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Chenayi Mutambasere: Demystifying the World Bank income classification

By Chenayi Mutambasere

So yesterday every Zanuoid Tom, Dick and Harry gleefully announced that Zimbabwe has been moved from low income classification to lower middle classification.

Chenayi Mutambasere (Msc Development Economics and Policy) is the MDC UK and Ireland Province Secretary for Industry and Commerce. You can follow her on Twitter: @ChenayiM
Chenayi Mutambasere (Msc Development Economics and Policy) is the MDC UK and Ireland Province Secretary for Industry and Commerce. You can follow her on Twitter: @ChenayiM

Most purported we told you it would work referring to the recently announced Zimbabwe dollar changes. I have attempted to demystify this and explain why this means nothing of nothing for most Zimbabweans and an unlikely indicator to it is working as they claim.

Infact so insignificant is this that even the local Zanu PF economy spinning doctor cum Mary Poppins neglected to give this a mention at all… So here we go

1- the primary purpose of the classification is to understand country lending category . This means it is mostly relevant to ascertain the upper and upper middle income countries so as to determine how much they can be charged for any lending made to them. Given the lower middle income classification and lack of lending available to Zimbabwe this bares little to no relevance.

2- the Gross income used in the calculation is based on the economy currency in relation to USD as per July 2018. Yes in July 2018 the country was on the most part dollarised we were in a different state of play from where we are now.

Infact if you stopped Mangudya or Mthuli in the street at the time they would have told you the bond note was 1:1 with the usd. It is this official rate used to calculate.

We all know a more accurate estimate at the time was perhaps around 1:3.5-4. This was still better to the rates we are seeing now @ 1:10-13. So however good we looked on paper in 2018 as reflected in the classification certainly isn’t reflected today.

3- Gross income isn’t necessarily the best representation of a country’s well-being or economic classification particularly where the majority of the population is either unemployed or in the informal sector. As the world bank rightfully state “Gross National income does not by itself constitute or measure welfare or success in development “. The Gross income figures are solely what is used to calculated the world bank classification.

4- The gross income calculation used by the World Bank doesn’t necessarily consider inequality this means it doesn’t look at income differences between the poorest and the richest income groups within the country. Put simply it is merely a law of averages.

To illustrate this I mean go to the poorest village and tell them their country has been moved from low income to low middle income when they are still having nothing to eat in the same way for the last 3 years. They like you and I will wonder whose income has been used to calculate this.

The evidence on the street of folk purchasing the latest sports car and driving it around in Zimbabwe is enough evidence to support the continuing unequal distribution of wealth in Zimbabwe. The president himself has reported high levels of corruption etc suggesting the money is available in Zimbabwe but it just isn’t finding its way to the general population.

It is that ‘handinakumbodya ini’ response you give at a wedding when your table is wrongfully accused of having eaten at that point when the caterers realise there isn’t enough food to go round.
So a befitting response to the oily lipped Zanuoid telling you we are alright is quite rightly a dry mouthed “Hatisatitadya Isu!”