Lilongwe: Latest per capita income figures from the Reserve Bank of Malawi (RBM) show that on average, the majority of Malawians survive on just US$1 (K152) per day despite the high gross domestic product (GDP) growth rates recorded over the years since 2004. The RBM figures indicate that GDP per capita income has nearly doubled in kwacha terms between the years 2005 and 2010.
Even in United States (US) dollar terms, widely considered to be fairly constant, per capita income appears to have recorded some gains. GDP per capita income, one of the key indicators of an economy’s well-being, is an estimate of the value of all final goods and services within a nation divided by the total number of people in the country.
The measure thus indicates how much each individual could earn if the country’s total wealth, as measured by GDP, is shared among all residents in that particular year.
The RBM figures, released towards the end of last year, show that individual incomes surged from K26 700 in 2005 to K55 300 as of September 2010.
Between the years 2006, 2007, 2008 and 2009, an improved trend in the indicator is also evident as per capita income was estimated at K31 700, K36 300, K43 500 and K49 200, respectively.
In dollar terms, GDP per capita income was valued at $227 in 2005 before further improving to $240, $267, $313, $344 and $369 in 2006, 2007, 2008, and 2009 as of September 2010, respectively.
If one were to take the 2010 per capita figure of US$369 as annual individual income, it translates to roughly US$1.025 per day, a statistically meaningless improvement over the US$1 poverty mark. Government says only 40 percent of Malawians live below the poverty line.
Commenting on the trend in GDP per capita income, Economics Association of Malawi (Ecama) vice-president Paul Kwengwere, while commending the country for the rising incomes, wondered whether the income jump has improved the welfare for ordinary Malawians. "It is a positive development to see GDP per capita increasing. However, [the worry would be] where are we in terms of income inequality in the country?" said Kwengwere.
He said there is need for a comprehensive analysis to determine the overall impact of such an increase in GDP per capita on individual Malawians and rural masses in particular. Kwengwere argued that such an increase would only be meaningful if it is broad-based and not just benefitting a few rich individuals while the rest of population gets poorer.
Finance minister Ken Kandodo, when he presented the 2010/11 national budget in Parliament last June, said the growth in real GDP has remained above the six percent mark needed to reduce poverty.
Said Kandodo: "The success of our macroeconomic management has not happened by mere chance or coincidence; it has come as a result of pursuing focused policies and prudent fiscal and economic management."
Growth in real GDP has averaged 7.5 percent since 2004, and was pegged at 8.2 percent in the year 2006 before registering a 7.9 percent surge in 2007.
At the height of the global financial crisis in 2008, Malawi recorded real GDP growth rate of 9.7 percent before retreating to 7.6 percent in 2009. Growth in 2010 is estimated to further slacken to 7.1 percent, according to national accounts authorities.