A 1998 Social Accounting Matrix for Malawi

The last few years have seen a proliferation of attempts by various institutions to create a framework that would enable analysts to have a broad overview of all transactions in the Malawian economy. It was decided that 1998, the most recent year for which a comprehensive data set is available, would be the base year for the SAM. The National Statistical Office conducted a major household survey which provided information on budget shares, incomes and many other social-economic characteristics of households.Social accounting Malawi. ,Economic surveys Malaw. ,Household surveys Malawi. ,TMD ,

External shocks and domestic poverty alleviation

Two sets of issues loom large on the economic horizon of Malawi: poverty alleviation and the country's vulnerability to shocks emanating from the outside world. In this paper, simulations with a Computable General Equilibrium (CGE) model of Malawi are used to analyze aspects of these issues. Two types of poverty-alleviating domestic policy shifts are simulated: a public works program and a land reform program. The public works program may function as an absorber of negative shocks elsewhere in the economy. The land reform program may introduce a structural change in the distribution of factor incomes in favor of the poor. The results for the simulated external shocks confirm that Malawi's economy is highly sensitive to external shocks of the magnitudes that the country has experienced in recent years. The consequences are particularly negative for the non-agricultural population. A more diversified production and export structure would make Malawi less vulnerable to external price shocks and reduce the pressures that lead to sharp exchange rate fluctuations.Poverty alleviation Malawi. ,Economic situation. ,Equilibrium (Economics) Simulation methods. ,TMD ,

A 1998 Social Accounting Matrix for Malawi

The last few years have seen a proliferation of attempts by various institutions to create a framework that would enable analysts to have a broad overview of all transactions in the Malawian economy. It was decided that 1998, the most recent year for which a comprehensive data set is available, would be the base year for the SAM. The National Statistical Office conducted a major household survey which provided information on budget shares, incomes and many other social-economic characteristics of households.Non-PRIFPRI1TM

A 1998 SOCIAL ACCOUNTING MATRIX FOR MALAWI

The last few years have seen a proliferation of attempts by various institutions to create a framework that would enable analysts to have a broad overview of all transactions in the Malawian economy. A first attempt was made by Lodh and Chulu (1994) to construct a macro accounting framework using data from the National Statistical Office's 1990-1991 Household Expenditure and Small Scale Economic Activities Survey and the National Sample Survey of Agriculture complemented by other data sets such as the Government Budget Estimates, National Accounts and External Trade Statistics. This framework consisted of 9 sectors using 1987 as the base year. However, this framework was lacking in detail such that it was extremely limited in its usefulness as a basis for policy analysis. The main drawback was that it followed the one digit ISIC classification: agriculture; mining; manufacturing; construction; utilities; distribution; transport; financial institutions; and community, social and personal services. The exercise created considerable interest by various government agencies such that in 1995, an Input-Output survey was commissioned and subsequently conducted by the National Statistical Office and the Economic Planning Department which lead to the construction of the first comprehensive Input-Output (IO) table for Malawi for the year 1994 (EPD 1996). This formed the groundwork for the construction of a Social Accounting Matrix (SAM) for Malawi for 1994 (Chulu, Wobst and Brixen 1998). The data from the IO table presented better disaggregation of agriculture and other sectors. Unfortunately, the SAM relied heavily on household data from the 1990-1991 Household Expenditure and Small Scale Economic Activity data which was relatively outdated. In addition, there were numerous inconsistencies in macroeconomic statistics coupled with the fact that 1994 was too distant in the past and that too many structural changes had taken place in the interim, rendering some of the macro-relationships obsolete. Further, the year 1994 was not a "normal" economic year for Malawi. There were several events and changes that took place during that year that included the following: a total liberalization of the exchange rate regime which culminated in a huge depreciation of the domestic currency of over 150%; price deregulation in all commodities except for maize; an unprecedented drought which resulted in huge decreases in agricultural production and hence exports, as well as huge increases in imports of food stuffs; the Mozambican refugee crisis; an inflation rate of over 83%; a large government deficit. These factors, coupled with the fact that the 1994 Social Accounting Matrix stimulated increasing interest by research institutions to further develop it and use it to develop a consistent framework for in depth policy analysis that integrates macro and micro issues led to a rethinking of maintaining 1994 as a base year. It was decided that 1998, the most recent year for which a comprehensive data set is available and a more normal year, would be the base year for the SAM. The National Statistical Office conducted a major household survey which provided 5 information on budget shares, incomes and many other social-economic characteristics of households. Moreover, 1998 saw marked improvements in External Trade statistics and National Accounts had been rebased to 1994 from 1978. Nonetheless, there are still a lot of inconsistencies between the various official publications referring to the same variables, for instance, there are three different values for government consumption from the Economic Report published by the National Economic Council, the Quarterly Statistical Review published by the Reserve Bank, and the Monthly Bulletin of Statistics published by the National Statistical Office

EXTERNAL SHOCKS AND DOMESTIC POVERTY ALLEVIATION: SIMULATIONS WITH A CGE MODEL OF MALAWI

Two sets of issues loom large on the economic horizon of Malawi: poverty alleviation and the countrys vulnerability to shocks emanating from the outside world. In this paper, simulations with a Computable General Equilibrium (CGE) model of Malawi are used to analyze aspects of these issues. The primary database that is used is a 1998 Social Accounting Matrix (SAM) for Malawi which in part is based on the recently published Malawian Integrated Household Survey (IHS) 1997-98. The simulations explore the effects of external shocks and domestic policy changes aimed at poverty alleviation. The external shocks reflect episodes to which Malawis economy has been exposed in recent times: changes in the international prices of tobacco and petroleum products and fluctuations in the real exchange rate. Two types of poverty-alleviating domestic policy shifts are simulated: a public works program and a land reform program. The public works program may function as an absorber of negative shocks elsewhere in the economy. The land reform program may introduce a structural change in the distribution of factor incomes in favor of the poor. The results for the simulated external shocks confirm that Malawis economy is highly sensitive to external shocks of the magnitudes that the country has experienced in recent years. The consequences are particularly negative for the non-agricultural population. Real depreciation has a pro-rural bias and is a powerful tool for eliminating balance-of-payment difficulties. Real appreciation protects the urban population (which may be more powerful politically) and total household consumption. A more diversified production and export structure would make Malawi less vulnerable to external price shocks and reduce the pressures that lead to sharp exchange rate fluctuations. Agricultural households are less exposed to changes in Malawis external environment since their incomes tend to be more diversified with a substantial non-agricultural component. Assuming that it is self-targeted, the expanded public works program generates significant gains for the rural poor but has a negative impact on non-agricultural households, especially in urban areas. High administrative costs and mobilization of workers that otherwise would have been employed elsewhere make the program less attractive from an over-all welfare perspective. It becomes more attractive if resulting improvements in infrastructure reduce distribution costs. The results for the land reform simulations show that a tax-based land reform program has the potential of generating substantial gains for the household groups that receive the redistributed resources. The aggregate gains and the distributional effects are reinforced if the new owners are able to maintain the production pattern of the estate sector. Matching financing from the rest of the world can play a similar role by benefiting the target groups