VP Mpango, Is Tanzania a Lower-Middle Income Country?

Richard Mbunda Dr Mpango, then Finance Minister, announced to the public in July 2020 that Tanzania is now a lower-middle-income country. But is it true? 

Honourable Mr Vice President, Dr Phillip Isdory Nzabayanga Mpango, greetings from this part of Tanzania! With due respect, allow me, in the first place, to congratulate you for becoming our Vice President. That is a well-earned position given your hard work in the five years you served under the Fifth Phase Administration. The first five-year term as Minister for Finance and Planning only builds on your excellent work as Executive Secretary, President’s Office – Planning Commission, where you had the first-hand experience to learn about the practical side of the country’s economy. I must say, one academic association invited me to write about the legacy of the late Dr John Pombe Joseph Magufuli. One thing I highlighted was that the Bulldozer will be remembered for putting trust in professionals and intellectuals. You are one of those very few intellectuals who had the late President’s trust, and no one can dispute the excellent work you have done for this country except your insolent political rivals.

However, it was you, Mr Vice President, who informed us through the media and in one of your speeches that the World Bank Report of July 2020 has declared Tanzania a middle-income country with a per capita GNI of US$ 1,121. As a permanent student of the international political economy, like any other well-wisher for the betterment of Tanzania, I was elated by the news. Unfortunately, I didn’t manage to get hold of the World Bank report. However, this narrative was a key campaign message in favour of the late Dr Magufuli when he was running for the second term to the oval office. The same message was echoed by the Secretary-General of the United Nations, Antonio Guterres and other distinguished diplomats in the General Assembly’s 59th plenary meeting at the 75th session dedicated to paying tribute to the memory of the late Dr Magufuli. A few weeks ago, when I discussed this very same topic with my students, the question on Tanzania’s current economic status emerged. Have we really graduated?

It is common knowledge that Tanzania was initially included in the Least Developed Countries Group (LDCs) group in 1971.  It was among the 16 countries that the Committee for Development Policy (CDP) in its report of the 7th session recommended to be classified as LDCs. The list of LDCs is reviewed every three years by the CDP, a group of independent experts reporting to the United Nations Economic and Social Council (ECOSOC). The CDP, in its report to ECOSOC, may recommend countries for addition to, or graduation from, the list of LDCs.

Some key criteria 

It is probably imperative at this juncture to remind you of the criteria used by the CDP to review LDCs. This brief article will present some comparative data for reviews of both 2018 and 2021, following the updated version on the United Nations website. There are three criteria: The Gross National Income (GNI) per capita represents the value produced by a country’s economy in a given year divided to its population. According to the 2018 review, Tanzania had the GNI per capita of US$ 902, but in 2021 it has increased the value to US$ 1,031, way above the threshold for being included in the LDC group, which is US$1,018. However, the threshold for graduation is US$ 1,222, which Tanzania is yet to achieve. Countries can graduate by the income only criterion, but it has to be US$ 2,444, which is still a tall order for our situation.

The second criterion used in the review is the Human Assets Index (HAI).  This index covers indicators such as nutrition, literacy rate, school enrolment, and health. While the threshold for graduation is 66 or above, currently (in 2021), Tanzania has recorded the value 61.1 way up from 56, the value recorded in 2018, but below the graduation threshold, which is 66. Tanzania is short of the required value on this criterion.

However, Tanzania was ranking favourably in the third criterion, the Economic Vulnerability Index (EVI), which covers indicators such as the capability to withstand natural shocks, economic shocks, and smallness of the population and remoteness of the country. To be included in the LDCs group, a country must have 36 or above. The benchmark for graduation is 32 or less. In the 2018 review, Tanzania was graded with a value of 27.9, way down from 28.8 recorded in 2015. Sadly, the country has fallen again in the 2021 ranking to the value of 34.7. That’s to say, Tanzania has backtracked on this indicator that it had graduated from 2015.

This brief article does not intend to discredit the excellent work done by the fifth phase administration on waging war against poverty and ensuring that Tanzania progresses towards achieving its Development Vision 2025. A lot of hard work has been directed into the development projects, and I am not amongst those who would deride these efforts. Nevertheless, although we have noted an increase in the GNI per capita, we have also noted a slight slump in the EVI indicators. And as stated above, we cannot say Tanzania has graduated on the GNP per capita indicator alone.

Now, Mr Vice President, I would like to ask a few questions. First, why was this good news about Tanzania graduating to a lower middle-income country reported one year ahead of the review time that we are used to? Second, isn’t the CDP the right entity to deliver the good news after its report of the triennial review in 2021? If the answer to the second question is yes, where does the World Bank fit in this equation of reviewing and recommending the graduation of LDCs like Tanzania? And the last question Mr VP, is, what is our status as a country? Have we graduated from the LDC group?

Dr Mpango, you are one of the top economists in this country and an important figure in our government. I am sure you will see the value of clarifying this issue, given the fact that the Sixth Phase Administration under President Samia Suluhu Hassan has decided to be transparent on economic data. She recently made a revealing submission that the COVID-19 pandemic had triggered some uncongenial effects on the growth of our economy.

I am looking forward to hearing from you, Mr Vice President!

 

Dr Richard Mbunda is a lecturer at the Department of Political Science and Public Administration, University of Dar es Salaam. He specialises in International Politics, particularly International Political Economy. You can reach him through his e-mail address which is rmbunda@gmail.com, or follow him on Twitter at @richiembunda. These are the writer’s own opinion and do not necessarily reflect the viewpoint of The Chanzo Initiative. Want to publish in this space? Contact our editor at editor@thechanzo.com for inquiries.

Dkt Richard Mbunda

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