The elevation of Zimbabwe from a low income into a lower-middle income economy has divided opinion, particularly in the context of the deteriorating economic situation in the country.
This week, the World Bank released its annual report of country classifications based on Gross National Income (GNI)) per capita and the data highlighted that Zimbabwe moved a tier up, into the lower-middle income category.
There are four categories starting with the least, Low income, Lower-middle income, Upper middle income and High income earning.
According to the latest data, Zimbabwe’s GNI per capita has risen to US$ 1 790 from US$ 910 recorded prior year, implying that the average income for each Zimbabwean has reached US$ 1 790 per year.
The Bank suggests that the (GNI)) per capita for lower-middle income countries for the year is between US$ 1 026 and US$ 3 995.
But the bone of contention among analysts and the generality of Zimbabweans has been to establish the significance of this rating in the wake of incomes that have been deteriorating particularly since fourth quarter of 2018.
“In figurative terms, what this means is that the average incomes of Zimbabweans has improved and they (World Bank) use that as a proxy to improvements in the standards of living,” economic expert Kipson Gundani told 263Chat Business adding that while it may be a globally acceptable measure, it doesn’t depict the exact picture of an economy.
“The GNI is not a perfect measure of the economic wellbeing of any nation because it does not take into account a number of factors, it only take into account Gross output without telling us about the distribution of that income. So you might have people that have quadrupled in terms of their national incomes per capita but you might also have the same people plunging further into poverty,” he said.
But official figures suggest that Zimbabwe’s economy has performed fairly well in the past year. Recently, Finance and Economic Development Minister, Mthuli Ncube said the economy grew by 6.2 percent in 2018, to reach US$ 25.8 billion.
The development is sweet news to Government’s Vision 2030 which seeks to make Zimbabwe an upper-middle income economy.
For perspective, the World Bank says the GNI per capita for an upper-middle income country is between US$ 3 996 and US$ 12 375, and Zimbabwe only has a decade to reach this feat.
Meanwhile the reality on the ground tells a different picture, with more and more people believed to be plunging deep into poverty.
“Incomes have been deteriorating for workers. The RTGS dollar has depreciated in value and prices have gone up. It’s actually a deplorable standard of living we are subjected to,” Amalgamated Rural Teachers Union of Zimbabwe, regional secretary, Fortune Jamela said.
However, economic experts say the figures warrantying Zimbabwe a lower middle-income status are a true reflection of gains so far made in the economy, but point to unfair distribution of that wealth.
“The average person is getting poorer because the improved GNI is not equitably distributed. In other words, what is the gap between the poor and the rich? Is it widening or shrinking, this is what we must be seized with,” Gundani said.
Income classifications influence the World Bank’s lending terms, for example the high-income threshold is a critical factor for determining lending rates.