l * ~~~~~~~~~resource constraints - workshop for l 10-13 Thematic working _ _of _raft* _c_nttmaticiooupso Preparation_ fir_s_ of groups _ __ _ __ _ _ ____ ll _ *___ PRSPl 13-14 Thematic working ll *Co-sting of ~priorityactivities -technical l groups ll* * *assistance where necessary to ensurel _ __ _ _ _ - l l _ _ _ _ l l _ * _ _ ~~~~~~~~adequatecosting, 15-16 Secretariat l l ll * * *Ensuring consistency of thematicl l - l l * t - * ~~~~~~~~~~~~contributions witb overall strategy and l i t _ l l - { - * ~~~~~~~~~~~resource constraintsl 17-18 TFhematic working l | ll * * *Update contribution in line withl grfoups1 -- - mments co 19-20 Secretariat _ rpr raft PRSP from contributions | 21 Secretariat l lllll lDistribution of draft PRSP to alll . _ _ __ _ _ | _ _ _ __ _ _ _ _ < 1l l l 1 _ _ _ ~~~~~~stakeholders 23 All stakeholders , lll ll l National Symposium on PRSP - with l __ _ _ _ * _ _ i I 1 l _ * * ~~sessions on thematic contributionsl  rA N~~~~~~ 14 - Way forward 13 - Strategy validation @~ ~ 12- Ensureconsistency ~~. . _ 14- Wayur iforwnatid I1I- Design implennentation 8 - Thematicprioridsation I7 - OveralI prioritisation . 6 - Brainstorming 8- Prioritisation 5 awareness 4 - Outlineparticipation 3 - S' holderpovertyfocus 2 - Povertyconsensus I - PRSP awareness VI -Nat. Svmwosium __ P5 - Them. Workshop _ s P4 - Strat. Formuin - P3 - Gap filling > P2 - Written comment c- _ PI - Overall strategy _ M2 - Mobilisation _ Ml - Info. Dissem E - Thematic process o D - Thematic guide _ E C - Process e B - Issues paper A - Mobilisation .~~~~~. I-~~~~~~~~~~~- _ g sO g tfn Y~as r'li E as> Objectives: Mobilisation objectives 1. Create awareness of the PRSP process and its implications. 2. Reach consensus on the understanding of poverty in Malawi. 3. Encourage stakeholders to focus on poverty reduction. 4. Inform potential contributors of how they can participate. 5. Create awareness of potential trade-offs and the need to prioritise given limited resources. Preparation objectives 6. "Brainstorming" - develop new strategies 7. Obtain input into overall prioritisation process 8. Obtain input into intra-sectoral prioritisation process 9. Secure focussed and targeted information 10. Set realistic targets 11. Design implementation and monitoring system and enlist support. Validation objectives 12. Ensure consistency of proposed strategy 13. Ensure effectiveness of participation 14. Obtain validation of the proposed strategy 15. Define and explain way forward Types of Activity Mobilisation Ml. Information dissemination - distribution of papers, press releases etc. without direct contact M2 Mobilisation meetings - briefing sessions based on papers Preparation P1 Overall strategy workshops/roundtables P2 Invite written comments on distributed papers P3 Training/"gap filling" for thematic working groups P4 Strategy formulation by thematic working groups P5 Thematic workshops/roundtables Validation VI National Symposium - check on final draft. Information for distribution F. Mobilisation paper - Brief introduction to the PRSP process, answering such questions as: What is the PRSP? What is new about the PRSP? How does the PRSP fit in with other initiatives? G. Issues paper - outline of the current poverty situation, review of past and present strategies and discussion of challenges. H. Outline of the mobilisation, preparation and validation process - edited version of current paper I. Guidelines for thematic contributions J. Thematic group preparation outline - to be determined by lead ministry in thematic group and detailing membership of thematic group, involvement of other stakeholders (timetable, objectives, format of inputs).