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REVOLUTIONARY GOVERNMENT OF ZANZIBAR
MINISTRY OF FINANCE AND ECONOMIC AFFAIRS, ZANZIBAR
AN OVERALL ANALYSIS OF MACROECONOMIC FRAME WORK
AND
ASSESSMENT OF ACHIEVEMENT OF MKUZA OUTCOME
DRAFT REPORT
Prof. Samuel Wangwe
In collaboration with
Dr. Mussa Fumu of University of Zanzibar
And
Mr. Ameir Ali Khatib of Ministry of Finance and Economic Affairs, Zanzibar
22nd January 2010
Contents
List of abbreviations.............................................................................................................................. iii
Acknowledgements................................................................................................................................v
Executive Summary...............................................................................................................................vi
1.0 Background and Context..................................................................................................................1
2.0 Objectives and Methodology............................................................................................................2
2.1 Objectives.....................................................................................................................................2
2.2 Methodology and Approach.........................................................................................................2
3.0 Assessment of the overall macroeconomic framework.....................................................................3
3.1 Macroeconomic Framework and Indicators: Trends and Status...................................................3
3.1.1 Gross domestic product.........................................................................................................3
3.1.2 Inflation.................................................................................................................................4
3.1.3 The external sector.................................................................................................................5
3.1.4 Money and Credit..................................................................................................................5
3.1.5 Zanzibar Debt Structure.........................................................................................................6
3.1.7 Employment........................................................................................................................10
3.2 Sectoral Performance..................................................................................................................12
3.2.1 Agriculture...........................................................................................................................12
3.2.2 Tourism...............................................................................................................................14
3.2.3 Industry................................................................................................................................17
3.2.4 Trade...................................................................................................................................18
3.2.5 Cross cutting Issues......................................................................................................20
4.1. Assessment................................................................................................................................26
4.2 Resource Mobilization and Allocation.......................................................................................26
4.2.1 Financial Resources.............................................................................................................26
4.2.2 Human resources.................................................................................................................28
4.3 Institutional set up......................................................................................................................29
i
6.0 Recommendations.........................................................................................................................30
Results matrix Table.............................................................................................................................32
ii
List of abbreviations
AGOA African Growth Opportunity Act
ARV Anti - Retroviral
ASDP – L Agricultural sector development Programme – Live stock
BEST Business Environment Strengthening for Tanzania
CAG Controller and Auditor General
DPP Director for Public Prosecution
EAC East African Community
GDP Gross Domestic Product
HIV Human Immunodeficiency Virus
MACEMP Marine and Coastal Environment Management Project
MDG Millennium Development Goals
MoFEA Ministry of Finance and Economic Affairs
NGO Non- government Organization
PADEP Participatory Agricultural Development and Empowerment
Project
RGoZ Revolutionary Government of Zanzibar
SADAC Southern African Development Community
SMEs Small and Medium Enterprises
iii
SMOLE Sustainable management of Land and Environment
TASAF Tanzania Social Action Fund
TRA Tanzania Revenue Authority
UNFPA United Nations Fund for Population Activities
URT United Republic of Tanzania
USD United States Dollars
ZRB Zanzibar Revenue Board
ZPRP Zanzibar Poverty Reduction Plan
ZSGRP Zanzibar Strategy for Growth and Reduction of Poverty
iv
Acknowledgements
We would like to thank all those who cooperated with us in this study in terms of
giving us information and making relevant documents available to us when we needed
them. In particular we would like to mention the officers in the Ministry of Finance
and Economic Affairs and the Bank of Tanzania.
As usual we take responsibility for any shortcomings that may be noted in the study.
v
Executive Summary
Since 2000’s poverty reduction strategies have been the guiding fundamentals for
growth and poverty reduction in Tanzania. Zanzibar started to implement the second
generation of poverty reduction strategy, known as MKUZA in 2007 after experience
with ZPRP. The thrust of the agenda has been on sustaining broad based growth
which emphasized quality of life, social wellbeing and good governance.
The purpose of this review is to make an assessment of the macroeconomic situation in
the past 5 years with a view to identifying successes and challenges that have been
experienced and suggesting what needs to be done differently in the successor strategy
period. In this regard, the main objectives of the study are three fold;-
i. To assess the overall macroeconomic framework for Zanzibar
ii. To provide overall status of the achievement, failures and the reasons for
each of them paying special attention to allocation of resources and the
institutional set up to support the implementation of MKUZA.
iii. To draw lessons learnt from the MKUZA implementation and thereafter
make recommendations on appropriate steps to be taken to enhance efficient
and effective implementation of the coming strategy.
This study has relied mainly on desk review of existing information and analyses -
studies or reports. The main sources that have been used include the outputs of
MKUZA monitoring system, reform programme reports and macroeconomic and
sector review reports. Outputs from other stakeholders have been used as important
inputs to this study.
vi
The global economic recession and financial crisis, reduced real growth recorded 5.4
percent in 2008 compared to growth of 6.3 percent in 2007 and is expected to decline
further to 4.9 percent in 2009 with the export oriented sectors, remittances and foreign
direct investments likely to be relatively more affected by the crisis.
The rate of inflation reached an average of 20.6 percent for year 2008 compared to
13.1 percent in 2007 and has shown signs of further decline in 2009. Structural
inflation has been significant with food inflation playing a considerable role, a
situation calling for priority on productivity increase in agriculture.
Exports grew by 42.6 percent whereas imports value declined by 13.2 percent
between 2007 and 2008 leading to improvement in the balance of trade deficit during
the same period.
The Government continues to support the Second Generation of Financial Sector
Reforms in order to increase the efficiency of the financial sector in Zanzibar. As a
result, credit extended to the private sectors for short, medium and long term
investment has increased with most credit going to the trade sector.
The average growth rate of the Zanzibar domestic debt stock has been higher than
GDP growth rate suggesting the need for a comprehensive strategy for domestic debt
management. External debt started to decline after 2006/07.
Capital formation has increased but there is room for further improvement of the
private sector component. In order to ensure that there is further increase in private
sector contribution in capital formation, the Government has been implementing the
Investment Policy and taking steps to improve the investment climate, rolling over
BEST programme to Zanzibar and strengthen the institutional framework (the Zanzibar
Chamber of Commerce, Industry and Agriculture (ZNCCIA); the establishment of the
National Business Council).
vii
The Government continues to take measures aimed at improving the quality of the
labour force by reviewing and amending the Vocational Training Act No. 8 of 2006.
The government is promoting employment through SMEs and creating and supporting
labour intensive investment.
