Malawi, a small landlocked country bordering Zambia, Tanzania, and Mozambique, remains one of the world’s poorest countries. It was ranked 171st out of 187 on the 2011 UNDP Human Development Index and 45th out of 79 on the 2012 Global Hunger Index. Over 40 percent of the country’s 14 million people live on less than US$1 per day (2012 Government of Malawi MDG Report). According to the 2010/11 Integrated Household Survey, poverty declined slightly from 52.4 percent in 2005 to 50.7 in 2011 . The poverty levels for urban and rural areas declined from 25.4 to 17.3 percent and 55.9 to 56.6 percent during this period, respectively (World Bank 2012). Malawi’s economic growth has slowed in recent years, from a peak of 9.7 percent in 2008 to an estimated less than 3 percent in 2012; such low growth is significantly below Africa’s average projected growth of 4.8 percent (World Bank 2012).

Agriculture is Malawi’s most important economic sector, employing about 80 percent of the population. Over 90 percent of the rural population is made up of smallholder farmers cultivating plots whose average size is only 0.8 hectares (IFAD 2012). Maize accounts for over 80 percent of cultivated land; the country produces an average of 3 million tons of maize annually, above the 2.3 million ton level needed for self-sufficiency. However, widespread food shortages are commonly experienced during lean seasons, leading many rural households to suffer from chronic food insecurity and malnutrition. Over-use of marginally productive lands, soil erosion and nutrient depletion, poor access to financial services and markets, unfavorable weather events, and small landholdings all combine to exacerbate food insecurity. Post-harvest losses are estimated to be around 40 percent of production (IFAD 2012). According to the Malawi Vulnerability Assessment Committee report released in June 2012, more than 1.6 million people in rural areas will be at risk of hunger in 2012 and 2013 (WFP 2012).

Access to education, basic social services, and financial services is extremely limited in Malawi. An estimated 30 percent of poor children never attend school, and only 12 percent of rural households have access to credit (IFAD 2012). In addition, frequent shocks from weather-related events, illness, and injury further increase poverty traps. Such shocks often force poor households to sell their productive assets, withdraw children from school, and reduce food consumption.

Since May 2012, the government of Malawi has instituted strict reforms aimed at revitalizing the economy, including devaluation of the local currency. The government has also launched an Economic Recovery Plan (ERP) that focuses on expanding social protection programs (including public works, school feeding, cash transfers, and farm input assistance) and strengthening the commercial agriculture, tourism, energy, mining, and IT sectors (World Bank 2012).