Earlier this week the World Bank released an updated country income classification for its 2020 fiscal year which showed that Zimbabwe had risen to become a from lower income country to the lower-middle-income category.
Twitter user @mutungadzimwe attempted to break down what this means. Here’s the thread:
1. ZIM NOW A MIDDLE INCOME COUNTRY!! New @WorldBank figures have classified Zim a lower middle income country. Welcome news for a country that has been a basket case for decades due to poor policies. But, what does this mean?
2. On revised WB thresholds, it means Zim had a GNI (total value of goods produced and net earning from abroad) per capita (per person) of US$1,026 – 3,995. This is based on new higher threshold, which makes it a big deal! But really?
3. Well, it’s not quite as it seems! Why? The classification is based on 2018 GNI figures, which are converted to their US$ equivalent. And this is where it all goes a wee bit pear shaped for those celebrating. What was the conversation rate to US$ and what is it now?
4. I believe @WorldBank uses official exchange rates – I am sure to respect it member countries, which for Zim was 1:1 in 2018. But everyone in Zim knows that was fiction, and that rate has since adjusted to US$1:ZW$10, adjusting downwards incomes in Zim (internal devaluation)!!
5. Take a teacher who earned US$350 per month in 2018, currently are getting ~US$35. If you look across the economy, many people and businesses have been affected by this internal devaluation. So the US$ equivalent of 2019 GNI figures are going to be much lower.
6. My informed guess is Zim’s economy will need to grow by ~800% if the country is to maintain this near posh income status. Its like expecting Santa Clause to be distributing presents Muzarabani in Oct using elephant drawn carriages. Nothing against Muzarabani – my rural home!!
7. In short, it’s very unlikely that Zim will be a lower middle income country next year! So let’s make the most of it while it last, let’s mingle with the bigger boys and girls, we might pick up on or two things. But does it really matter that Zim is now in this near posh club?
8. Well, one needs to look at standard of living for the majority of people in the country. Zim is a very unequal society, those who have it, have it all, those with little have nothing. GNI per capita figure say nothing about actual distribution of income, and living standards
9. Rather than getting carried away about our new found status based on GNI figures, I would argue the more informative measure is the Inequality Adjusted Human Development Index (IHDI). It looks beyond GNI and accounts for inequality, which is extreme in Zimbabwe.
10. For those that are celebrating, I know it’s unfair to be ‘raining on your parade’! But I am conscious these latest
@WorldBank figures have somewhat become a basis for propaganda about the fortunes for those struggling in Zim. Disclaimer: I am criticising the World Bank11. I genuinely wish that Zim becomes a middle income country soon, it will benefit me and all my fellow Zimbabweans who have struggled for decades now. But it needs not be a result of some arithmetic irregularity in the way the classification works
12. Even the 40% uplift in GDP figures following a rebasing in 2018 to account for economic activity in the informal sector will not be enough to offset the impact of the internal devaluation. Well the incomes of those in the informal sectors have also been reduced!!!
More: World BankNew Country Classification, @Mutungadzimwe on Twitter