The most important sectors are agriculture, tourism, industry and trade. Agriculture is
a major provider of food and livelihoods as it employs about 60 percent of the total
labour force of which 70 percent are women. Tourism is the leading overall foreign
exchange earning in Zanzibar and contributes the largest part of the GDP in services
sub- sector. The manufacturing sub- sector in Zanzibar largely comprises micro, small
and medium enterprises. The Zanzibar investment policy and SMES development
policy emphasized promotion of sustainable industrialization of SMES. The industrial
sector is expected to contribute to transformation and diversification of the Zanzibar
economy. Trade is recognized as a strategic sector and a key driver of in growth in
Zanzibar as it plays an important role in stimulating economic development and growth
of both the productive and service sectors.
Among the cross cutting issues, good governance, HIV and AIDS, gender and
environment stand out as particularly important. The government of Zanzibar and its
people recognize the important role played by good governance in the achievement of a
conducive environment for sustainable development. It is in this context that the
Government has continued to implement several governance reforms such as Public
service Reforms and local Government Reforms.
HIV/AIDS has been recognized as a challenge going beyond the health sector.
Although HIV/AIDS prevalence in Zanzibar is low compared to many neighboring
countries, precautionary measures need to be taken to ensure that HIV does not
become entrenched. The HIV/AIDs policy and the National Strategic Plan has been
formulated tom address this challenge. Gender equality has been recognized by the
government of Zanzibar as a particularly important challenge considering that
traditionally women have been involved more domestic chores and informal sector
jobs that are irregular. Environment is a challenge as land is among the scarce resource
viii
in Zanzibar and all development efforts are competing for access to land and
environmental related resources.
Given the increased resource requirement, the Government emphasizes the need to
have a robust budgeting process and improvement of revenue forecasting by
strengthening the Plan and Budget Guidelines (PBGs) machinery, Inter Ministerial
Technical Committee (IMTC) and Parliamentary Sector Committees. The Government
has scaled-up measures to increase domestic resource mobilization (through ZRB,
TRA and other MDAs) as well as attracting external financing.
ix
AN OVERALL ANALYSIS OF MACROECONOMIC FRAME WORK AND
ASSESSMENT OF ACHIEVEMENT OF MKUZA OUTCOME
1.0 Background and Context
Since 2000’s poverty reduction strategies have been the guiding fundamentals for
growth and poverty reduction in Tanzania. Zanzibar started to implement the second
generation of poverty reduction strategy, known as MKUZA in 2007 following
recommendations from review of the first generation of the Zanzibar Poverty
Reduction Plan (ZPRP). MKUZA, is therefore part of the second generation of
poverty reduction strategies (PRSs) generated strong agenda aiming at sustaining
broad based growth which emphasized quality of life, social wellbeing and good
governance. In Tanzania Mainland, the corresponding poverty reduction strategies
are PRSP (2000) and MKUKUTA (2005). Tanzania mainland started implementing
second generation poverty Reduction Strategy in 2005/2006 or MKUKUTA following
recommendations from review of the first generation Poverty Reduction Strategy
Paper (PRSP).
The second generation poverty reduction programmes have been better harmonized than the
first generation. Both have emphasized growth, human development and governance. The
second generation of PRS has achieved some notable progress through major reform
programmes undertaken by Revolutionary Government of Zanzibar. The Revolutionary
Government of Zanzibar is implementing MKUZA with a focus on three main clusters,
namely Growth and Reduction of Income, Poverty, Social Services and Wellbeing, and Good
Governance and National Unity.
Now that MKUZA is approaching a harmonized terminal year i.e. 2010, the RGoZ
is undertaking this review and make an assessment of the phase of MKUZA which is
ending in June 2010 and contribute to the formulation and implementation of
successor strategies.
1
This study analyzes and evaluates the macroeconomic situation in the past 5 years and
points out successes and challenges that have been experienced with a view to
suggesting what needs to be done differently in the successor strategy period – the
medium term.
2.0 Objectives and Methodology
2.1 Objectives
The main objectives of the study are three fold;-
iv. To assess the overall macroeconomic framework for Zanzibar
v. To provide overall status of the achievement, failures and the reasons for each
of them paying special attention to allocation of resources and the institutional
set up to support the implementation of MKUZA.
vi. To draw lessons learnt from the MKUZA implementation and thereafter make
recommendations on appropriate steps to be taken to enhance efficient and
effective implementation of the coming strategy.
2.2 Methodology and Approach
This study has relied mainly on desk review of existing information and analyses -
studies or reports.
Where possible, data allowing, gender-based analysis has been part of the summary,
in much the same way as the other cross-cutting issues (such as environment, and HIV
and AIDS). This has helped to deepen the “Mainstreaming” agenda for these issues.
Reference has been made to how mainstreaming contributes to the growth effort.
The analysis and assessment study primarily relied on desk review of the relevant
information that was found in various existing documents. The main sources that
have been used include the outputs of MKUZA monitoring system, reform programme
reports and macroeconomic and sector review reports. Outputs from other stakeholders
have been used as important inputs to this study. The lead sectors and other key
stakeholders have been consulted for purposes of updating information in existing
2
documents and seeking their views and interpretations of achievements and
challenges.
The following are some important tools that have been used to collect and verify the
required information;-
i. Desk Review
This method has formed the core of the approach used in this study.
Information that exists in the various available documents and reports enabled
the consultant to assemble the information that has been used in making the
overall analysis and assessment.
ii. Focus Group Discussions
This tool has enabled the consultants to complement the desk review by
verifying and making clarifications on selected issues through discussing with
groups of selected MKUZA actors.
iii. Interviews
This method has been used to tap the views and ideas of key stakeholders with a
view to obtaining insights from knowledgeable persons who have been central
to the process of MKUZA implementation.
3.0 Assessment of the overall macroeconomic framework
3.1 Macroeconomic Framework and Indicators: Trends and Status
3.1.1 Gross domestic product
During 2008, Gross Domestic Product was expected to grow by 6.8 percent.
However, due to the global economic recession and financial crisis, real growth
recorded was 5.4 percent i.e. declining by 14.3 percent compared to a growth of 6.3
percent in 2007. Owing to the global financial crisis the Zanzibar economy is expected
to grow by 4.9 percent in 2009 from the growth rate of 5.4 percent recorded in 2008.
The export oriented sectors, remittances and foreign direct investments are likely to be
relatively more affected by the crisis.
3
The table below shows the trend in growth of GDP and the broad sectors.
Table 3.1: GDP Growth and Broad Sectors, 2003 -2008
2003 2004 2005 2006 2007 2008
GDP at market prices 5.9 6.5 4.9 6 6.3 5.4
Agriculture, forestry &
fishing
4.2 2.8 2.8 18.7 -0.4 5.7
Industry 16.3 12.5 6.6 17.6 4.7 1.6
Services 4.3 6.7 5.3 -2.8 10.4 6.4
Adjustment to market prices 5.9 6.5 4.9 6 6.3 5.4
Source: Zanzibar statistical abstract 2008
However, the outcome would have been even worse if it was not for the
counterbalancing effects of favorable factors such as good rains, timely supply of
agricultural inputs, and healthy competition in the communications sector and growth
in capital formation.
