In recent years, observers of the goings-on in Zimbabwe have been inking their opinions on government’s vision of transforming the country into an upper middle-income economy by 2030.
In their appraisal of this vision, some of the observers have been enthusiastically optimistic while others have been cautiously optimistic and a few have been out-rightly dismissive of the vision as a ruse and smokescreen used by state managers to keep the suffering masses hoping for a better life in seven years time.
While noting the above, this think piece seeks to illuminate the less discussed folly of over-hyping the notion of upper middle income status when the country is “falsely” classified as a “lower middle-income” economy instead of a “low-income” economy which is what it is.
To begin with, Emmerson Mnangagwa’s government has set itself a lofty target of transitioning Zimbabwe from a “lower middle-income economy” to a more sophisticated upper middle-income economy by 2030.
Apparently, this date is set to coincide with the country’s celebration of 50 years of independence from colonial rule.
As a build up to this historic event, Mnangagwa has used every opportunity to ricochet his vision including reciting it in all the state of the nation addresses he has given since assuming power in 2017.
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At the same time, the vision has become a common refrain in all government programmes including the National Development Strategy 1.
If by some miracle this feat is achieved, Zimbabwe will join the likes of Singapore, China, and Mauritius among others.
In these countries, economic life for the general populace is bearable.
False lower middle-income classification
Since 1989, the World Bank has been analytically classifying the world’s economies into four income groupings namely: low, lower middle, upper middle and high income economies.
This classification is based on gross national income (GNI) calculation, which is the sum of income generated by individuals and businesses divided by the number of citizens.
The classifications are updated each year on July 1.
In the latest classifications for the 2023 fiscal year, the low-income countries are those with GNI per capita of US$1, 085 or less; lower-middle income economies are those with GNI per capita that is between US$ 1, 086 and US$4, 255; upper middle- income economies are those with GNI per capita that is between US$ 4, 256 and US$13, 205; and high income economies are those with GNI per capita that is US$13, 206 or more.
In this current classification, Zimbabwe is categorised as a lower middle-income country and its GNI per capita is US$1, 400.
However, just like the budget surpluses that are routinely declared by the Finance and Economic Development minister Mthuli Ncube, GNI per capita of US$1, 400 is meaningless to the majority of Zimbabweans.
This is because wealth in Zimbabwe is concentrated in the hands of few oligarchs and high net worth individuals while the majority of the population remains poor.
Apparently, the use of other measures of economic development which factor in the lived experiences of the people such as the United Nations Human Development Index, Index of Human Poverty, and Genuine Progress Indicator will confirm that the Zimbabwe is in economic turmoil far worse than the “false” claims of a lower-income status which is adduced through GNI per capita figures.
What is puzzling is that the government of Zimbabwe is obsessed with hyping its ambition of becoming an upper middle-income economy when it is obvious that the GNI per capita it is using as a standard of national performance does not give due consideration to low family incomes and earnings; lack of secure and descent work; nutrition and health; poor housing; lack of clean water and, sanitation, and shortages of power all of which are the things that people expect to be addressed when the country becomes an upper middle income economy.
From concessional to non-concessional facilities
In practical terms, the danger with Zimbabwe graduating from a “false” lower middle-income to a label of upper middle income economy is that the country will not have access to financing windows for the “poor” countries such as the IMF Catastrophe Containment and Relief Trust and the World Bank Poverty Reduction and Growth Trust and many other concessional financing facilities.
It should be remembered that in 2020, Zimbabwe did not benefit from the global financing facilities that were offered to the poor countries to contain Covid-19 not only because of its arrears to international financial institutions but also due to the fact that is not considered “poor enough” for such financing facilities.
For argument’s sake, if Zimbabwe were to attain the “label” upper-middle income economy in 2030, the country will be entitled to borrow from the more expensive non-concessional loans from the global capital and financial markets and yet its true structure of the economy is that of a “poor” country which cannot afford such non-concessional loans.
In this way, the country will remain perpetually trapped in a vicious debt slavery cycle.
It is important to reiterate at this point that Zimbabwe is currently beset by a double whammy of economic problems, namely, rising inflation and slow growth.
The lived experiences of the majority of Zimbabweans are not of a lower middle-income economy but those of a “poor” country.
Self –erected roadblocks
All things being equal, Zimbabwe should be an economic powerhouse in Southern Africa.
The country is richly endowed with lavish natural and human resources both of which can be deployed to transform the country into the Singapore of Africa.
But all things are not equal.
Considering the current economic difficulties in Zimbabwe, it will be easier for a camel to go through the eye of a needle than for the country to attain the upper- middle income status by 2030.
There are just too many self-erected roadblocks to progress including lack of macroeconomic stability, price and exchange rate distortions, currency crisis, inefficient allocation of resources and sluggish exports among others.
Again, the external shocks such as the Russia-Ukraine war, climate change, and the looming global recession are likely to add to further dislocation of Zimbabwe’s economy.
Going forward, Zimbabwe’s economic growth should be increased from its current pace of around 3% to cruising speed of 8-9% per annum for the next seven years.
At the same time, government must urgently address the debt crisis, normalise its international economic relations, and curb illicit financial flows and corruption as well as reform the parastatals without any further delay.
Without addressing these economic and institutional fundamentals, Zimbabwe can only become an upper middle-income economy by 2030 by cooking statistics.
Lastly, instead of hyping the hollow label of upper middle- income status, government will do well to focus on policies that will rescue the country from its true status that is an economically vulnerable “low-income” country rather basing its prognosis on a false label of “lower-income” status.
More crucially, the Mnangagwa administration should ensure that the 2023 general elections are held under peaceful environment in order to set the tone for the post election economic reconstruction agenda.
*Dr Gorden Moyo is the director of the Public Policy & Research Institute of Zimbabwe (PPRIZ). Moyo is also an expert in African agency, public policy, global finance & emerging markets and developing economies.
These weekly articles are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered governance & Accountancy Institute in Zimbabwe. Email- kadenge.zes@gmail.com and mobile No. +263 772 382 852