DOING BUSINESS WITH ZANZIBAR: BACKGROUND NOTE

Zanzibar, a small Island off the coast of mainland of Eastern Africa is an autonomous constituent of the Republic of Tanzania. It has lost its historical pre-eminence as the trading hub for the East African hinterland, after the revolution in 1964. Efforts to develop and establish an industrial base in Zanzibar have failed dismally.  Agro-based industries still hold some promise for investors interested in setting up joint ventures.

2. The sharp decline in the international price of cloves also contributed to the economy’s under-performance.  The GDP, as per official data for 2018, is a little over US$ 1.6 billion  and the economy continues to be in doldrums. The Government on its part has passed a legislation in October, 2004 to attract foreign investments by setting up a one-stop/window clearance for such proposals. Zanzibar, however, lacks in the necessary infrastructure to support industrial projects. There is just one unit making detergent cake bars and two mineral/spring water bottling plants. A new milk processing unit has just come up. A sick sugar manufacturing unit of small capacity has been revived with Indian assistance and an Indian company has established another sugar factory at Pemba.

3. With little or no manufacturing activity, Zanzibar depends exclusively on imports for all its requirements. With a population of about 1.5 million, the market is rather small. Zanzibar’s total imports are in the range of US$ 145mn/-. India however is the third biggest trading partner of Zanzibar where 9% of total direct import is from India. The import market in Zanzibar holds promise and potential for agricultural and processed foodstuffs and textiles/ garments, bicycles, motor-bikes/scooters, consumer goods and plastic and rubber products. Our main competitors are from China and Japan.  USA, Malaysia, Indonesia and Turkey are the emerging competitors.  Re-exports from UAE also account for a sizeable portion of Zanzibar’s imports. The balance of Indo-Zanzibar bilateral trade is tilted in India’s favour, with Zanzibar’s export (cloves) constituting under 35% of its imports from India. 

4. The imports by Zanzibar mainly include (a) Machinery & Mechanical Appliances, Electricals, (b)Vehicles, Aircraft, Vessel, etc. (c) Textiles and Textiles articles (d) Animal, Vegetables Oil (e) Vegetable Products (f) Base Metal & articles of base metal (g) Mineral products (h) Live Animals, Animal Products (i) Products of Chemical or allied industries (j) Optical, Photographs, etc. (k)Plastic and Articles thereof (l) Articles of Stone, Cement Asbestos etc. 

 5. It is advisable to check the bonafides of a prospective Zanzibari importer before entering into a commercial deal. Payment should be secured through firm and irrevocable letters of credit, preferably seconded by a multinational bank or the Bank of Baroda / Bank of India, which have their branches in Dar-es-Salaam. 

6. The Zanzibar National Chamber of Commerce, Industry and Agriculture (ZNCCIA) with a membership of about 75.  ZNCCIA is an organization with virtually no resources to support trade or industry.

7. The Revolutionary Government of Zanzibar has set up the Zanzibar Business Council with the President of Zanzibar himself as its Chairman. Unlike ZNCCIA, this body enjoys the backing and support of the Government and therefore, has better resources. This body can be approached, especially for solution of trade disputes, if need be. 

8. Investors looking for business avenues in Zanzibar may like to visit the website of Zanzibar Investment Promotion Authority - www.zanzibarinvest.org

9. A good number of Zanzibari small-time retailers visit India and bring with them goods (mainly garments, shoes and plastic & rubber products) as part of their personal baggage.  Similar attempts from the UAE and Oman also account for a sizeable portion of Zanzibar’s imports. These do not figure in official trade statistics.

10. Zanzibar still lags behind considerably in the field of information technology and majority of importers do not have their e-mail addresses. Many of them do not even have fax links. Indian exporters may therefore, have to correspond with Zanzibari importers through letters.

11. A Business Seminar-cum-Exhibition was organized in Zanzibar (February2019) to promote and expand India-Tanzania commercial linkages.  The Deputy Minister of Trade & Industry of Zanzibar represented the local government at the event beside other dignitaries.  About 100 business persons from diverse fields such as banking, cottage industries, food processing, hardware, tourism, healthcare, education, hospitality, etc. attended the seminar.  Indian companies in the area of electrical equipment, steel goods, vehicles, healthcare and education put up stalls at the seminar-cum-exhibition.

(January 2020)