UNIVERSAL BASIC INCOME PERCEPTIONS FROM MALAWI, A PREDOMINANTLY AGRARIAN ECONOMY

Written and Researched by Frank Kamanga

ACKNOWLEDGEMENTS

The UBI Malawi Network is heavily indebted to numerous contributors and editors who provided
invaluable support by editing and proofreading this study report.

ABSTRACT

Malawi for years has been implementing several development programmes to eradicate poverty
namely; Empowering local authorities and local people through decentralization programme, Farm Input
subsidy programme, the Iron Sheets Subsidy Programme, Social Cash transfer programmes, Public works
programme, microfinance programme, Self Help Groups and Village Saving Loans programmes among
others. Despite of all these development programmes poverty levels remain high and widespread as the
World Bank indicates that in 2017 percentage of Income Poor ($1.90 a day) was 70.9 percent. Across the
globe there is a new programme for poverty and inequality reduction called Universal Basic Income
(UBI) that is being tested both in the developed and developing countries. Developed countries like
Finland, Canada and USA are implementing pilot studies. Meanwhile, in the developing world notable
pilot projects are also being implemented in Kenya, India and Uganda. Malawi Basic Income Network
feels that Malawi can also implement a UBI programme in both rural and urban areas to reduce poverty
and inequality. To support the government in its efforts to reduce poverty and inequality, the Malawi
UBI network has conducted a survey to assess people’s perceptions of UBI in both rural and urban areas.
The objectives of the study included; to understand the level of knowledge of UBI among Malawians, to
capture economic indicators that are explaining economic conditions of Malawians such as poverty
levels, unemployment, saving patterns and income levels of people and to understand the importance
of UBI in solving poverty in Malawi. The study found out that three fourths of the participants felt that
that basic income can help to reduce poverty in Malawi. Participants also asserted that the success of a
universal basic income in Malawi mainly depends of the efficiency of the disbursement system and the
level of financial literacy of the beneficiaries.

Keywords: Universal Basic Income, Poverty, Inequality, Malawi

1.0 INTRODUCTION

Malawi is a landlocked country located in the Southern Africa. It is bordered by Tanzania, Zambia and
Mozambique. The population of Malawi is about 17 million and 80 percent of the population are small
scale farmers who mainly practice subsistence farming. This population is also youthful, approximately
46.0 percent of the population is below the age of 15 and up to 73 percent below the age of 35 years.
The government economic development programme is guided by policy documents referred to as
Malawi Growth and Development Strategies (MGDS). The latest one, the Malawi Growth and
Development Strategy III has been launched in March 2018. Basically the MGDS domesticates the
Sustainable Development Goals in Malawi. The main sector of the economy is agriculture which is
contributes about 23.0 percent of Gross Domestic Product.

Malawi is also one of the poorest countries in the world ranking at 170 out of 188 countries on human
development index. To eradicate poverty the government of Malawi has been implementing several
initiatives through the previous MGDSs. For instance, through the MGDS II the government
implemented the following projects to end poverty in Malawi; free primary school education, fighting
corruption, Empowering local authorities and local people through decentralization programme,
implementing Farm Input subsidy programme, implementing the Iron Sheets Subsidy Programme, Social
Cash transfer programmes, Public works programmes, microfinance programme, Self Help Groups and
Village Saving Loans programmes among others.

The civil society is one of the most important stakeholders and partner to the government of Malawi in
the fight against poverty. Since the launch of Sustainable Development Goals (SDGs) in 2015 several
international and local civil society organizations have been aligning their aid programmes to these
goals. Major development partners supporting Malawi through SDGs are the UK Department for
International Development and United States Agency for International Development, African
Development Bank, World Bank and United nations agencies. Besides this, there are also several
organizations implementing development projects in areas of agriculture, health and education in line
with SDGs in order to reduce poverty.

