A policy and governance report has faulted the country’s school calendar effected in 2010, stating it negatively affects poor farming households with children in primary schools as they are forced to sell their crops to meet short-term expenditure needs.
The report, Africa Economic Brief: Selling early to pay for school in Malawi, argues that the calendar forces poor farming households to sell their crops earlier than would be optimal, given the large increases in crop prices over the 6-8 months post-harvest.
The report has been compiled by Brian Dillon an assistant professor in the Evans School of Public Policy and Governance and an adjunct assistant professor in the Department of Economics at the University of Washington and published by the African Development Bank (AfDB)—a key development partner of Malawi Government.
In 2010, the Malawi school calendar switched from a December start date to a September start date, and although there is no primary school tuition, households contribute to school expenses and parent-teacher associations.
Because the main harvest season in Malawi is in May and June, Dillon observes that the change in the school calendar introduced a sharp change in the timing of school-related expenses relative to the crop price cycle.
“Poor households were sufficiently liquidity constrained that they prefer to sell crops early and forego significant expected increases in crop values rather than use savings or other financial mechanisms to pay primary school costs. This may be partly due to the covariant nature of the expenditure shock and its widespread effect on all households with primary school children.
“If the expenditure shock were idiosyncratic, affected households may have borrowed to finance expenditures at rates better than that charged by the crop market over the relevant period,” he states.
Published on September 20 2017, the report further notes that when households are living near the edge of their financial capabilities, seemingly innocuous policy changes can have unintended consequences.
“The broader lesson is that weak financial markets and highly seasonal crop prices combine to be especially detrimental for poor households,” he adds.
According to the report, in markets across sub-Saharan Africa, the nominal prices of some crops increase by as much as 50-100 percent from their harvest-season through to their peak in the lean season.
National News – The Nation Online