3.1.2 Inflation
The rate of inflation reached an average of 20.6 percent for year 2008 compared to
13.1 percent in 2007. High prices of petroleum products and foods in the world market
are the main factors behind this situation. The inflation rate however has shown a
declining trend in the year 2009, falling to 12 percent in April and to 9 percent in May
2009. The main forces behind this inflation are structural with food inflation reaching
16.1% in 2007. Consequently, structural measures such as increasing local
production and productivity in agriculture have been taken to curb the situation.
Specific programmes that have been implemented in this context include MACEMP,
PADEP and ASSP/ASDP-L.
4
The Bank of Tanzania has decided to enforce the use of Tanzania shilling in all
domestic transaction, the use of bank transfers, banker’s cheque, use of personal and
corporate cheques and use of bank cards in all transactions. Table 3.1 shows the annual
trends of the inflation rate for Zanzibar
Table 3. 2 The Trend of Zanzibar Annual Inflation Rate, 2002 – 2008
Description 2002 2003 2004 2005 2006 2007 2008
Food 6.8 9 10.2 11.9 11.6 16.1 24.3
Non - Food 1.3 8.9 3.5 4.9 11.5 9.5 16.6
All Item 5.2 9 8.1 9.7 11.4 13.1 20.6
Source: Office of Chief Government Statistician, Zanzibar
3.1.3 The external sector
Exports grew by 42.6 percent whereas imports value declined by 13.2 percent
between 2007 and 2008. This has resulted in a 7.7 percent drop in balance of trade
deficit during the same period. The supply capacity of exports continued to be the
main bottleneck.
Table 3.3: Zanzibar Trade of Balance 2003 – 2008 (Tshs Million)
Year Import Export Balance
2003 71,538.90 17,093.30 -54,445.60
2004 79,611.70 14,221.60 -65,390.10
2005 120,700.90 12,703.10 -107,997.80
2006 87,465.30 15,424.30 -72,041.00
2007 107,689.90 21,177.70 -86,512.80
2008 93,439.60 30,189.20 -63,250.40
Source: Office of Chief Government Statistician, Zanzibar
3.1.4 Money and Credit
The Government continues to support the Second Generation of Financial Sector
Reforms which was designed to increase the efficiency of the financial sector in
Zanzibar. As a result, loans extended to the private sectors for short, medium and
5
long term investment has increased. The ratio of loans to GDP increased from 5.9
percent in 2006 to 6.3 percent in 2007 and further to 8.3 percent in 2008.
Overall, bank loans have grown by 2.4 Percent between 2006 and 2008. The largest
share of the loans (about 22.8 percent) went to the trade sector. Agriculture sector,
which employs the majority of labour force, only received 0.8 percent of the loans
extended by the banks. This is mainly due to inadequacies of credit policies and high
lending rates and lack of development finance. In addition, agriculture has been rated
by banks as a risky sector.
Access to micro-loans has been promoted through several interventions, including
AK and JK Funds, with the aim of increasing employment and reducing poverty.
3.1.5 Zanzibar Debt Structure
(i) Overall debt
The total debt stock of Zanzibar as at the end of June, 2009 was TZS 138.329 billion
(US $ 105.979 million). The Debt to GDP ratio stood at 18.8 percent. The external
debt represented 58.4 percent of the total debt equivalent to TZS 80.782 billion while
domestic debt represented 41.6 percent equivalent to TZS 57.547 billion. The
domestic debt includes debt arrears of TZS 7.823 billion while Government stock was
TZS 49.724 billion.
(ii) External debt
The total external debt stands at US $ 62.134 Million (TZS 80.782 billion), of which
US $ 46.445 million accounting for 75 percent is guaranteed by Union Government
while non-guaranteed debt amounted to US $ 15.689 million ie 25 percent. As of
June, 2009, external debt stood at TZS 80.782 billion (USD$ 62.134 million)
representing 58.4 percent of total Debt. The level of debt had declined by 18.7 percent
from TZS 99.416 billion as at 30th June, 2008 to TZS 80.782 billion as at June, 2009.
6
External debt servicing is handled by the URT, while domestic debt comprising
Government securities (Treasury bill/Treasury bonds) are serviced by the RGoZ under
a payment plan agreed with the Central Bank and approved by the Zanzibar Ceiling
Committee. Domestic debt arrears are also serviced through the Consolidated Funds
Services as approved by the Ceiling Committee. External debt is managed in
accordance with benchmarks in the Tanzania National debt strategy.
The composition of external debt is as follows: Multilateral Debt (73.9 percent) ,
Bilateral Debt (5.6 percent), commercial debt (7.2 percent) and others (13.3 percent).
The composition of the Zanzibar external Debt is shown in the table No. 3.4 and the
Chart below:-
Source: Ministry of Finance and Economic Affairs
7
Table 3.4 External Debt Profile, 2003-2009
Details 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
Total External Debt
(TZS ‘000’000’)
67,710 119,738 110,899 131,363 99,416
80,782
External Debt/Total
Debt
57.8 63.8 61 66 64.7
58.4
External Debt/GDP 23.62 34.77 20.08 25.75 -
-
Total Debt/GDP 40.71 54.54 45.95 39.01 23.9 18.8
Source: Ministry of Finance and Economic Affairs, Zanzibar
(iii) Domestic debt
The total domestic debt stood at TZS 57.547 billion comprising government securities
and stocks TZS 49.724 billion (86.4 percent), pension and gratuities of TZS 1.445
billion (2.5 percent), contribution to ZSSF TZS 0.804 billion (1.4 percent) and
suppliers debt TZS 5.574 billion (9.7percent). The duration of government securities
range from one to five years.
The average growth rate of the Zanzibar domestic debt stock has been higher than
GDP growth rate, but below the average growth rate of the total debt for the period
between 2003/04 to 2007/08 (December, 2008). The debt stock increased from TZS
49.33 billion in 2003/04 to TZS 70.66 billion in 2005/06 and significantly declined to
TZS 67.6 billion in 2006/07, also further declined to TZS 53.18 billion in 2007/08. It
increased slightly to TZS 57.55 billion in 2008/09. This trend suggests that there is a
need for a comprehensive strategy for domestic debt management.
The composition of domestic debt is 31.6 percent, ordinary loans (TZS 18.159 billion),
8
13.7percent for government stock (TZS 7.904 billion), 41.1 percent for Treasury
bill/bonds (TZS 23.661 billion), 9.7 percent for suppliers’ credit (TZS 5.574 billion),
and 1.4 percent pension and gratuity (TZS 1.445 billion) and 1.4 percent for
Zanzibar Social Security Funds (TZS 0.804 billion). The chart below depicts the
composition of domestic debt.