Despite of several efforts made by both the government and international development partners in the
previous years the Malawi Growth and Development Strategy III indicates that Malawi managed to meet
only 4 out of 8 Millennium Development Goals. In particular, progress was notably slow in eradicating
poverty and hunger, achieve universal primary education, promoting gender and equality and maternal
and child health among others. Regarding poverty levels, as of 2017 the World Bank reported that
Multidimensional Poverty Index was 0.251, Percentage of MPI Poor was 53.70%, average Intensity
Across the Poor was 46.70%, percentage of Income Poor ($1.90 a day) was 70.90%, percentage of
Income Poor ($3.10 a day) was 87.60%, percentage of Poor (National Poverty Line) was 50.70 percent
and Income Inequality (Gini index) 0.4621.

The Bank attributes high levels of poverty especially in rural areas to volatile economic growth, poor
performance of the agriculture sector, high population growth, limited opportunities in non-farm
activities and inadequate safety nets within a context of high economic insecurity. Poverty also persist in
urban areas due to poor management of development programmes and under creation of jobs in the
economy. Recently, the government of Malawi has issued expenditure control measures in the public
sector dates 23rd March 2018. In the document one the measures is to freeze employment of new staff
and restrict promotion temporarily. This has negative bearing on the welfare of people and hence
exacerbating the levels of poverty in the economy.

Table 1: Poverty Statistics in Malawi

Multidimensional Poverty Index 0.251

Percentage of MPI Poor (H) 53.70%
Average Intensity Across the Poor (A) 46.70%
Percentage of Income Poor ($1.90 a day)‡ 70.90%
Percentage of Income Poor ($3.10 a day)‡ 87.60%
Percentage of Poor (National Poverty Line)‡ 50.70%
Income Inequality (Gini index)‡ 0.462

Source: The World Bank (2017). “The World DataBank”. Washington, DC. [available at
http://databank.worldbank.org/data/home.aspx, accessed 17 Apr 2017]

Table 2: Poverty and inequality statistics

Inequalit
MPI Vulnerable In Severe y Among
(H x H(Incidence) A(Intensity toPoverty20% Poverty k = Destitut the MPI Populatio
Region A) k = 33.3% ) -33.3% 50% e Poor n Share
Malaw
i 0.251 53.70% 46.70% 29.20% 19.70% 16.30% 13.50% 100.00%
Urban 0.098 23.20% 42.40% 26.70% 5.00% 0.00% 0.00% 14.60%
Rural 0.277 58.90% 47.00% 29.60% 22.20% 0.00% 0.00% 85.40%

Source: OPHI Country Briefing June 2017

1
The World Bank (2017). “The World DataBank”. Washington, DC. [available at
http://databank.worldbank.org/data/home.aspx, accessed 17 Apr 2017]
2.0 RATIONALE FOR THE STUDY

Cash transfers were introduced in Malawi in early 2002 to cover the shortfalls of public works
programme (PWP). It is argued that PWP are unable to address the requirements of the chronically poor
and people unable to work. For instance, the 2008 census recorded that a population of 498,122 were
disabled persons, of whom 133,000 had visual impairments and about 108, 000 had lower limb
disabilities. Other vulnerable people such as those affected by communicable diseases like adults living
with HIV, tuberculosis were unable to work hence could not benefit from public works programme. To
include these people in social safety nets programme cash transfers were introduced in 2002 by the
government of Malawi (UNDP 2013).

Despite the need for social safety nets over a long period of time, it has been observed that these social
safety nets are too small in scale and also they are crisis-oriented hence their impact on poverty
reduction is very limited. In addition, the government of Malawi also noted that all social protection
measures face the problem of targeting beneficiaries. It is reported that about half of the poor people
are missed from social safety nets programme and approximately 40 percent of non-poor people are
included.

Both the World Bank and the government have noted that inadequate safety nets are one of the major
causes of poverty in rural areas. Meanwhile, it must be acknowledged that urban people hardly receive
social safety nets and this is one of the major reasons for rampant poverty in urban areas. To solve the
poverty problem in urban areas the government of Malawi has indicated that they want to expand the
social cash transfers from rural to urban areas.

To be specific, there is need for a wide scale and long term social safety nets programme that can help
vulnerable and poor people recover from crisis and also accumulate wealth overtime to build resilience
both in urban and rural areas. Universal Basic Income (UBI) is deemed to be such a social safety net that
embodies features such as longevity, universality and unconditionally. The wide coverage and
universality of UBI can also help to solve the problems of inclusion and exclusion errors in targeting the
beneficiaries. UBI has been tested in developing countries like Kenya, India and Uganda and has already
registered positive results.

