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Building Financial Security in Malawi

Banks and similar “formal financial services” are common means of protecting and investing money in the developed world, but they are scarce in developing nations. Financial security in Malawi, however, is becoming a more prevalent phenomenon.

Having access to formal financial services is important, especially in impoverished communities; it gives people a reliable means of saving that protects them from economic fluctuation. The ability to amass funds over time is crucial to establishing a stable financial future, and gives farmers and entrepreneurs alike a source of funding for new ventures.

Interventions orchestrated by the American nonprofit, Innovations for Poverty Action, show that when farmers in Malawi were given access to savings services, not only did their yields increase in the fields, but also their families had the capital to spend on necessary healthcare and adequate food provisions. Savings accounts accessible to even just one person managed to positively affect entire families.

Farmers are especially in need of formal financial services, as they often earn large sums of money in semiannual increments based on the harvest season, and have no place to store money during the lean periods between harvests. Formally storing money allows farmers to prioritize long-term investments rather than short-term spending and family borrowing, which are common in poor communities.

Banking is highly correlated with education in countries worldwide, suggesting that, like education, it could be a means to escaping poverty. It makes sense, considering that banks provide an easy way to manage income. Humanitarian organizations in the poverty-elimination business would be wise to turn to banking as a means of sustainable development. Savings accounts have already been successful in Malawi, and are sure to be as successful elsewhere in the developing world.

– Elise L. Riley

Sources: Innovations for Poverty Action, The Gates Foundation, The Economist
Photo: World Agroforestry

Hunger in Zambia Leads to Agriculture Investments

hunger in zambia
The African country of Zambia has been working to end its epidemic of hunger.  While the World Bank considers the country lower-middle income, hunger is still extreme because economic disparities have grown with the GDP.  The 2012 Human Development index gave Zambia a poor review, ranking it 163 out of 186 countries.  The number of people at risk of food insecurity rose from 63,000 in 2012 to 209,000 in 2013.

An influx of 34,000 refugees, 6,000 of whom receive no assistance from the country, increases the food burden.

Hunger in Zambia has been a major concern, as the country suffers from high rates of malaria, malnutrition, an HIV rate of 12.7% and an extreme poverty rate of 42.7%.  This poverty rate rises much higher in the countryside, where subsistence farming flourishes.

Zambians are highly dependent on rain-fed agriculture, which relies on one harvest that can make or break a farmer’s year.  There is little economic incentive to pursue other fields, and when food and money are tight, farmers often do casual labor at other farms to supplement their incomes.  This causes their own harvests to suffer because they are not devoting enough time to their own land.  Food prices are also high, meaning the supplemental incomes do not stretch as far as they need to when harvests do not supply enough food.  This has led to a 45.4% rate of malnutrition; almost half of Zambian children are deficient in vitamin A and iron.

Malnutrition and the dependence on unreliable agriculture has led the country to low educational and economic attainment.  Farmers do not have the ability to focus on anything other than putting food on their tables.  While educational enrollment has increased, Zambians only complete an average of six years of education.

These agricultural burdens have become a focus for the nation.  Zambia is part of the Scaling Up Nutrition program, which focuses on bolstering nutrition in over 50 countries.  Scaling Up Nutrition also supports the First 1000 Most Critical Days program, making infant care a priority.

Another organization working in Zambia is Women’s Empowerment through Animal Traction (WEAT).  WEAT works with Heifer International and the World Food Programme to provide households with draft animals.  The focus is on providing women with a means to support their families.  The draft animals allow women to plant crops quickly and efficiently, while also supplying milk.  The offspring of these animals go to other families in the community, allowing more farmers to increase their outputs.

Action Against Hunger works specifically with families affected by HIV and AIDS.  The organization helps people take up activities that create income, such as raising rabbits or poultry.  It also educates people about HIV and AIDS.

Innovations for Poverty Action funded a study in 2012-2013 which gave loans of maize to farmers during the lean season.  The goal was to keep farmers from needing to seek additional employment on other farms.  The results showed that food consumption increased, casual labor decreased and there was evidence of an increase in local wages.  These positive signs led the study to expand in January 2014.  Now IPA will give 3,000 households the opportunity to receive loans of food and cash, and it will measure crop yields and nutrition at the end of two years.

In addition to all of these programs, Zambia has joined with other African nations to plead with their governments to invest more in agriculture.  The request is for an increase in effective agriculture investments of at least 10%, with a focus on support for small farmers, especially women.  Vice-president Guy Scott received the petition for Zambia.  In total, over two million African citizens have signed petitions in support of this legislation.

– Monica Roth

Sources: World Food Programme, Action Against Hunger, Innovations for Poverty Action, Scaling up Nutrition, Africa Science News
Photo: Irish Aid