Source: Ministry of Finance and Economic Affairs, Zanzibar
The RGoZ ensures that the magnitude of domestic debt in relation to Treasury Bill and
Treasury Bond is in line with policy instruments as negotiated with the BOT and
approved by the Ceiling Committee. Suppliers’ credit is monitored in accordance with
the Public Procurement and Disposal of Public Assets Act no. 9 of 2005 and the Public
Finance Act no. 12 of 2005.
3.1.6 Capital Formation and Investment climate
The total capital formation increased from Tshs 101,323 million in 2006 to Tshs
129,429 million In 2007 and further to Tshs 145, 151 million in 2008. The public
sector component of capital formation has been mainly driven by construction of basic
facilities such as roads, bridges, and social service infrastructures. The private sector
component, (which is mainly composed of investment in residential and non-
residential buildings, e.g. tourist hotels), grew by 20 percent in 2007 and by …in
2008.
9
In order to ensure that there is further increase in private sector contribution in capital
formation, the Government has been improving the investment climate through
implementation of the Investment Policy 2004 and the Act that established the
Zanzibar Investment Promotion Authority (ZIPA).
ZIPA registered investment increased from 45 projects (worth US$ 120.7 million) in
2006/07 to 48 projects (worthy US$ 480.0 million) in 2007/08.
Further steps to strengthen the private sector institutional framework notably
strengthening of Zanzibar Chamber of Commerce, Industry and Agriculture
(ZNCCIA); the establishment of the National Business Council; and dialoguing on
issues process of Public Private Partnership (PPP) and rolling over the BEST
programme to Zanzibar.
Initiatives have been taken to improve access to land and infrastructure. For instance,
efforts to increase access to land rights have made by surveying 3000 and 2000 plots
in rural Unguja and Pemba, respectively while efforts to improve access to affordable
energy have included the implantation of the Rural Electrification Project.
Priority was also given to the road sector and airport infrastructures. About 89 km of
roads were paved in 2007 and 142 kilometer in 2008. Airport improvement included
upgrading of security facilities at the airports, expansion of apron installation and
rehabilitation of flood lights, renovation of airport tractors, and the water supply
systems at the Zanzibar Airport.
3.1.7 Employment
Various studies undertaken in Zanzibar show that large portion of employees is in
informal sector. Agriculture alone accommodates 60 percent. On the other hand
government continues to be a main employer in the formal sector of whom 60 percent
are those at low wage and untrained and these includes daily paid workers, personal
secretaries, assistants to various officers and 40 percent are professionals at different
levels and cadres. Statistics show that 52 percent of the Central government workers
have certificates/Diplomas, 41 percent are those who finished school without any
special training and only 7 percent have First degree and above.
10
Results from the Census made together with the survey on Public Sector Employment
and Wage bill Issues for the Zanzibar Government, show that there were a total of
29,546 employees (16,503 men and 13,043 women). The majority of the employees
are employed on permanent terms (28,082) and a few are employed on special
contract (588) and as daily paid and others.
According to the House Budget Survey conducted during 2004/05 the unemployment
rate stood at 7 percent of the total population. In its efforts to address the problem of
unemployment, the Government has been making progress in promoting SMEs and
creating and supporting labour intensive investment.
The Government continues to take measures aimed at improving the quality of the
labour force by reviewing and amending the Vocational Training Act No. 8 of 2006.
Underemployment
Workers are classified as underemployed if they are willing and able to change their
work situation in order to, for example, work additional hours, or use their skills
better, or increase their income per hour, or work in an establishment with higher
productivity etc. regardless of the duration or productivity of their currently
employment situation.
A total of 60,553 persons were underemployed. Most (60.5 per cent) of the
underemployed persons fall under ages 15-34 years, led by the age group 20-24,
which alone have 18.9 percent of the total currently underemployment. In urban areas,
persons aged 15 – 34 years make 64.4 percent. Rural areas lead having 60.0 percent of
the total currently underemployment, of whom 32.8 percent were rural male alone.
Generally, underemployment is dominated by persons who have attained O-level
education and below.
Half of the rural underemployed persons are those engaged as unpaid family helpers
in agricultural activities (50.0 percent). Rural males take the leading position having
59.7 percent and females 38.3 percent.
Employment in the Informal sector
11
A total of 144,147 persons were engaged in informal sector; majority (45.4 percent)
in the age groups 20-34. In rural areas, the informal sector was more dominated by
persons with age group 15-19 accounting for 18.0 percent, while in urban areas 16.9
percent were found in the age group 30-34.
Unemployment
Unemployment rate is the ratio of the number of unemployed persons to the labour
force expressed as percentage. The unemployed is defined as all persons of 15 years
of age and above who during the reference week were “without work, available for
work and seeking work.”
A total of 28,451 persons out of 614,986 working age population (4.6 percent) were
found to be unemployed; 17.7 and 82.3 percent in rural and urban areas respectively.
The overall unemployment rate is 5.5 percent i.e. out of the total labour force 5.5
percent were unemployed. In rural areas, the unemployment rate is 1.6 percent
compared to 11.4 per cent in the urban areas. The age groups that experienced the
highest unemployment rate were 20-24 years with 13.0 percent (more than double the
average) followed by age group 25-29 years.
3.2 Sectoral Performance
3.2.1 Agriculture
Agriculture is among the most important economic activities in Zanzibar as a source
of livelihood and the main source of food (influencing inflation through food
inflation). The share of agriculture in the total GDP has fluctuated from 29.5 percent
in 2006 to 27.5 percent in 2007 and to 30.8 percent in 2008. This sector employs
about 60 percent of the total labour force of which 70 percent are women.
It also provides an average of 75 percent of foreign exchange earnings and 30 percent
of tax revenues.
As a thrust of MKUZA, agriculture is to increase budget allocation from xxx in 2007
and 10 percent of the national budget in 2010. The 2009/2010 budget allocation is
xxx percent of the national budget. Available statistics show that, agriculture sector
12
declined by 1.7 percent in 2007 as compared to an increase of 4.7 percent in 2006.
Between 2007 and 2008 the sector grew by xxx percent. Projection for 2009/ 10 are
xxx percent. The decline in this sector was mainly attributed to the decline in crop
production (mainly cloves), bad weather conditions, high prices of agricultural inputs
(pesticides , fertilizers, seedlings etc), plants and animal diseases, low level of
modernization and low level of private sector investment in the sector. Increased theft
events for agricultural crops and livestock also contributed to demoralizing the
farmers while unplanned and uncoordinated extraction of sands and deforestation
contributed to land degradation.
During the period under review the government has taken a number of steps to
develop the sector by implementing a number of policies and programs. These
include:
i. Agricultural Policy
ii. Food Security and Nutrition Policy Programs
iii. Irrigation Master Plan
iv. Agriculture Support Services Programme (ASSP)
v. Agriculture Sector Development Programme – Livestock (ASAP – L)
vi. Participatory Agriculture Development and Empowerment Project (PADEP)
vii. Marine and Coastal Management Project (MACEMP)
These efforts have contributed to the growth by 5.7 percent in 2008 as compared to
negative 0.4 percent in 2007. Favorable weather condition also helped.