Malawi basic income network feels that Malawi can also implement a UBI programme in both rural and
urban areas to reduce poverty. To support the government in its efforts to reduce poverty through
social safety nets, the Malawi UBI network has implemented a survey to assess people’s perceptions of
UBI in both rural and urban areas.
The Malawi, Basic Income Network carried out a survey to investigate perceptions of people with
respect to basıc income and the need for a basic ıncome project in Malawi. The survey was conducted
on a sample of respondents from different districts of Malawi, including both dwellers in urban and rural
areas, of various ages, sex and occupations.The study investigated a number of issues, such as saving
behaviours, job occupations, poverty perceptions, knowledge of Universal Basic Income (UBI),
importance of UBI and cost of living in Malawi.

2.0 UNIVERSAL BASIC INCOME

Basic income is a relatively new concept in the developing world in comparison with the developed
world. Already in the 1970s a basic income experiment called MINCOME was carried out in Canada as a
means-tested negative income tax2. However, in the developing world, notable experiments were
conducted in India in 2017 and in Namibia only about a decade ago. Currently, Kenya and Uganda are
also conducting pilot programmes on basic income. The Basic income guarantee or unconditional basic
income (UBI) is considered unconditional cash transfer income, which constitutes enough money to
guarantee everyone in an economy or society a minimum level of financial resources to meet basic
needs regardless of imposed conditions.

Basic Income is based on the principles of unconditionality and universality, which means under UBI
programme the payout does not depend on whether an individual meets some stated requirements or
not. With regards to universality, UBI payouts are entitled to every human being regardless of region,
race, economic status etc. Proponents of basic income also suggest that it is based on the intrinsic value
of human beings in an economy. This value is generated from their contribution to the creation of the
general wealth of the society and also from the inherited value of our ancestors who created the wealth
we are enjoying today (Jourdan S. 2017). Just like cash transfers, basic income could play an important
role in poverty alleviation, school attendance promotion, work emancipation, gender balance
incentivization, social protection, entrepreneurship promotion, modernization and early child marriage
prevention. Some of risky activities such sex work and early child marriage are practiced due to lack of
financial resources and once people in the society are empowered financially, risky activities such as
early child marriages can be avoided.

3.0 METHODOLOGY OF STUDY

The study was conducted by ten researchers from the Malawi Universal Basic Income Network by
applying both qualitative and quantitative methods for data collection and analysis. The data was
collected by conducting interviews with the help of a questionnaire. The participants in the survey were

2
A negative income tax is a progressive income tax system where people earning below a certain amount receive
supplemental pay from the government instead of paying taxes to the government.
randomly selected in different neighbourhoods of the city of Lilongwe and hailed from different cities
such as Lilongwe, Balaka, Mzuzu, Mzimba and Mulanje in the three regions of Malawi. Among the
respondents were students, house wives, entrepreneurs, formal employees, villagers, and informal
employees. The response rate was about 95.0 percent. The study was conducted with a sample of 54
people of whom 34 were rural and 20 were urban. The age range of the sample was 18-53 years old and
60% were male (40% were female). The data was captured and analysed by using SPSS. Besides findings
from the study, information from desk review of literature was added to guide the rationale of the study
and reinforce primary findings.

5.0 OBJECTIVES OF THE STUDY

There are four objectives of the study:

● To understand the level of knowledge of UBI among Malawians

● To capture economic indicators that are explaining economic conditions of Malawians such as
poverty levels, unemployment, saving patterns and income levels of people in Malawi.
● To understand the importance of UBI in solving poverty in Malawi

6.0 ANALYSIS OF FINDINGS

6.1 EMPLOYMENT STATUS

The survey has shown that 48.1 percent of participants were unemployed, 22.2 percent were in informal
employment and only 16.0 percent secured formal jobs.The findings gave an approximate picture of the
employment status in Malawi. The results for the unemployment rate are higher compared to the
International Labour Organization (ILO) levels of 6.74 percent, partly because the questionnaires were
administered even to students who are currently not in the labour force . However, Trading Economics,
an independent research Think Tank, addressed that by using broad definition, Malawi’s unemployment
rate falls at 20.4 percent.

