Zanzibar: Tanzania’s New Economic Powerhouse

Open towards the Arabian Peninsula, and to Asia more broadly, Zanzibar’s position is working in its favor today. First, bilateral ties between the Tanzania and the UAE have recently been reinforced with the aim to raise the volume of foreign direct investments to support the country’s industrialization and economic diversification. Concomitantly, efforts are being made to increase agricultural, value-added products and mineral ores exports towards the UAE. This has been a fruitful deal with the volume of foreign direct investments almost doubling during the third trimester of 2023 reaching 1.05 billion dollars.

Moreover, after ten years of preparation supported by Saudi Arabia, Tanzania is now launching its own gas industry off the coast of Zanzibar. Last September, the Omani company ARA Petroleum already signed a license contract of 180 million dollars with Tanzania to launch the exploitation of one of its eight offshore blocks. The seven other licenses are expected to be announced by February 2025.

Further, the first edition of the Tanzania-Saudi Arabia Trade and Investment Forum took place in Riyadh 17-21 December 2024, with the aim of reinforcing commercial ties between both countries. The presence of the Tanzanian president at COP 28 in Dubai in 2023 has also attracted diverse colossal investors such as the Masdar group – a renewable energy company based in Abu Dhabi –  which has explored potential investments in solar and wind power projects in Tanzania.

With annual real GDP growth rates of 4.7% and 5.6 % registered in 2022 and 2023 respectively, Tanzania represents one of fastest growing economies in Africa. Even during the pandemic, Tanzania benefitted economically when the beauty and the attractiveness of the semi-autonomous archipelago of Zanzibar was one of the rare destinations in the world that remained open to tourism. This openness, combined with lax Covid test requirements both upon arrival, and even more so upon departure, explains that Zanzibar welcomed more than 260’000 visitors in 2020, and 349’200 in 2021. The strategy adopted during the pandemic has turned out to be effective in the long run with the appeal of the island reaching a peak with over a million visitors in 2024. Indeed, the economic spinoffs of Zanzibar alone today represent 30% of national GDP in Tanzania.