THE World Bank has reclassified Zambia to low income status from lower middle income, for the 2023 financial year.
The development comes after Zambia’s deterioration of Gross National Income (GNI) per capita estimates recorded in 2021.
And government says it has embarked on an economic repair, stabilisation and transformation path that will ensure that the country swiftly regains the lower middle-income status at the next assessment.
In a statement, Minister of Finance and National Planning Dr Situmbeko Musokotwane said the new dawn government was keen to reverse the situation.
“The deterioration of Gross National Income (GNI) per capita estimates recorded in 2021 – using the World Bank Atlas Method – has resulted in the re-classification of Zambia by the World Bank to low income status from lower middle income, for the 2023 financial year. To reverse the situation, the New Dawn Government has embarked on an economic repair, stabilization and transformation path that will ensure that the country swiftly regains lower middle-income status at the next assessment or in the medium term; in line with our long-term vision of becoming a prosperous middle-income nation by 2030,” read the statement issued by his ministry.
Dr Musokotwane noted that the country’s macro-economic health became unstable by 2021.
“To give a perspective to what has happened, in 2006, the Zambian people set out their collective understanding, aspiration and determination to become a middle-income country by 2030. This was to be attained through implementation of five-year development plans, the first of which was the Fifth National Development Plan, that in effect, was from 2006 to 2010. Consistent with adherence to the objectives and strategies in the FNDP, the country attained lower middle income status in 2011. Real Gross Domestic product growth between 2006 to 2011 averaged 8.7 percent,” he said.
“The targets in the Vision 2030 were to grow the economy at progressively higher rates from 6 percent real growth over the period 2006 to 2010, 8 percent between 2011 and 2015, 9 percent between 2016 and 2020, and 10 percent over the period 2021 to 2030. This would have resulted in higher per capita income, and redistribution of wealth to reduce poverty and inequality. Unfortunately, by 2021, our macro-economic health had become unstable.”
Dr Musokotwane said the re-classification by the World Bank was looming considering the poor economic performance compared to the targets.
“In our Vision 2030, we had furthermore set other objectives aimed at achieving prosperity, such as entrenching macroeconomic stability and improving the living conditions of the Zambian people through increasing access to safe water, attaining education for all, and providing quality health care for all. The initial growth rate target was surpassed, while over 2011-2015, real GDP growth averaged 5.2 percent, and over the period 2015-2021, real GDP averaged 2.4 percent, contrary to our aspirations of higher growth. Against the foregoing, the country dismally lost the initial momentum of actualizing the vision of the Zambian people. The re-classification by the World Bank was therefore looming, on the basis of the poor economic performance compared to the targets,” he said.
The Finance Minister said the economic stabilisation and governance measures that his government had embarked upon would be pursued with vigor to ensure that the World Bank’s assessment was overturned within the next few years.
“We are determined to reverse the situation. For this reason, the New Dawn Government upon assuming office in August, 2021, committed to actualizing the Vision of the Zambian people. The focus is to stabilize the economy. So far, the Government has managed to bring down the inflation rate, stabilize the exchange rate, and control domestic borrowing by the government. Over the medium to long term, the Government has drawn up the Eighth National Development Plan (8NDP) in which there are strategies to enhance and foster higher growth by focusing on the main sectors of agriculture, agro-processing, mining, manufacturing and tourism,” said Dr Musokotwane.
“Further, Government has embarked on a multi-pronged approach to improve the financial and economic governance of the country. The economic stabilization, growth and governance measures that the Government has embarked upon will be pursued with vigor to ensure that the assessment by the World Bank is overturned within the next few years of the new Dawn administration. We remain resolved to ensure that progress is made towards the Vision 2030, and to turn the economic fortunes of our country around.”