The table below shows the trend of growth in agriculture.
Table 3.5: Agricultural GDP Growth Rate, 2003 -2008
13
2003 2004 2005 2006 2007 2008
Agriculture, forestry & fishing 4.2 2.8 2.8 18.7 -0.4 5.7
Source: Zanzibar statistical abstract 2008
However, the growth of agriculture sector is expected to increase further as
government policies and programmes mentioned above are fully implemented
3.2.2 Tourism
Tourism is the leading overall foreign exchange earner in Zanzibar, has great
economic potentials and continues to contribute the largest part of the GDP in services
sub- sector. According to statistical classification, tourism is embedded within the
wholesale and retail trade, restaurant and hotels sub- sector. Owing to this
classification it is difficult to determine official estimates for the tourism contribution
to the Zanzibar GDP.
Tourist arrivals have shown a fluctuating trend between 2006 and 2008. There has
been an increase in the number of tourist arrivals from 137,111 in 2006 to 143,263 in
2007 but declined to 128,440 in 2008 due to the global economic recession and
financial crisis. Most tourists came from Europe (Italy, Britain, Scandinavian
countries and Germany), the America and Canada and South Africa.
Table 3.6: Annual Recorded of Tourist Arrivals in Zanzibar by Country, 2003 –
2008 (in numbers)
Country 2003 2004 2005 2006 2007 2008
Scandinavia 4,642 5,616 7,052 8,400 8,807 8,791
German 3,245 3,526 4,347 4,794 7,091 6,990
Britain 7,945 9,810 12,963 14,180 14,204 12,949
Italy 18,586 29,278 50,037 49,658 52,046 41,610
14
France 2,907 3,389 3,085 4,838 4,255 3,958
Other Europe 13,816 16,087 17,777 18,329 18,744 14,740
America/Canada 4,137 4,949 6,915 8,624 10,328 10,100
Other America 197 911 310 491 577 590
Kenya 2,276 2,735 3,231 3,857 3,924 4,722
South Africa 3,170 4,595 8,993 11,769 9,246 8,746
Other Africa 1,420 1,723 1,874 2,618 2,863 3,744
Japan 540 566 571 678 915 727
Other Asia 1,807 2,913 4,406 4,169 5,572 6,326
Australia/New Zealand 3,677 3,597 3,961 4,706 4,693 4,452
Total 68,365 89,695 125,522 137,111 143,265 128,440
Source: Zanzibar Commission for Tourism
There has been an increase in the number of tour operators, tourists’ hotels (five, four
and three stars). The expectation is that the increase of these facilities will continue to
attract more tourists. Correspondingly, the number of tour operators, tourist hotels
(five, four, and three stars) has been increased.
Employment in this sector has shown an increasing trend between 2006 and 2008.
Projections for year 2009 put the figure of the employed persons in the tourism sector
at a higher level compared to 2008, a sign of recovery from the global recession.
Despite the above achievements, the tourism sector still faces a number of challenges,
such as;-
a) Inadequate number of local Zanzibaris who are well trained in tourism related
jobs and willing to work in the sector. Many hotels employ people from outside
Zanzibar. Greater employment of Zanzibaris would enhance the benefits
derived from the growth of the tourist industry.
b) Weak linkages between tourism and other sectors of the economy, such as
agriculture,
c) Low quality products
15
d) Low service standards and providers
e) Limited capacity to provide quality services at air and sea ports.
In order to develop the tourist industry, the government has taken a number of
steps to address the above challenges:
Several interventions have been directed towards enhancing the expansion and
improving quality delivery in tourism sector, enhancing the expansion and quality
delivery in this sector and promoting the marketing function, training and SMOLE.
The marketing function has been enhanced with the Government production of
calendars and leaflets and the publication of Karibu Zanzibar magazine and
enhanced par5ticipation in international trade fairs.
Other interventions through the Sustainable Management of Land and
Environment (SMOLE) are geared towards laying a solid foundation for expansion
of investments in tourism facilities. Under the programme, the Government
reviewed and recommended 43 areas, along the shore, for tourist activities. The
Government also assessed 24 land applications for hotel construction during the
period under review.
However, the Government has responded to these challenges in several ways,
including preparation of the Marine Tourism Management Plan. Further, the
Government plans to prepare Tourism Cultural Policy.
3.2.3 Industry
The manufacturing sub- sector in Zanzibar comprises micro, small and medium
enterprises. These include wood works, bakery products, mineral water, lime
making, traditional wearing and animal feed. The contribution of this sub-sector to
the economy has been relatively low and stagnant during a period from 2006 to
2008.
16
The share of manufacturing sector declined from 4.6 percent in 2006 to 4.5 percent
in 2007 and 4.3 percent in 2008. This was mainly due to the collapse and closure
of some activities e.g. the wheat flour industry due to port rehabilitation which
inhibited docking of large ships.
Furthermore, production of mineral, water video tapes jewellery and soft drinks
slumped during 2007 mainly on account of shift competition from imported
products
Production of bakery and wood products clothes and animal feed exhibited modest
improvement responding to increased demand in domestic market.
Table No. 3.7: Production of Selected Industrial Commodities
Jan- March
COMMODITY UNIT 2007 2008 2009 % Change
Animal feed Tons 1115 215 215 0 -100
Breads. No.
000's
97,960 108,942 24,490 25,500 4
Beverages Ltrs.
000's
9935 9417 2584 2850 10.3
Video/Audio Tapes Ctns 80687 61167 16201 15200 -6.2
Dash Dash Fashion
(Clothes)
Pcs 5338 3778 642 650 1.2
Jewery (Gold and
Silver)
Grms 7563 7526 1718 1780 3.6
Noddles Kgs 58807 71072 14702 15200 3.4
Source: Office of Chief Government Statistician
The Zanzibar growth strategy (2005-2015) has identified the manufacturing sector
as among the important sectors in its strategic objectives and the Zanzibar
investment policy and SMEs development policy emphasized promotion of
sustainable industrialization of SMEs. The potential for raising its contribution to
the economy is abundant through promotion of micro, small and medium
enterprises.
Government efforts to develop the manufacturing sector include the following:
17
Transform the Zanzibar economy to move diversified and industrialized
economy with emphasis an agro-and marine product processing;
Promote SMEs whose products can sell in the domestic and export markets;
Identify and promote micro enterprises that have potential for output
expansion employment generation.
Policy formulation and dissemination of policies e.g. distribution of 5000
brochures on industrial/trade policy on SMEs;
Preparation of industrial Database;
Stepping up training and human resource development (e.g. providing
entrepreneurship and food processing skills to 205 operators).
