EDITORIAL: Middle-income status is an incentive to do more

Friday July 03 2020
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According to a ‘classification by income levels’ carried out by the World Bank, Tanzania becomes a middle-income economy in the current financial year (2020/21). This is indeed ahead of the schedule incorporated in the country’s National Development Vision 2025.

The Development Vision – which is sought to be concretised through an assortment of strategic programmes that include five-year development plans – envisages a semi-industrialised, middle-income economy for the country by 2025: less than five years hence.

In a manner of speaking, therefore, the government has ‘overtaken itself’ in its bona fide efforts to bring about an all-inclusive socioeconomic development for its people that is sustainable on the ground.

On July 1st of each year, the World Bank updates its classification of national economies, based on gross national income (GNI) per capita in current US dollars, and using the ‘Atlas method’ exchange rates of the previous year (i.e. 2019 in this case).

This time round, the Bank came up with four income groups: low income countries, whose annual GNI per capita is less than $1,036; lower-middle income countries ($1,036-4,045 GNI/capita); upper-middle income countries ($4,046-12,535 GNI/capita), and high income countries, whose annual GNI per capita exceeds $12,535.

Tanzania’s GNI per capita has been assessed by the World Bank at US$1,080 as on July 1, 2020, up from $1,020 on July 1, 2019..


This puts the country in the same group [of lower-middle income economies] with Kenya, while the other four EAC member-countries of Burundi, Rwanda, South Sudan and Uganda languish in the low-income grouping with an annual GNI per capita of $1,035 or less.

This is no crown of jewels, though... We must instead see the slight climb from the low-income level in which we wallowed for more than half-a-century as a spur to better things – and, hence, strive to attain NOT only the upper-middle income status by 2025, but the high-income status soon thereafter.




Banks and other financial institutions are a catalyst in economic development. The agriculture sector has remained underdeveloped, with farmers condemned to perpetual poverty partly because they can hardly access banking services.

Some of the farmers who earn millions of shillings annually are unable to cultivate the savings culture because the nearest bank branch may be all of 100 kilometres away. It is time for banks to go rural to tap the huge potential.

Lack of banks in rural areas has also curtailed the expansion of mobile money transfer services.

For banks to operate profitably in rural areas, however, supporting infrastructure must be in place. We urge the government, therefore, to invest more in upgrading rural roads, telecommunications and social services to attract not only banks but also players in other economic sectors such as agro-processing.

Government-owned banks should also show the way and pioneer in this “go rural” adventure. All banks operating in Tanzania need to expand their branch networks to bring their services closer to both existing and potential customers.