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Spending on safety nets for the poor : how much, for how many? The case of Malawi

During 1999 the Government of Malawi and donors undertook a joint piece of work to develop a national safety net strategy. The objective was to pull together what is known of poverty in Malawi, and of experience with programs in Malawi and elsewhere, and to come up with an agreed safety net program for the next ten years. This paper is presented to share some of the analytical findings more widely, to help those confronting the issues of public safety nets in very poor countries. Three central questions are asked: How big a role should public safety nets play in the development strategy? how much should be spent on them? and what programs are most cost-efective in terms of achieving the desired objectives? The analysis then examines three key issues that arise in considering these questions: the affordability and appropriate size of the transfer program; the problem of targeting approaches; and finally the question of institutional capacity. The paper's structure is as follows: Chapter 1 describes poverty in Malawi and the implications for choosing safety nets. Chapter 2 lays out the broad fiscal options. Chapter 3 examines in depth the safety net's objectives and possible target groups. Chapter 4 sums up existing programs. Chapter 5 evaluates program options. Chapter 6 recommends a safety net program.