3.2.4 Trade
Zanzibar Growth Strategy recognizes trade as its strategic sector contributing to
the major economic growth sectors touching a large sphere of human life. Trade
plays an important role in stimulating economic development and growth of both
the productive and service sectors. The geographical location of Zanzibar helps
trade to be a strategic sector that plays a central role in Zanzibar economic
activities.
Zanzibar vision 2020 has outlined a number of longterm objectives for the trade
sector. During the period under review, government has implemented a number of
strategies to improve the sector. These strategies include;-
Formulation of the Zanzibar Trade Policy and the SME Development Policy
Strengthening of Public Private sector Partnership (PPP)
Creating an enabling environment for trade and development for growth and
poverty reduction;
Implementation of Interrelated Program on SMEs
18
Source: Tanzania Revenue Authority, Head Quarter- Dar Es salaam
A major problem that contributed to this is the low supply respond of the export
activities and the low level of competitiveness. Other challenges include;
To promote trade by taking advantage of the geographical location of Zanzibar
Promoting fair trade practices and improving quality and enhancing capacity
to produce competitively
Transforming Zanzibar to be a Special Economic Zone (SEZ) with conformity
to East African Community (EAC) Frame work.
Adhering to EAC tariffs within the specified period of EAC treaty
Reduce high cost of production such as electricity power (rates and
availability), taxes and input prices 9 oil imports, raw materials, etc).
To enhance openness and integration of Zanzibar Economy to Global
economy.
To overcome the problems of domestic market
Improving access to credit to financial sector
The main drives and opportunities for growth in the trade sector include;
Strategic geographical location of the islands
Long history of trade between Zanzibar and the rest of the world
Positive mindset of the peopleA about trade
Availability of natural and historical Resource Endowmwnt ( fish,
spices,tourists attraction, cloves etc)
Enabling Trade Policy Framework inplace
Special trade agreements , AGOA, ABA etc
19
Belonging to regional intergration groups, eg EAC, SADAC, IOR etc
Investment Promotion Authority as a One Stop Center
3.2.5 Cross cutting Issues
Among the cross cutting issues, good governance, HIV and AIDS, gender and
environment stand out as particularly important.
(i) Good governance
The key institutions of governance in Zanzibar include the President’s office the
cabinet, ministries, departments, regional and district authorities, Constituencies,
parastatal organizations, judiciary, the electoral system and House of
Representatives.
The government of Zanzibar and its people recognize the important role played by
good governance in the achievement of a conducive environment for sustainable
development. The challenge is to enhance efficiency of government institutions,
enhance the implementation capacity, streamline the cumbersome decision making
processes and clarify the demarcation between the three arms of the Government
combined with improving the relationship between Government and other actors in
society.
The government is working towards removal of all forms of discrimination,
minimizing political tensions and enhancing the role of non-state actors are
important components in the designing and implementation of MKUZA. In this
regard, the Government has continued to implement several governance reforms
(e.g. Public service Reforms and Local Government Reforms) with the aim of
creating a conducive environment for the promotion of pro- poor growth and
development of poverty reducing policies. Furthermore, initiatives have been taken
to promote effective participation of Non – State actors (NSAs), Non- government
organizations (NGOs), Faith Based Organizations (FBOs), Community Based
Organizations (CBOs) in the public policy processes. Moreover, the government
20
has taken special efforts to involve private sector in policy making process though
Public Private Sector Partnership (PPP).
The Directorate of public prosecution has taken over the prosecutions functions
from the police and civilianized them and depoliticized the prosecution activities
which were originally handled by the Attorney General’s Office. All prosecution
functions at the District level to the High court are now being handled by DPP’s
office. Other efforts taken by the government include acceptance of the Tanzania
Human Rights Commission to extend its duties to Zanzibar. The commission is
now headed by the Resident Commissioner.
The Penal and criminal Procedure Acts of 2004 have been reviewed. Acts No. 3
and 4 of 1995 and No. 1 of 1998 have been reviewed in order to strengthen linkages
between the government and the society. In addition, the government also provides
Civic Education on human rights and good governance to the public.
Local government capacity has been strengthened making their participation in
governance activities more effective. Other efforts taken during the period under
review also include: formulation of an NGO Policy; Involvement of civil society
in the PER process that has contributed to MKUZA monitoring and evaluation; the
establishment of Zanzibar Chamber of Commerce, Industry and Agriculture
( ZNCCIA); Establishment of the Zanzibar Business Council in operationalising the
Public Private Sector Partnership in the policy dialogue processes; Programmes to
promote women participation in development and encouraging girls to opt for
science subjects.
The following challenges need to be addressed:
a) To correct the perception among the public that issues of good governance are
the responsibility of the Ministry of Good governance and institutional Affairs
only;
21
b) Build the capacity of MDAs in streamlining good governance issues in
different levels of the institution and developing qualified human resources to
implement good governance
c) Improving coordination of implementation and monitoring of good governance
issues.
(ii) HIV/AIDS
The Tanzania HIV and Malaria Indicator Survey (THMIS) 2008 estimated HIV
prevalence at 0.6 percent in Zanzibar. This rate is similar to what was estimated in
2002 through a validation study conducted by ZAC.The most affected group is men
and women aged 15-49. Although HIV/AIDS prevalence in Zanzibar is low
compared to many neighboring countries, the Zanzibar National HIV/AIDS
Strategic Plan 2004/5-2008/09 has acknowledged that precautionary measures need
to be taken to ensure that the pandemic does not become entrenched.
During the period under review, the RGoZ has implemented a number of strategies
and interventions through the HIV/AIDs policy and the National Strategic Plan.
The interventions include:
Enhance awareness and knowledge among various groups in society through
the use of the media, community dialogue/conversion and support to
community initiated HIV/AIDS education interventions.
Provision of education to young men and women aged 15-24 including those
groups regarded as being at risk (e.g. drug abusers and commercial sex
workers)
Encouraging abstaining and use of condoms.
Encouraging progress has been made in enhancing awareness. About 99 percent of
the Zanzibar population aged 15-49 years are now aware of the HIV/AID epidemic.
Provision of HIV care and treatment services to PLHAS has increased with the
number of patient enrolled under the HIV care and treatment programme increasing
from xxx in 2006 to xxx in 2008 of the total number enrolled, xxx particular are
22
ARV. HIV prevalence among the pregnant women aged 15-24 years attending
anti-natal clinics (ANC) has declined from approximately 1 percent in 2006 to 0.05
percent in 2008. This implies a significant decline beyond the MKUZA target of
reducing the HIV prevalence among the said age group from 1 percent to 0.05
percent by 2010.
