Investor ActivityTanzania

What diplomats can do to attract investment into Zanzibar’s economy

4 Mins read

What diplomats can do to attract investment into Zanzibar’s economy

Zanzibar’s economy is doing well but can do better, especially by increasing its foreign direct investment to boost its blue economy potential.

The island has huge agriculture and tourism potential that is yet to be utilized effectively. Now, Zanzibar President Hussein Mwinyi wants the country’s diplomats to do more to attract foreign direct investment.

Zanzibar President Mwinyi recently aired his views during talks with newly appointed Foreign Affairs and East Africa Cooperation Minister Dr Stergomena Tax, emphasizing the need for what he described as economic diplomacy.

According to President Mwinyi, the Zanzibar economy can do better if the country’s diplomats become more proactive in attracting foreign direct investment. President Mwinyi said Zanzibar’s economy stands to gain from economic diplomacy should its ambassadors sway investors in its favour.

“We need economic diplomacy…this should include wooing investors to come and invest. It is important for us considering that Zanzibar relies heavily on services in the tourism industry for its income,” President Mwinyi urged the ambassador.

The advice, coming from a president, is, as a matter of fact, an executive order, and the newly appointed diplomat did not let President Mwinyi down.

  • Zanzibar President Mwinyi wants diplomats to do more to attract foreign direct investment.
  • Zanzibar is growing its blue economy through aquaculture and leasing of islets.
  • UAE places visa ban on at least 20 African countries.

Ambassador Tax seized the opportunity to pledge to place Zanzibar’s economy on the pedestal in his next visit to China, where he will be accompanying President Samia Suluhu Hassan.

“ We will promote Zanzibar and Tanzania in general so that investors can come to invest, especially in the island’s blue economy,” she promised President Mwinyi.

In response, Minister Tax promised to implement the directives, including consideration of Zanzibar in all dealings that regard the Union government and tasked ambassadors abroad to focus on economic diplomacy and ensure Tanzanians have enough information about the ministry and what is going on in fast-tracking of the EAC integration.

What diplomats can do to attract investment into Zanzibar’s economy
As United Arab Emirates (UAE) places visa bans on 20 African countries, Tanzania president Samia strengthens ties with UAE.

A blue economy: Zanzibar economy overview

Generally speaking, despite global turmoil, including setbacks by the Covid-19 pandemic, Zanzibar’s economic performance has been fairly stable. Zanzibar’s economy is divided into three major sectors, service (tourism, trade, transportation and storage, and other private and public services); industries (manufacturing, construction, and mining); and agriculture (including forestry, crops, livestock, and fishing).

According to authorities, ‘the contributions of these sectors to GDP are 51.7 per cent, 20.1 per cent, and 18.4 per cent, respectively, for services, agriculture, and industries respectively.’

A blue economy, according to the World Bank, is the sustainable use of resources for economic growth, and improved livelihoods and jobs, while preserving the health of the ocean ecosystem. Generally speaking, a blue economy refers to all economic activities related to oceans, seas and coasts.

To promote its blue economy, Zanzibar recently started leasing out small islets surrounding the main archipelago and has already pocketed US$15 million in advance leasing fees for some ten islets.

In his budget speech earlier this year, the Island’s second Vice President, Hemed Suleiman Abdulla, Zanzibar’s economy is expected to grow by 6.8 per cent this year, up from 5.1 per cent in 2021

Similarly, export earnings in the Islands increased 138 per cent from an approximated US$28.1 million in 2020 to US$66.6 million in 202 thanks to increased export of clove and seaweed and of course, the leasing of islets.

To further boost its blue economy, Zanzibar has set aside several Special Economic Zones (SEZ), Free Economic Zones (FEZ) and Export Processing Zones (EPZ). These are strategic policy moves to attract investors since, other than sensitive areas like food and medicines, investors in the EPZ or SEZ are not required to get any extra licensing, making setting up a business much easier, faster and more affordable.

These policies help increase investment in the blue economy and attract foreign direct investment (FDI) through the expansion of exports.

As pointed out, investors operating in these special zones enjoy lean administrative procedures and lower operating costs. Zanzibar already has five free economic zones to increase investment in its blue economy.

As the blue economy grows, so does tourism. In 2021, Zanzibar saw a surge in tourist visits as the number went over 394,200 tourists, up from 260,600 in 2020.

Zanzibar is also building closer ties with the United Arab Emirates (UAE), even as other countries in the East African Community (EAC) are losing favour with the wealthy UAE. Only recently, the UAE announced a visa ban on several EAC countries, including Uganda and Rwanda, all close neighbours to Zanzibar.

UAE places visa ban on 20 African countries

While ties with Zanzibar and mainland Tanzania are growing with the recent signing of agreements to end double taxation, among other deals, authorities in the United Arab Emirates (UAE) recently announced a Dubai visa ban on 20 African countries.

They include Uganda, Rwanda, Ghana, Sierra Leone, Sudan, Cameroon, Nigeria, Liberia, Burundi, Republic of Guinea, Gambia, Togo, Democratic Republic of Congo, Senegal, Benin, Ivory Coast, Congo, Burkina Faso, Guinea Bissau, Comoros and the Dominican Republic.

“Any applications from the above-mentioned countries will be sent back or cancelled,” the UAE authorities warned trade partner authorities along with travel agents, urging them to reject all related applications.

The reason given for the ban is increased visa term violations by persons from the said countries. The UAE authorities explained that persons from these countries are using 30-day visas to Dubai to stay and work in the country illegally.

Before this most recent move, authorities in UAE introduced a requirement that all migrant workers from said countries present police certificates of good conduct before entering the country, but even that did not help.

The UAE authorities also revealed that more than 600 Ugandans who were living in UAE illegally were recent. Annually, the United Arab Emirates (UAE), particularly Dubai, has become a favourite destination for Africa’s migrant labour as thousands look for better-paying jobs in the UAE to improve their lives.

However, with the visa ban, migrant labour to the UAE will see a sharp drop which may, to some extent, allow migrant workers from countries that still have the privilege to find jobs much more easily.




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