Our early middle income status deserves big cheers

04Jul 2020
The Guardian
Our early middle income status deserves big cheers

PRESIDENT John Magufuli was perhaps the most surprised person among the country’s leaders when the World Bank announced on Wednesday that Tanzania is now classified as a lower middle income country rather than a poor country strictly speaking.

At first instance one wonders if this isn’t one of those statistical ploys where global institutions and their clients, governments, get room to breathe by a positive spin on statistics, but gradually it starts making sense. Its signals or signs have been with us for a while, like rapid annual growth and constantly diminishing foreign aid, apart from a rather rapid reduction of agro-sector activities.

There are numerous other indicators of a middle income status, from the profound to the anecdotal, like having most major city roads being four lanes while ten years ago two lane roads mostly sufficed. Six lane roads are coming up, as are traffic interchange facilities to cut on queues, all of which belie an economy transiting from poverty to relative affluence.  Lately, the government has survived a sharp downturn in tourism earnings without being shaken to its feet, like failing to deliver credible Budget estimates for the next fiscal year. This is what is happening for donor dependent East African Community network of organs of cooperation, lacking a budget.

But as top level economists point out, putting a country’s finances on the right footing with an ethically upright selection of priorities in public expenditure go a long way to explain this early achievement of middle income status, if just at the tail ends of it. Vast improvements in urban and territorial infrastructure as a whole have made it easier for people to invest and a hub of manufacturing to start taking shape. This has been there for decades but diminution of expendables in government expenditure led to a sharp rise in capital expenditure whose needs are more solid, push industry.

To a certain extent also the country has been attracting more foreign capital as the Dar es Salaam Stock Exchange has constantly a greater influx of foreign buyers of shares than local share movement.  Not even in the lists of rich people in Africa or the region is the country being left behind, as datum trending in the wake of this reclassification says Tanzania is the only country in East Africa with a local dollar billionaire, whereas ten years ago this would be virtually unthinkable, that we could quite soon play rivals with Kenya. All isn’t settled yet in that direction but progress is abundant.

Top level explanation of this achievement in a briefing on Thursday touched for instance on tax collection, from 850bn/- towards the peak of the 2014/2015 fiscal year to 1.3trn/- per month as the outgoing financial year was closing. Vast improvements in infrastructure outlays, medical or hospital capacities are illustrations of the value of diligence and painstaking effort to close revenue drain and expenditure loopholes. This deserves our utmost salutations, as no one expected it would be realized too rapidly.

Even the fact that the government was able to pay with relative ease around 7.5bn/- after taxes as the value of two big tanzanite stones, despite that their going price is likely to rise appreciably when placed in cutting and branding markets abroad, is a case in point. When in 1998 total local revenues totaled 720bn/- and the total budget 1.2trn/- how could such payment come about? It was unthinkable, and that is 22 years ago, just.

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