However, challenges remain. As low as 8 percent are reported to be using the
abstaining method and the proportion of men and women using condoms is
estimated at 32.9 percent and 20.3 percent respectively. Some progress has been
made in fighting stigma surrounding HIV and AIDS. This indicates that 90.5
percent of women and 94.6 percent of men aged 15-49 are willing to take care for a
family member with HIV.
(iii) Gender Equality
Gender equality calls for equal access to development opportunities, education,
social welfare and legal rights for all in the society. The government of
Zanzibar recognized that women traditionally been involved more in domestic
cores and informal sector where the earnings are very low and irregular.
Available statistics show that women constitute only 36.4 percent of the total
employees in the formal sector and most of them occupy low level positions.
Women travel long distances fetch water and collect fire wood for domestic
use. Gender disparity is also marked in different areas - employment, access to
education and involvement in decision making process
Initiatives have been taken on affirmative action for women welfare and
development to promote the contribution of women in economic activities.
These include:
- The ministry of labour, youth development, women and children in
collaboration capacity building consideration of gender issue in
development policies and plans including abolition of sexual harassment;
23
- Establishment of task force which will work towards the inclusion of
gender issues in development policies, programs and government laws;
- Promoting the provision of credit to women. The government has set
aside special provision in MLYWCD for lending to women entrepreneurs
- Making effort to enhance access to supply clean and safe water and
electricity.
- Review of Zanzibar constitution in 2003 increased the the percentage of
special seat for women in house of representative from 25 percent to 30
percent.
Table 3.8 : Representation of Women in Decision making Posions
Position /Y ears 2,006 2007 2008
Male Female Male Female Male Female
Members of House of
Representatives
61 18 61 18 60 19
Ministers 9 4 9 4 9 4
Deputy Minister 5 1 5 1 5 1
Pricipal Secretary 14 1 14 1 13 2
Deputy Principal
Secretary
8 2 8 3 8 2
Regional Commisioner 5 0 5 0 5 0
District Commisioner 9 1 9 1 8 2
Source: Ministry of Labour, youth women and children development (2)
(iv) Environment
Land is among the scarce resource in Zanzibar. All development efforts are
competing for access to land and environmental related resources. Owing to
this the RGoZ recognizes the importance of proper management of the existing
renewable and non renewable natural resources in order to ensure future
24
prospects in terms of environment, food security, and overall social economic
development.
Zanzibar’s vision 2020 advoates intergration of environmental issues with
development objectives so as to ensure sustainable socio-economic
development.
The high population growth rate of 3.1 percent per annum continues to put
pressure on demand for environmental related resources. Zanzibar relies a great
deal on wood products for cooking. It is estimated that 96 percent of the
population use solid fuel that includes firewood and charcoal. The proportion is
higher in the rural areas (98 percent) compared to urban areas (93
percent)Reports show that about 500 hectres of coral rag forest is cleared each
year for fuel wood and presume on mangroves building.
During period under review a number of government efforts have been
undertaken, including; Implementation of various programs aimed at poverty
reduction and environmental protection, such as ; Sustainable management of
land and Environment (SMOLE); Management of Coastal Environment
Program (MACEMP); Review of Economic investment projects in order make
environmental impact assessment (for instance during 2008 about 19 projects
have been financed by TASAF); Sensitization of community on forest
conservation and bee keeping. The government also through MACEMP and
other mechanism and in collaboration with JSDF and GEF has been
implementing a number of projects aimed at environmental conservation and
poverty reduction. For example, a total of 195 projects worth Tshs 3 billion
have been financed by MACEMP through TASAF during 2008/09. In addition,
a total of 100 projects worth USD 8.1 million were planned to be implemented
during 2009/2010.
Despite these government efforts, the following main challenges need to be
addressed;-
25
Better control over and management of urban development
Spreading the practice of subjecting investments projects to
Environmental Impact Assessment (EIA)
Address land and environmental management issues in reducing poverty
and enhancing economic growth.
4.0 Overall Assessment of Implementation: Achievements and Challenges
4.1. Assessment
Among the challenges is the increase in oil and cereal prices in the world markets,
which had triggered inflationary tendencies in the economy.
4.2 Resource Mobilization and Allocation
4.2.1 Financial Resources
MKUZA costing exercise in 2007/08 revealed that financial requirements were as
follows:
Given the increased resource requirement, the Government emphasizes the need to
have a robust budgeting process and improvement of revenue forecasting by
strengthening the Plan and Budget Guidelines (PBGs) machinery, Inter Ministerial
Technical Committee (IMTC) and Parliamentary Sector Committees.
The Government has scaled-up measures to increase domestic resource mobilization
(through ZRB, TRA and other MDAs) as well as attracting external financing.
Domestic revenue increased by 23.3 percent in 2007/08 compared to 2006/07 and
further to 26 percent in 2008/09. Due to power failure which occurred August 2008
and December to February 2010, government revenue are expected to decrease
substantially and thus affect the whole economic projections
26
In 2006/07, external resources were estimated at Tshs 124,783 million (of which Tshs
95,587 million was from DPs and 29,196 million from GBS and MDRI). In 2007/08,
external resources were estimated at Tshs 156,305 million (of which 119,141 million
was DPs and Tshs 36,164 million was from GBS and MDRI). In 2008/09 external
resources were 173,752.
The fund allocation for development programs shows a good rend especial for cluster
one and two but cluster three seems to somehow volatile as shown in table No. 4.1 .
The execution rate of the development budget is unsatisfactory and has been inhibited
by delays in disbursement and inadequate human resource capacities in procurement
procedures.
Table No. 4.1: Allocation for Development Projects, Cluster wise ( Tshs 000’s)
2007/08 2008/09 2009/2010
91,974,351 123,464,318 145,724,280
46,460,434 61,206,096 80,418,656
17,218,417 7,603,421 13,769,947
Source: Ministry of Finance and Economic Affairs, Zanzibar
Efforts have also been directed to improving budget transparency and reporting. The
steps taken in this direction are including computerization of Integrated Financial
Management System (IFMS) and Zanzibar Strategic Budget Allocation System
(ZBAS). Quarterly, semi annual, and annual sector (MDA level) performance reports
are prepared as a part of routine data system which are expected to contribute towards
MKUZA implementation. At the central level, MOFEA, (the Department of Economic
Management and Budget) produces flash report on a monthly basis.
The CAG and the House of Representatives remain active in providing budget
oversight and accountability.
The Government started implementing reforms in economic and financial management
by taking the following steps…….
27
Challenges faced in mobilizing resources for MKUZA implementation include
inadequate domestic and external resources, dependency on taxes on international trade
(which is erratic), delays in disbursement and lengthy procurement procedures,
inadequate coordination of budgetary allocation within and across MKUZA clusters,
weak monitoring and budget execution reporting due to institutional and human
capacity constraints.
4.2.2 Human resources
Human resources is the most important resource as compared to other factors for
socio-economic development in any society.