From the study, the unemployment rate of 48.1 percent is a result of multiple reasons. In Q4 2017,
production capacity of Malawian companies and enterprises reportedly went down to 25.0 percent due
to intermittent supply of energy. More Malawians are employed informally than formally, which has
shown in the survey. The informal sector is mainly made up of unregistered Small and Medium
Enterprises(SMEs) like barbershops and priniting shops, which mainly depend on national grid electricity
supply to operate. Unfortunately, poor electricity supply has rendered machinery and labour idle hence
leading to layoffs in SMEs. Currently, electricity is only supplied 8 hours in a day and occasionally at
night, when these businesses are not operating. This has resulted in huge profit losses and consequently
job losses, disproportionately affecting young employees

6.2 INCOME LEVELS OF RESPONDENTS

A majority of the participants(42.2 percent) earn less than K10,000 per month, which is approximately
12 US dollars. As shown in the Chart on section 4.3 , 51.9 percent of respondents indicated that they are
unable to save. Due to low income and high unemployment, 70.4 percent of respondents reported that
poverty level in Malawi is very high and intolerable as indicated in the chart in section 4.7 below.

6.3 SAVINGS BEHAVIOURS

6.4 KNOWLEDGE OF UBI

Regarding knowledge of Universal Basic Income(UBI), 66.7 percentof the participants said that they had
no idea of the concept of universal basic income. However, 31. 5 percent of the participants have heard
of universal basic income or synonymous projects like cash transfers, some of whom knew about it
through social media campaigns. This shows the effectiveness of awareness raising campaigns on UBI
being conducted all over the world mainly through social media like Facebook
6.5 ACTIONS WITH EXTRA INCOME

Most of respondents said that if given an opportunity to receive a basic income they would venture into
small scale businesses in order to generate more income. Some also indicated that they would spend
the money on basic needs and other investments.
6.6 DECISION ON LEAVING A JOB DUE TO UBI

When asked about leaving a job because of UBI, 85.2 percent of the respondents said they could not
leave their current job due to lack of other resources. However, UBI can be an alternative source of
income which can be invested. Further, respondents indicated that UBI may be unsustainable. Only a
few participants said they would leave their jobs if basic income is more than their salaries.
6.7 VIEWS ON COST OF LIVING AND POVERTY LEVELS IN MALAWI

Around 75.4 percent of interviewees stated that poverty levels are very high in Malawi. Some even said
that based on the current economic situation Malawi is considered as one of the poorest countries in
the world. There are many factors that explain the prevalence of poverty in Malawi, including inequality,
low circulation of money, low salaries, corruption and high food prices. On the issue of scarcity of
money, some respondents, who reside in rural areas of Lilongwe but very close to the urban area, stated
that small businesses cannot even afford to make sales of K1000 (approximately US$1.2 a week) to
support their families. Due to high poverty, students from primary schools to university levels are
dropping out of school. Parents are even failing to pay school fees of K10,000 (approximately $12 per
term) for primary school students. This situation is leading to early child marriages and pregnancies
which are perpetuating poverty even further.
Considering the high levels of poverty in Malawi, one cannot doubt the role that UBI can play in reducing
poverty. Actually, 74.1 percent of people indicated that UBI could play a key role to reduce poverty in
Malawi. They said that UBI can reduce poverty mainly through assisting to meet basic needs in Malawi.

One of the survey respondents from Balaka district in her response supporting role of UBI in reducing
poverty said the following:

“ it can help to reduce poverty. It will depend on how universal basic income is distributed”
One of the major drivers of poverty in Malawi is the high cost of living. This is supplemented by low
circulation of money, especially in rural areas. In summary, life is unsustainable due to extreme poverty.

