Bank upgrade of Zambia fails to impress
News||14 September 2011|update 77|
The World Bank's reclassification of Zambia from low-income country to lower middle-income country has been hailed as an economic achievement by Zambia's president Rupiah Banda, but is less celebrated in other quarters. Jealous Chirove of the International Labour Organisation (ILO) has cautioned that Zambia still has some way to go to meeting its poverty goals given the unequal distribution of wealth in the country.
Meanwhile, Patrick Mucheleka, of NGO Civil Society for Poverty Reduction, has questioned what the Bank seeks to measure, arguing that instead: "We should be talking about equity distribution of wealth and proper funding of the agriculture, education and health sectors". Noting that Zambia's upgrade can be largely attributed to increasing copper output and favourable metal prices on international markets, he said that: "The money that we are raising from the mines is very little. Is the money from the mines remaining in the country to help us fight poverty? The answer is no."
The upgrade carries with it a new 'blend status' for lending to the country, with Zambia moving from the International Development Association, the Bank's low-income arm, to the International Bank for Reconstruction and Development, the Bank's middle-income country arm. This means that the concessionary lending facilities open to it have been reduced and instead it will borrow at market rates. This led Zambian finance minister Situmbeko Musokotwane to warn against falling into a "debt-trap" that could result from a lack of prudency.
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Published: 14 September 2011 , last edited: 14 September 2011
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