ZANZIBAR-ECONOMY: Turning to Services as Clove Prices Fall

By Moyiga Nduru Reprint | | Print |

Moyiga Nduru

NAIROBI, Apr 19 1996 (IPS) - For decades Zanzibar’s economy has hinged almost solely on cloves but falling world market prices for the commodity have forced the Indian Ocean archipelago to turn to other sources of income.

“We are taking drastic measures to diversify the economy which was heavily dependent on cloves,” says Finance Minister Amina Salman. “We are moving away from agriculture into services and manufacturing.”

“We are glad that the services sector, which includes tourism and trade, is growing faster,” she told IPS here this week. “In 1990 it was only 15 percent. Now it accounts for 29 percent of Zanzibar’s economy.”

Tourism, which attracted 50,000 people in 1993, now makes up 70 percent of the services sector. Most of the tourists come from Germany, Britain and the United States.

Amina expects tourism and commerce to boost the island’s economy, severely affected by the fall in the world market price of cloves. In the 1980s, Zanzibar’s main export fetched 9,000 dollars a tonne. Now it sells at 600 dollars a tonne.

This resulted in negative economic growth — minus four percent in 1990. “Now, thanks to the diversification process, the economy has registered 3.6 per cent growth. In the year 2001 we expect it to reach six per cent,” she said.

However, cloves still provide about 80 per cent of the islands’ foreign exchange earnings.

Zanzibar was once the world’s largest exporter of the spice but it now vies with Madagascar for second place, behind Indonesia. Other major competitors include Sri Lanka and Brazil.

Marketed output has fallen because of low producer prices, diseases that have affected clove trees and smuggling. The islands exported an average 20,000 tonnes a year in the 1960s, but only 5,800 tonnes in 1990. This led the republic to move to reduce its dependence on a single commodity.

“In order to arrest the situation, the government introduced policies which were designed to diversify the economy away from clove production and to foster private and foreign investment,” said Zanzibar’s Chief Minister, Mohamed Gharib Bilal.

In 1986, it introduced an Investment Protection Act offering potential investors an array of incentives designed to attract foreign capital to various sectors of the economy, especially tourism. Bilal admits, however, that much still needs to be done.

“We recognise that infrastructural developments need to go hand in hand with the advance of tourism – indeed in many cases they are a necessary precursor,” said the Chief Minister.

He said his administration was now rehabilitating roads, electricity and water facilities, while the airport in Unguja, the main Zanzibari island, was upgraded in 1991 to accomodate wide- bodied aircraft.

“Further we are in the process of improving all the customer facilities at the airport. We feel that this will not only bring Zanzibar’s airport to an international standard but will provide for direct flights from Europe and the Middle East,” said Bilal.

Zanzibar, a former Omani sultanate, merged with Tanganyika to form the Republic of Tanzania in 1964, following a popular uprising in which the last Arab sultan was forced to flee into exile in Britain.

Despite the uprising, cultural and religious links between the islands’ 750,000 people, 96 percent of whom are Muslims, and the Middle East remain strong. Thousands of Zanzibaris work in Oman and they remit millions of dollars to their families every year.

The campaign to attact investment to Zanzibar is likely to be affected by the political unrest that has followed parliamentary and presidential elections in October 1995.

The opposition Civic Union Front (CUF), based mainly in Pemba, the smaller of the archipelago’s two main islands, has maintained that the elections were rigged by the ruling Chama Cha Mapinduzi (CCM). It has refused to recognise the Zanzibari government, kept its 24 legislators away from Zanzibar’s 50-member parliament and carried out a campaign of civil disobedience.

Since November, the islands have been hit by acts of arson, sabotage and demonstrations. Forty people were recently arrested for trying to blow up a power station and Bilal has vowed to crack down on offenders.

He accuses the CUF of resorting to what he calls acts of terrorism, “instead of assuming its legally recognised role of an opposition party which is supposed to put to task the ruling party and its government by acting as a watchdog in the pursuit of good governance, democracy and respect for human rights”.

The government is also grappling with a famine in the east of Pemba.

“The famine was caused by scanty rain, which led to crop failure,” said Bilal. “Although shops are full of food, people cannot afford it. That is why we appealed to the international community to help them with food aid until the next rainy season in July.”