Ray of light for region’s economies – The Southern Times

Timo Shihepo

Windhoek In the gloom of COVID-19, Mauritius and Tanzania have cast a ray of light for Southern Africa as the two countries economies continue to grow.

The World Bank recently classified Tanzania as a lower-middle income economy, while Mauritius classification was enhanced from upper-middle to high income.

The World Bank classifies economies in four income groups: low, lower-middle, upper-middle and high.

For its assessment, the World Bank uses gross national income (GNI) per capita, which entails dividing the gross annual income by the population to determine what a person earns on average per year.

The GNI per capita model is linked to indicators that measure social and environmental wellbeing, and classifications are updated every 1st of July 1.

Lower-middle income refers to GNI per capita of between US$1,026 and US$3,995; and upper-middle income as GNI per capita between US$3,396 and US$12,375. A high income economy has GNI per capita of US$12,375 and above.

The majority of Southern African countries are in the broad middle income bracket.

For 2020-2021, the World Bank said Mauritius GNI per capital had risen from US$12,050 to US$12,740, thus making it a high income economy.

Tanzania was this year classified lower-middle income with GNI per capita of US$1,080, up from US$1,020.

We had envisaged achieving this status by 2025 but, with strong determination, this has been possible in 2020. God Bless Tanzania, President John Magufuli said on Twitter after the World Bank published its 2020 classifications.

Tanzania has achieved high growth rates on the back of revenue from natural resources and tourism. The countrys GDP growth from 2009 to date has been between six and seven percent per year.

The government has used fiscal stimulus measures and monetary policy tools to lessen the impact of the global recession, while the country also benefited from low oil prices.

While Tanzania is transitioning to a market economy, the government retains a presence in the telecommunications, banking, energy, and mining sectors.

The economy largely depends on agriculture, which accounts for slightly less than a quarter of GDP and employs about 65 percent of the work force. Gold production has been on the rise and now accounts for 35 percent of exports.

All land in Tanzania is owned by the government, which can lease land for up to 99 years. Proposed reforms to allow foreign land ownership are widely unpopular.

Meanwhile, the Seychelles remains one of Africas top performing economies.

The Indian Ocean archipelago achieved high income status with GNI per capita of more than US$12,000 in 2013, a figure that grew to US$13,990 the following year and surpassed US$17,000 in 2019.

It has the highest GNI per capita in SADC.

With its recent accession to the World Trade Organisation, an upswing in tourism and steady progress towards ocean-floor oil and gas exploration, the Seychelles is on the path to increasing its GNI per capita in the 2021 fiscal year.

On the other hand, Namibias government wants its upper-middle income classification revised as it feels the country misses out on financial facilities available to low-middle and low income economies.

Namibias GNI per capita is US$5,931.45.

Namibias government contends that the criteria used by the World Bank to elevate the country to upper middle-income status did not reflect the reality on the ground.

Namibia's classification as an upper-middle-income country has made it difficult for the country to access loans at favourable rates, and has hampered development efforts, President Hage Geingob has said.

Despite the headwinds brought by COVID-19, which has led to a slump in economic output and massive job losses, South Africa remains classified as an upper middle-income economy with GNI per capita of US$6,374.03.

Read more from the original source:

Ray of light for region's economies - The Southern Times

Related Post

Comments are closed.