Excitement is in the air among different stakeholders about Zambia’s reclassification into the Lower Middle Income bracket by the World Bank, but a few meters from its central business district of the capital city Lusaka in a place called Chibolya where people are languishing in abject poverty.
The Zambian government has attributed the country’s attainment of the vision 2030 target of becoming a middle income country 19 years earlier to good economic policies. Zambia’s Finance and National Planning Minister Situmbeko Musokotwane at a media briefing in the capital city Lusaka today stated that good policies have allowed increased investments especially in the mining sector which coupled with huge exports have increased earnings.
Dr. Musokotwane said the reclassification of the Lower middle income status means that the Southern African nation will now have access to non-concessional loans which are high value and good for developing the country; a step ahead of the concessional loans which were limited in nature as the World Bank only offers US$ 70,000,000 under t his category.
“The reclassification now allows us as a country to borrow more for investments as we have the capacity to pay back as has been seen from increase earnings from copper exports,” said Dr. Musokotwane adding that “our status now makes the country known to the international community as a hub for good investment.” And when asked about how soon the gap between the rich and the poor will be narrowed, the Minister stated that the poor are a common sight even in the world’s huge economies.
In a Wednesday edition of the United Kingdom-based newspaper The Guardian the World Bank reclassified Zambia as a middle-income country along with Ghana. The World Bank said the upward adjustment in Zambia’s income growth is a result of foreign aid-driven interventions and surging prices of copper in the last few decades.
“Zambia and Ghana are ranked 27th and 28th among 63 countries which the World Bank has reclassified as middle-income countries since the year 2000,” The Guardian newspaper reported. Low-income countries are those with the average gross national income (GNIs) of less than US$1, 005 per person annually. Lower middle-income countries have per capita GNIs of between US$1,006 per year and upper middle-income countries have per capita GNIs between US$3, 976 and US$12, 275.
The middle-income countries now account for most of the world’s population living in absolute poverty and they need aid allocation models which will take account of poor people and deprivation beyond income. On the Millennium Development Goals, the Guardian newspaper states that Zambia and Ghana have done well although the progress to attain the goals is slow.
“However, in both Ghana and Zambia, the number of children in primary school has climbed along with literacy rates and infant mortality has fallen. Even if they are not on track to meet the MDGs, quality of life is getting much better,” it states.
There are only 35 low-income countries remaining out of the countries being assessed by the world.
ECONOMIC POLICIES FOR FOREIGN INVESTMENTS
Zambia’s provide for externalization of profits by foreign investors as a policy aimed at attracting Foreign Direct Investment (FDI). The Country’s Commerce Minister Felix Mutati and Zambia Development Agency (ZDA) have on several platforms stated that foreign investors are free to bring in as much money as they want and take out as much as they want.
This policy has been attacked by many people like independent Economist Robert Sanyikosa who says affects development of the local economy. Mr. Sanyikosa says that owing to control of mines by foreign investors the reclassification of the country as a Lower Middle Income status has nothing to be excited about because people are still wallowing in poverty in most of Zambia’s rural areas.
“The yardsticks that the World Bank is using to reclassify Zambia is copper exports when allnot all earnings from the venture come back home because of the profit externalization policy,” says Mr. Sanyikosa. His sentiments have been supported by opposition Forum for Democracy and Development (FDD) President Edith Nawakwi has called for change of policies. Ms. Nawakwi is an opposition leader who has never run for presidency during elections since formation of her party in 2001 but only endorses other presidents.
By Brian Mwale.
