They say you can’t succeed without vision and you can’t realise your vision without goals. The Zimbabwean govt has a vision and it has goals. The dream is for Zimbabwe to be an upper middle income economy by 2030. The vision is thus aptly named ‘Vision 2030.’
Of course, the govt knows that to say ‘upper middle income economy’ doesn’t mean much to most. After all, the World Bank says countries with a gross national income per capita between $4046 and $12535 are all upper middle income economies. That’s quite the broad range.
So the Zim govt clarified that the gross national income per capita should be at least US$5000 by 2030. That is the main goal. So we are targeting the lower end of the upper middle income range. It’s a noble goal. Let’s talk about that.
The gross national income (GNI)
Some may not be as familiar with GNI as they are with it’s cousin, GDP. If you know what GDP represents it’s then easy to understand what GNI is.
You’ll remember that GDP represents the total value of all goods and services produced in a country in a given period of time. To get the GNI:
i. The income earned by Zimbabweans living in Zimbabwe but earning income from abroad is added. Income earned by people like remote worker Gwinyai Nyatsoka who is CTO of a US firm whilst resident in Zim does not appear in GDP but is added in to make GNI. We then subtract income earned in Zimbabwe by foreigners.
ii. The rentals, dividends, interest and other property income received by resident Zimbabweans from abroad are added. Whilst the same earned in Zimbabwe by foreigners is subtracted.
iii. We then subtract subsidies on production or imports. The thinking being that a subsidy is payment by a govt to promote production or reduce the producer’s losses. It is really not income they earned, hence the subtraction.
Subsidies
The interesting bit is the subsidy situation in Zimbabwe. We all know about the command agriculture programme through which over US$3 billion was distributed from 2017 onwards. The programme was a huge flop and failed to revive agriculture as was planned. Yet, through the years, the command agric subsidies accounted for around 5.5% of the GDP. Subtracting these subsidies from GDP makes the GNI more useful.
In 2021, subsidies were responsible for about 1.3% of all expenditure up to September. We expect that to rise to 2.5% by the close of the year. In the 2022 budget, we expect 4.9% to go to subsidies. Removing all these transport (ZUPCO), agric subsidies, etc will leave us with a more representative figure of real economic output.
GNI per capita
Simple, here we divide the GNI by the population to get each person’s share of the nation’s gross income.
Now that it’s clear what GNI is, it’s up to you to determine how useful it is as an indicator. Of course, it does not show who is earning the income and so we could have a few companies responsible for almost all of that GDP which determines the GNI.
What is our current GNI per capita?
In 2020 our GNI per capita was US$1090. That means we are a lower middle income economy according to the World Bank. However, we are at the very low end of that range because:
- Low income economy – less than $1045
- Lower middle income economy – $1046 – $4045
- Upper middle income economy – $4046 – $12535
What this means is that the value of the stuff produced, and income from abroad earned by the average Zimbabwean in a year is $1090. That means what a Zimbo produces/earns from abroad per month is around $87. This is low, guys. The World Bank may call this middle income but let’s be honest, it’s way too low.
How have we done in the past?
Zimbabwe reached the lowest point, our rock bottom, back in 2008 when it was $330. We dollarised in 2009 and the GNI per capita grew every single year to a record high of $1410 in 2018. We held our elections that year, the second republic was born and the GNI/capita has been falling every year since. A 23% drop since the elections. If the trend holds, we will be a low income economy for 2021.
This means the second republic has its work cut out for it. The GDP, which is the main component in GNI has been falling since 2018 and so it is no surprise the GNI/capita has been falling too. The GDP is set to grow in 2021 by 5-7%, even by World Bank and IMF predictions and so this year could be the turnaround year we wanted. However, projections also predict 2022 will see a smaller percentage increase. Which will be smaller still in 2023.
The latest IMF World Economic Outlook report of October 2021 projects ….In 2021, Sub-Saharan Africa is expected to grow on average by 3.7%, lower than the global growth rate of 5.9%, ..in 2022 …3.8%
From the 2022 National Budget
While this is growth, around 5% in 2021 and 3.8% in 2022, we are still aways from even just reversing the 23% decline from 2018-2020. Even if we work with our govt’s projected 7.8% and 5.5% in 2021 and 2022 respectively, it’s still not enough to reverse the 23% slide. Let alone to grow the economy by 359% by 2030. Yes, we need to grow by 3.5 times in just 8 years.
Now as we enter the election cycle we know we will lose ground a little bit as politics take precedence over everything else. So 2022-2023 will likely be disappointing. Whoever wins in 2023 will have a tall order, Vision 2030 will be hard to bring to pass.
Are we making progress?
You decide. We have shrunk by 23% since the 2018 elections but expect to grow in 2021. The 5% growth in 2021 is somewhat disappointing in context.
We cannot ignore the negative impact the pandemic has had in the last 2 years. We also predict we will still it’s effects in next few years at least, especially as new variants keep stalling progress.
However, our GNI/capita fell by 15% from 2018 to 2019, before the pandemic. So we had our problems before the 2020 madness. During the pandemic in 2020, we fell by 9%, meaning a smaller percentage drop than in 2019 when there was no pandemic.
2021 will mark progress towards the upper middle income status. However, I think it’s akin to progressing by a metre in a day as you plan to go around the world in 80 days. It is progress but it’s probably too slow to reach the goal by the stated time.
So, I think we can reasonably call Vision 2030 a pipedream. 8 years is too little to attain that lofty goal. However, I hope we do grow at a good rate. Upper middle income status or not, we should see annual growth till 2030.
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What’s your take?