The currently active population or the labour force comprises all persons aged 15 years
and above for inclusion among the employed or the unemployed, which together form
the Labour Force.
A total of 513,032 (aged 15+ years) persons were found to be currently economically
active out of the total working population of 614,987 people. Majority of them
(308,436 people) equivalent to 60.1 percent were found in the rural areas compared
with (204,596 people) or 39.9 percent found in the urban areas.
Currently male employees seem to dominate by making up 51.5 percent and females
48.5 percent. Rural areas have 303,402 (62.6 percent) of the total currently employed
persons while urban areas account for 181,178 (37.4 percent). Out of the total, urban
areas have 54.5 percent male and 45.5 female currently employed persons, whilst rural
areas have 49.8 percent male and 50.2 percent female currently employed persons.
Table No. 4.2: Percentage Distribution of Currently Employed Persons 15+ (Main Activity) by
Education Level Attained, Area and Sex.
Education Level
Attained
Rural Urban Total
Male Female Total Male Female Total Male Female Total
No Education 26.5 42.2 34.4 6.7 15 10.5 18.7 32.7 25.5
Primary Education 39.3 27.9 33.6 32.5 30.3 31.5 36.6 28.8 32.8
28
Lower Secondary
Education
26 24.7 25.4 36.8 36.3 36.6 30.3 28.8 29.6
Secondary Education(O
level)
6.9 4.9 5.9 19.3 16.4 18 11.8 8.9 10.4
Secondary Education (A
Level)
0.6 0.2 0.4 3.9 1.5 2.8 1.9 0.7 1.3
Tertiary non University 0.6 0 0.3 0.3 0.4 0.3 0.5 0.2 0.3
Tertiary University 0 0 0 0.5 0.1 0.3 0.2 0 0.1
Total Percent 100 100 100 100 100 100 100 100 100
Total Number 150,969 152,434 303,402 98,805 82,373 181,178 249,774 234,807 484,581
Source: 2006 Integrated Labour Force Survey
4.3 Institutional set up
Zanzibar Strategy for Growth and Reduction of Poverty (ZSGRP) aims at achieving
growth and reeducation of income poverty; Social Services and well-being and Good
governance and national unity. This requires a well organized and coordinated
institutional arrangements from planning stages through implementation stages and to
the monitoring and reporting stages. Effective and efficient linkange between
planning, implementing and monitoring are very important to the real achievement of
ZSGRP.
Current set up of MKUZA implementation (institutional) frame work is well
designed and enabled to achieve the MKUZA goals, but it needs strong and effective
monitoring, evaluation and reporting system in place at every area and stage of
implementation and corrective measures taken as and when need arise.
29
5.0 Lessons from Implementation
(i) Most of the drivers of inflation come from outside and from agriculture.
(ii) Low productivity in the agricultural sector and high dependence on rain-fed
agriculture results in low and seasonally fluctuating in production, thus
unstable food security.
(iii) Exports are not sufficiently diversified and the supply capacity is low.
(iv) Access to finance especially investment finance and finance to SMEs and
agriculture has continued to be limited.
(v) Shortage of qualified personnel continue to inhibit competitiveness in many
sectors.
(vi) The average growth rate of the Zanzibar domestic debt stock has continued
to grow fast a situation which is not sustainable.
(vii) The investment climate is improving but more but there is much room for
improvement.
(viii) The infrastructure sector is still characterized by high cost, low quality
services with unsatisfactory level of safety and environmental sustainability.
(ix) Domestic resource mobilization and robust budgeting processes and
promotion of revenue forecasting capacity deserve greater attention.
Coherent policy guidance and coordination in the planning and development
of harmonized interventions needs to be improved.
6.0 Recommendations
Structural inflation has been significant with food inflation playing a
considerable role, a situation calling for priority on productivity increase in
agriculture. It is recommended that special attention be paid to increasing
investment in agriculture with a view to improving the agricultural supply
capacity and productivity in the sector.
Exports grew by 42.6 percent which is encouraging. It is recommended that
greater effort be placed on enhancing diversification and the supply capacity.
30
The Government should continues to support the Second Generation of
Financial Sector Reforms in order to increase the efficiency of the financial
sector in Zanzibar and in particular enhance access of the private sector to credit
for short, medium and long term investment .
The average growth rate of the Zanzibar domestic debt stock has been higher
than GDP growth rate. It is recommended that a comprehensive strategy for
domestic debt management be formulated.
It is recommended that capital formation be promoted especially the private
sector component by making concerted efforts to improve the investment
climate and strengthen the institutional framework for private sector
development.
The Government should continue to take measures to improve the quality of the
labour force;
Employment should be promoted through SMEs and creating and supporting
labour intensive investment.
The most important sectors are agriculture, tourism, industry and trade. These
should be promoted as key drivers of growth.
Cross cutting issues, notably, good governance, HIV and AIDS, gender and
environment stand out as particularly important. These should be mainstreamed
into the policy and planning framework.
The Government should step up measures to improve domestic resource
mobilization and develop a robust budgeting process and promote improvement
of revenue forecasting by strengthening the Plan and Budget Guidelines (PBGs)
machinery, Inter Ministerial Technical Committee (IMTC) and Parliamentary
Sector Committees.
31
Results matrix Table
The matrix table is expected to provide a summary of outputs cum activities
No. Issue Key Challenges
(constraints)
Recommended
Action (strategy)
Expected Output
(Results)
Targets,
Baseline
Indicator
Key Actors Comments
1.1 Stable
Macroeconomi
c environment
promoted
High inflation rates,
Weak financial and
debt management
system
narrow financial
intermediation
Weakd private sector
growth
Low external
resource mobilization
Pursuing
prudent fiscal
and monetary
policies
Keep low and
stable inflation
by addressing
supply
constraint) of
food and other
goods and
services
Implement
recommendatio
MOFEA TRA,
ZRB, BoT,
MTTI, Private
Sector. MALE
32
ns of second
generation
financial
reforms
(financial
services)
Roll out public
financial
management
reform
programme
(PFMRP)
Introduce
measures to
reduce the
lending rates
Mobilize
external
resources for
strengthening
economic and
development
environment
Formulate a
Tax Policy and
strengthen tax
33
administration
Broaden the
revenue base
1 Improve
structure and
performance of
Tourism sector
as per
recommendatio
ns of the
Tourism
revenue study.
34
References
2001 /2002 Zanzibar Manpower Survey Report
An Environmental Policy and Programme For Zanzibar
Economic Review and National Development Plan Implementation
MKUZA Monitoring Maser Plan, February, 2007
National Tourism Policy, Zanzibar
Zanzibar Food Security Policy
Zanzibar Growth Strategy, (2006 – 2015
Zanzibar SMEs Development Policy
Zanzibar Vision 2020, Ministry of Finance and Economic Affairs,
ZanzibarJanuary,2002
35
