Tanzanian President John Pombe Magufuli announced yesterday that his country had joined Middle Income Status. “The World Bank has today July 1st 2020 announced Tanzania to have entered the middle income economy. I appreciate my fellow Tanzanians for this achievement. This is great victory and we have worked hard for it since we had planned to reach that level in 2025 but we have succeeded in 2020. God bless Tanzania” shared president John Magufuli on twitter on his twitter handle.
Tanzania enters into that bracket of middle–income countries with a GNI per capita between US$1,006 and US$3,955 per World Bank 2018 classification and joins Kenya and South Sudan as three East Africa Community member states that are middle-income.
Tanzania Had projected to become middle income by 2025, but has now achieved the goal 5 years earlier. Last year, Tanzania recorded economic growth of 7 per cent making it one of the fastest growing economies in Africa. Records show that Tanzania cemented its position of achieving this status in 2017 according to a briefing by the Finance Minister Dr Phillip Mpango in 2019 but was only declared a middle income country on July 1, 2020.
According to the Word Bank, the world’s Middle Income Countries (MICs) are a diverse group by size, population, and income level. They are defined as lower middle-income economies – those with a GNI per capita between $1,006 and $3,955; and upper middle-income economies – those with a GNI per capita between $3,956 and $12,235 (2018).
The World Bank classifies the world’s economies into four income groups namely Low, Lower-Middle, Upper-Middle, and High-Income countries. The classifications are updated annually on July 1 and are based on GNI per capita in current USD (using the Atlas method exchange rates) of the previous year (i.e. 2019 in this case).
The classifications change due to factors such as economic growth, inflation, exchange rates, and population growth influence GNI per capita. Revisions to national accounts methods and data can also influence GNI per capita.
Middle income countries are home to 75% of the world’s population and 62% of the world’s poor. At the same time, MICs represent about one third of global GDP and are major engines of global growth. Tanzania’s GNI per capita is US$1,020. In other words, Tanzania entered the bracket of middle-income countries with a GNI per capita between US$1,006 and US$3,955 per World Bank 2018 classification.
President John Pombe Magufuli was elected into office in 2015 with the motto “Hapa Kazi Tu” (Here its just Work) and has instituted reforms that has seen Tanzania become one of the fastest emerging economies in the region. The country has sustained relatively high economic growth compared to last decade, averaging about 6-7 percent a year. Tanzania’s medium-term outlook is positive, with growth projected at about 6.6 percent in 2020/21, buoyed by large infrastructure spending. Tanzania’s GDP rose from $56.66 billion to $62 billion as at 2020.