CASE STUDIES OF ECONOMIC INSECURITY FROM LIVES OF PRISCILLA3 AND MARIA

3
Priscilla is not her real name
Priscilla is a hairdresser in Malawi’s capital, Lilongwe. Priscilla had wanted to study at one of the
country's public universities, but unfortunately was not selected to attend. Her parents could not afford
to send her to a private college. ‘ i have been working as a hairdresser for a year now since i left the
village, Mitundu, in pursuit of a better life and also to support my family. On average i work for eight to
nine hours a day, but what i get is too little to sustain me. My wage per month is MWK15,000($20) which
I sometimes receive late, depending on the profits and business done in that particular month. ‘my pay is
not enough to cover my rent, lunch, basic necessities and transport. For instance, I pay MWK7,500 ($10)
for my monthly rent, which is half monthly wage. My husband is not working and I am the breadwinner.’

In Malawi’s rural areas the situation is even more desperate for many. Maria, 32, is a tea plucker on the
slopes of Mount Mulanje. She is fortunate to have a long-term contract and housing provided by the tea
plantation; three-quarters of workers have neither of these things. Maria must pick a minimum of 44
Kilograms of tea each day to earn her daily wage, which is still below the World bank Extreme Poverty
Line of $1.25 a day. Both of Maria’s two children are malnourished4.

7.0 RECOMMENDATIONS

●Following the high poverty and unemployment rates and also overwhelming interest in basic
income project by respondents Malawi qualifies to benefit from UBI disbursement. Therefore,
Malawi Basic Income Network is inviting interested organisations across the world to come and
implement basic income pilot projects. The findings from the study will provide evidence for
Government of Malawi to develop policies and programmes for Basic Income in Malawi.
● Financial literacy programme for both urban and rural people should accompany basic income
programmes for people to productively utilize the funds received.
8.0 CONCLUSIONS

Malawi is regarded as one of the poorest countries in the world. Data from the United Nations
Commission on Trade and Development(UNCTAD) shows that 71.0 percent of the population are living
below poverty line5. 90.7 percent of respondents in the survey indicated that the cost of living in Malawi
is very high due to low circulation of money and income and high food price. The study found that UBI
can help to reduce poverty in Malawi through helping to meet basic needs of people. Respondents
suggested that as long as the distribution mechanism is efficient, UBI can improve the welfare of many
people.

Building on the experience Malawian authorities have in disbursing cash transfers, UBI disbursement can
be relatively easier. With the advent of mobile payment technologies among many Malawians both rural
and urban UBI payments can be easy to make to beneficiaries. Targeting a wide array of beneficiaries

4
Mussa R and Masanjala W.H (2015). A dangerous Divide The state of inequality in Malawi. Oxfam International
5
Phiri Grace(2017) Poverty levels Extreme in Malawi.http://mwnation.com/poverty-levels-extreme-in-
malawi-unctad/ Accessed on 23rd December 2017
both the poor and the non poor in urban areas, UBI programmes can substantially reduce the inclusion
and exclusion errors faced by cash transfer programme.

BIBLIOGRAPHY

E. Chirwa and P. Mvula (Unpublished report, 2012) Understanding wages in the tea industry in Malawi.
Wadonda Consultant

Phiri Grace(2017) Poverty levels Extreme in Malawi.http://mwnation.com/poverty-levels-extreme-in-

malawi-unctad/ Accessed on 23rd December 2017

Mussa R and Masanjala W.H (2015). A dangerous Divide The state of inequality in Malawi. Oxfam
International

United Nations Development Programme (2013). Social Protection, Growth and Employment Evidence
from India, Kenya, Malawi, Mexico and Tajikistan.

World Bank (2017). “The World DataBank”. Washington, DC. [available at

http://databank.worldbank.org/data/home.aspx, accessed 17 Apr 2017]

9.0 APPENDICES

9.1 FREQUENCY TABLES

Savings Behaviour
Cumulative
Frequency Percent Valid Percent Percent
Valid .00 9 16.7 16.7 16.7
1.00 17 31.5 31.5 48.1
2.00 28 51.9 51.9 100.0
Total 54 100.0 100.0

