ECONOMICS MADE SIMPLE : Tanzania’s journey to middle income economy: What does it mean?

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This is documented in several places, including in the country’s Vision 2025 under the strong and competitive economy gal. This has also been articulated by a number of politicians, including during 2015 general election campaigns. It is very possible that many Tanzanians do not understand some of the key issues in attaining middle income status.

This is documented in several places, including in the country’s Vision 2025 under the strong and competitive economy gal. This has also been articulated by a number of politicians, including during 2015 general election campaigns. It is very possible that many Tanzanians do not understand some of the key issues in attaining middle income status.
These may include some key leaders supposed to lead the journey towards this status. This article is a humble attempt to highlight some of the key and basic issues for a Tanzanian type economy to migrate to middle income status.
Where is Tanzania now?
The talk about moving to the middle income status as a country necessarily raises the question in which income status is Tanzania now? According to the WB, the country is in a low income status group of countries.
This is a group of countries, whose annual Gross National Income (GNI) per capita by 2015 were between $1,025 (about Sh2,194,000 by the July 2016 exchange rate) or below.
There are about 31 countries in this group of countries. They include Tanzania, Afghanistan, Burundi, Congo, Ethiopia, Liberia, Malawi, Mozambique, Nepal, Somalia, Zimbabwe, Uganda etc. Needless to say the annual GNI per capita is an average. Statistically, there are outliers by way of incomes that are very much higher and lower than this average. This is true in Tanzania as is the case in other 30 low income countries.
Middle income sub-groups
In a bid to become a middle income economy, Tanzanians should understand that there are at least two major sub-groups in this income group. The middle income economies group of countries, as is the case for all other income groups, is not a homogeneous, but a heterogeneous category.
The countries falling in this set are diverse in many aspects, including in income. One of such sub-groups is the low middle income group of countries.
The other one is the high middle income sub-group. Documents and talks mainly by Tanzanian leaders have tended to be general on attaining the middle income status without specifying in which of the two sub-groups the country is aiming at.
Logically, it has to be the low middle income status because that is the next level after the low income status that Tanzania currently belongs to.
Low middle income
This income status is for the countries, whose annual GNI per capita is between $1,026 and $4,035. This is about Sh2,195,640 and Sh8,634,900 going by the average July 2016 exchange rate. There are about 51 countries in this income group. These include India, Ghana, Indonesia, Morocco, Sudan, Tunisia, Pakistani, Bangladesh, Kosovo, Lesotho, Egypt, Kenya, Nigeria, Zambia, Syria etc. Therefore, in its bid to attain middle income status, Tanzania is aspiring to resemble these countries.
High middle income
Upon attainment of the low middle income status the next level for the countries to migrate to the high middle income status. This is a club with annual GNI per capita of between $4,036 and $12,475 (between Sh8,637,040 and Sh26,696,500). There are about 55 countries in this group. They include Algeria, Angola, Botswana, Brazil, China, Iran, Jamaica, Namibia, Russia, South Africa, Cuba, Libya, Iraq, Turkey etc.
High income
The next level after attaining the high middle income status is the high income status. This is a club of rich countries, whose annual GNI per capita is $12,476 (Sh26,698,640) and above. This is equivalent to Sh2,224,886 per month. There are about 79 countries in this income group. They include the US, the UK, France, Germany, Norway, The Netherlands, Belgium, Saudi Arabia, Oman, Japan, Kuwait, UAE, Canada, Australia etc. It will be a tall order for Tanzania to attain this status.
Attaining middle income status
Tanzania’s bid to attain middle income status implies a number of things. Statistically, it implies raising the country’s GNI at a rate that is higher than a population increase.
This is because GNI per capita is total GNI divided by the total population. For a country, whose population is increasing like Tanzania, it is very important to increase Gross National Income and tame population increase. Increasing the GNI implies a lot of things, including having more production of goods and services and associated incomes. Increasing production for its part calls for increased investments.
This calls for improved investment climate inter alia. Attaining the middle income status goes hand in hand with broader development in a number of social, economic and technological variables.
It is very important, therefore, for Tanzania as a whole to understand what it entails to attain a middle income status and what next after attaining this status.

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ECONOMICS MADE SIMPLE : Tanzania’s journey to middle income economy: What does it mean?

What you need to know:

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