· Tanzania is among seven countries that moved up in economic status to that of a lower-middle-income economy.
· Tanzania qualified for the status of lower-middle-income after its GNI per capita increased to $1,080 in 2019 up from $1,020 in 2018.
Tanzania is among seven countries that moved up in economic status to that of a lower-middle-income economy this month. The World Bank has categorised Tanzania as a lower middle-income economy from July 1st.The development was celebrated across the country with enthusiasm. Many economists hailed it as “a step forward” in the national development process, reflecting improvement in poverty reduction but added that the new status comes with its own merits and demerits.
The World Bank classifies the world’s economies into four income groups–low, lower-middle, upper-middle, and high-income countries. The classifications based on gross national income (GNI) per capita – the total amount of money earned by a nation’s people and businesses divided by its population are reviewed every year on July 1. Tanzania qualified for the status of lower-middle-income after its GNI per capita increased to $1,080 in 2019 up from $1,020 in 2018. GNI alludes to the nation’s gross domestic product and the income it receives from overseas sources.
Prof Delphin Rwegasira of the University of Dar es Salaam’s Economics Department. explained that for a country, like Tanzania with ambitious growth plans, moving into lower-middle-income status will boost its creditworthiness and attract foreign investors. However, many economists pointed out that the categorisation is more advantageous to the country than individual citizens. The actual gap between the rich and the poor in Tanzania is reported to be still huge. On the flip side, under the new status, Tanzania will not be able to access some grants and some concessional loans it received as a low-income country.
Political observers caution that Tanzania has a long journey ahead to claim its place. Though the country had performed well in improving infrastructure and business environment in the last fifteen years, it needs to accelerate the growth to 8-10 percent. It has to reduce inequalities and work towards an inclusive economy where not only a few sectors benefit from economic growth.
