Finance and National Planning minister Situmbeko Musokotwane has said the Zambia’s upgrading from a Least Developed Country (LDC) to a Middle Income Country is a manifestation that the country is being governed under good policies.
Speaking at a media briefing Friday, Dr Musokotwane said it had taken a lot of political courage to get the country to where it has reached economically.
“It required a lot of political courage to change the country’s status from being a least developed poor country to a (lower) middle income country. For us as government, this is very good news because there are so many advantages that will come with this change in ranking,” he said.
The World Bank has awarded Zambia and Ghana the middle income status, ranking the two countries 27th and 28th, respectively.
Dr Musokotwane said although Zambia has managed to achieve the middle income status 19 years earlier than the targeted 2030, the government would not relax but push harder to go even higher in the global economic ranks.
“We have only moved a step higher, the struggle doesn’t end here. Every country desires to reach high income status, and that’s what we will aspire for,” he said.
Least developed countries, under the World Bank classification, are those that have a per capita income of less than US $1,005 while a lower middle income country is one with a per capita income of between US $1,006 and US $3,975.
Upper middle income countries are those with an average income per person of between US $3,976 and US $12, 275.
Once a country attains per capita income of over US $12, 275, it qualifies as a high income economy.
Dr Musokotwane said the government would put measures in place to ensure that the reclassification of Zambia as a middle income country does not plunge the economy into high indebtedness.
One of the advantages of the middle income classification is that the country will now be able to access more funding on commercial basis, as opposed to the previous scenario where Zambia could only access concessional loans because of her poor status.
Dr Musokotwane explained that although concessional loans come with the advantage of low interest rates and the provision to repay over a long period of time, they are usually limited in nature.
He said with Zambia’s new economic status, the country will now be able to borrow more to enhance infrastructure development.
Dr Musokotwane said government would not allow a situation where the economy falls back into a debt trap due to imprudent policies.
He said Zambia had learnt a lot from past experiences that led to the country’s economy deteriorating.
“At independence, Zambia was not a poor nation. In fact, Zambia was a donor. However, the economy declined on the basis of the State running business in key sectors. But with privatisation, year after year since 2000, we have seen the economy improve steadily,” he said.
Dr Musokotwane said the key to ensuring that the country’s economy stays afloat and more people are pulled out of poverty was to continue opening up the market to investments, both local and foreign.
One purported ‘disadvantage’ of Zambia’s new status will be the obvious decline in donor aid, but Dr Musokotwane disagrees that this should be classified as a disadvantage.
“No respectable society wants to survive on begging. The fact that we will have reduced donor aid should not be seen as a disadvantage. Aid doesn’t bring people out of poverty… we’ve been having aid for decades but most of it was about debt relief,” said Dr Musokotwane.