Did rapid smallholder-led agricultural growth fail to reduce rural poverty? Making sense of Malawi’s poverty puzzle

Poverty reduction is a primary development goal in Malawi. While a variety of policy interventions and strategies have sought to reduce poverty, the most significant policy intervention in recent years has been the Farm Input Subsidy Programme (FISP). FISP provides heavily subsidized fertilizer and other farm inputs to poor smallholders. Although the programme is primarily designed to address food security through increasing maize yields, its significant burden on public resources has meant that the programme’s wider impact on growth and poverty reduction has also been closely scrutinized as it is believed to crowd out other government interventions. Malawi’s recent growth performance has been remarkable. Official national accounts data reveal strong growth across all economic sectors during 2005–11. However, the authors find that the extreme poverty rate has increased marginally, suggesting that the most vulnerable continue to be excluded from the benefits of economic policy and growth.