This archive report was first published on 5 July 2020.
On July 1, 2020, Tanzania became the second country in East Africa, after Kenya, to be declared a lower middle-income country by the World Bank. This milestone is a testament to the country's economic progress, with a per capita income of at least $1,035 annually.
However, the World Bank's income classification system has its limitations. It lumps together countries with wide income disparities, making it difficult to accurately assess a country's economic situation. For instance, a country with a per capita daily expenditure of $3 or $1,095 annually may be classified as a lower middle-income country, despite having a significant wealth gap.
The World Bank argues that its income classification should not be a basis for funding decisions by multilateral agencies. However, in practice, many countries are assumed to be wealthy and can afford to pay more for goods and services, leading to higher prices and reduced access to essential medicines.
For example, a branded version of a commonly prescribed HIV treatment regimen, Atripla, costs $613 per patient per year in low-income countries, but $1,033 per patient per year in middle-income countries. Such prices are clearly beyond the affordability of many middle-income countries.
While Tanzania's middle-income status brings opportunities, such as increased creditworthiness, it also presents challenges. The country must now navigate the complexities of middle-income classification, ensuring that its economic growth translates into tangible improvements in the lives of its citizens.
