Zimbabwe remains on course to achieve its target of becoming an upper-middle-income economy by 2030, Finance and Economic Development Minister Mthuli Ncube said, adding the Government was accelerating policy interventions under the National Development Strategy 1 (NDS1) to attain the milestone.
Minister Ncube’s remarks follow the release by the World Bank of its latest report on the various national income level classifications, which saw Zimbabwe maintaining its status as a lower middle-income economy.
Prof Ncube, writing on his social media blog twitter page acknowledged the World Bank’s classification of Zimbabwe as a lower-middle income country saying the Government was “now implementing NDS1, towards the Upper -Middle Income category by 2030.”
NDS1 is Zimbabwe’s economic development blueprint (2020-2025) and outlines programmes and projects plans during the period by defining the trajectory and aligning the country’s financial flows with policy priorities as identified by stakeholders at national, provincial and local level.
According to the World Bank, a middle-income economy is one with a gross national income ranging between USUS$1 086 and USUS$12 235 per capita.
Since the advent of the Second Republic in November 2017, President Emmerson Mnangagwa has reiterated his Government’s national vision encapsulated by the rallying call “Towards a Prosperous Upper-Middle Income Economy by 2030.”
Key goals of Vision 2030 entail transforming Zimbabwe to an upper middle-income economy with per capita gross national income of between US$4 256 and US$13 205 in real terms, rising employment rates in both the formal and Small-to-Medium Enterprise sector. The Government also intends to progressively reduce the poverty rate to levels consistent with upper-middle-income economies.
Development economist Trevor Dzimiri said, “The country is in the right direction to attain its Vision 2030 of an upper middle-income country. We were able to weather the storm of Covid-19 and maintain the rating whereas some countries have downgraded.”
Mr Dzimiri added that the country should not relent on policy measures and interventions under the NDS1, which seek to take the country to the promised land.
National food security, affordable, competitive, and accessible education and health services, and infrastructural development are some of the targeted key deliverables.
The World Bank assigns the world’s economies to four income groups—low, lower-middle, upper-middle, and high-income countries. The classifications are updated each year on July 1 and are based on GNI per capita in current US dollar exchange rate.
“New thresholds are determined at the start of the World Bank’s fiscal year in July and remain fixed for 12 months regardless of subsequent revisions to estimates,” the World Bank said in its latest report.
The World Bank classifies the world’s economies into four income groups — high, upper-middle, lower-middle, and low. We base this assignment on Gross National Income (GNI) per capita (current USUS$) calculated using the Atlas method.
In each country, factors such as economic growth, inflation, exchange rates, and population growth influence Gross National Income (GNI) per capita. Revisions to national accounts methods and data can also have an influence in specific cases.
GNI is the total amount of money earned by a nation’s people and businesses. It is used to measure and track a nation’s wealth from year to year. The number includes the nation’s gross domestic product (GDP) plus the income it receives from overseas sources.
“For the current 2023 fiscal year, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of US$1 085 or less in 2021; lower middle-income economies are those with a GNI per capita between US$1 086 and US$4 255; upper middle-income economies are those with a GNI per capita between US$4 256 and US$13 205; high-income economies are those with a GNI per capita of US$13 205 or more,” the report read.
Economist Tinevimbo Shava said, “The World Bank rating is a morale booster to the economy as it means that the economy is resilient to shocks by keeping employment at sustainable levels to make citizens able to have money to spend.”
He added that Zimbabwe should now concentrate on making sure that the wealth is distributed across economic classes in order to lift the majority out of poverty and not create a state where the rich get richer and the poor get poorer.
The World Bank income level classifications are determined by two factors: A country’s GNI per capita, which can change with economic growth, inflation, exchange rates, and population. Revisions to national accounts methods and data can also influence GNI per capita.