Employment Status
Cumulative
Frequency Percent Valid Percent Percent
Valid 3 5.6 5.6 5.6
2 1 1.9 1.9 7.4
0 3 5.6 5.6 13.0
 Formal 9 16.7 16.7 29.6
Informal Employment 12 22.2 22.2 51.9
Unemployed 26 48.1 48.1 100.0
Total 54 100.0 100.0

Income levels of respondents

Cumulative
Frequency Percent Valid Percent Percent
Valid No answer 7 13.0 13.0 13.0
Less than 10000 23 42.6 42.6 55.6
10000-49000 15 27.8 27.8 83.3
50000-100000 6 11.1 11.1 94.4
100000 3 5.6 5.6 100.0
Total 54 100.0 100.0

Knowledge of UBI
Cumulative
Frequency Percent Valid Percent Percent
Valid 0 1 1.9 1.9 1.9
Have Knowledge 17 31.5 31.5 33.3
Have No Knowledge 36 66.7 66.7 100.0
Total 54 100.0 100.0

Decision on Leaving Job due to UBI

Cumulative
Frequency Percent Valid Percent Percent
Valid yes 8 14.8 14.8 14.8
no 46 85.2 85.2 100.0
Total 54 100.0 100.0

Reasons for the Decision

Cumulative
Frequency Percent Valid Percent Percent
Valid 18 33.3 33.3 33.3
No leaving job 4 7.4 7.4 40.7
 diversify income 9 16.7 16.7 57.4
less salary 10 18.5 18.5 75.9
if ubi is more 1 1.9 1.9 77.8
business 2 3.7 3.7 81.5
love my job 2 3.7 3.7 85.2
invest 3 5.6 5.6 90.7
basic needs 2 3.7 3.7 94.4
ubi is unsustainable 3 5.6 5.6 100.0
Total 54 100.0 100.0

Actions With Extra Income

Cumulative
Frequency Percent Valid Percent Percent
Valid No Answer 4 7.4 7.4 7.4
Business 37 68.5 68.5 75.9
1,2 2 3.7 3.7 79.6
Basic Needs 4 7.4 7.4 87.0
Invest 4 7.4 7.4 94.4
Save 3 5.6 5.6 100.0
Total 54 100.0 100.0

Views on Levels of Poverty

Cumulative
Frequency Percent Valid Percent Percent
Valid 0 1 1.9 1.9 1.9
high levels 38 70.4 70.4 72.2
many below poverty line 1 1.9 1.9 74.1
poverty is unbearable 2 3.7 3.7 77.8
food prices 1 1.9 1.9 79.6
poorest nation 3 5.6 5.6 85.2
scarcity of money 2 3.7 3.7 88.9
little salary 1 1.9 1.9 90.7
poveerty due to corruption 1 1.9 1.9 92.6
inequality high 4 7.4 7.4 100.0
Total 54 100.0 100.0

UBI Solution to Poverty

Cumulative
Frequency Percent Valid Percent Percent
Valid 0 1 1.9 1.9 1.9
 yes 40 74.1 74.1 75.9
1,2 1 1.9 1.9 77.8
no 12 22.2 22.2 100.0
Total 54 100.0 100.0

Reasons
Cumulative
Frequency Percent Valid Percent Percent
Valid 6 11.1 11.1 11.1
0 2 3.7 3.7 14.8
Capital for business 8 14.8 14.8 29.6
Meet personal needs 16 29.6 29.6 59.3
Effeciency of distribution 11 20.4 20.4 79.6
Good use by beneficiary 2 3.7 3.7 83.3
Reduce poverty 5 9.3 9.3 92.6
Support jobless 2 3.7 3.7 96.3
UBI for pleasure 2 3.7 3.7 100.0
Total 54 100.0 100.0

Views on Cost of Living in Malawi

Cumulative
Frequency Percent Valid Percent Percent
Valid Cost of living is high 49 90.7 90.7 90.7
Money is scarce 2 3.7 3.7 94.4
Unbearable 3 5.6 5.6 100.0
Total 54 100.0 100.0

Sex
Cumulative
Frequency Percent Valid Percent Percent
Valid 0 1 1.9 1.9 1.9
Male 33 61.1 61.1 63.0
Female 20 37.0 37.0 100.0
Total 54 100.0 100.0