Zanzibar export boom masks clove concentration

ZANZIBAR: ZANZIBAR’S exports more than doubled in the year ending June, driven by a surge in clove earnings that highlights both the island’s growing foreignexchange potential and its continued dependence on a narrow range of commodities.

The value of goods exports rose to 70.5 million US dollars from 33.3 million US dollars a year earlier, according to the Bank of Tanzania Monthly Economic Review.

The increase was overwhelmingly supported by cloves, whose export value reached 44.6 million US dollars accounting for about 63 per cent of total goods exports. Clove earnings benefited from higher prices and increased export volumes.

The average unit price rose 33.8 per cent to 6,335.9 US dollars a tonne while the volume exported increased to 7,000 tonnes from about 700 tonnes a year earlier, according to the report.

The sharp increase in clove earnings helped offset weakness across several other export categories, underscoring the concentration of Zanzibar’s merchandise export base. Non-traditional exports fell 13.3 per cent to 25.9 million US dollars during the period.

Manufactured-goods exports declined 30.1 per cent to 10.8 million US dollars, while fish and fish products fell 24 per cent to 8.94 million US dollars. Seaweed exports dropped 45.9 per cent to 1.7 million US dollars.

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The weakness in manufactured exports contrasts with stronger performance in some other categories. Other exports rose 24.2 per cent to 12.5 million US dollars, providing some diversification but not enough to offset declines in manufactured goods, seaweed and fish products.

The export performance comes as Zanzibar’s broader external position strengthens. The current-account surplus increased 29.1 per cent to 1.02 billion US dollars in the year ending June, supported largely by higher service receipts. Exports of goods and services rose 26.7 per cent to 1.80 billion US dollars, while tourism remained a major source of foreign exchange, with tourist arrivals increasing 18.9 per cent to 949,278.

The figures suggest that Zanzibar is generating stronger external earnings, but the composition of merchandise exports remains a vulnerability. A sustained increase in clove production and prices could support foreign-exchange inflows, while a reversal in global spice prices or supply disruptions could have a disproportionate impact on goods-export earnings.

The decline in manufactured exports also points to the need for greater diversification if the island is to convert rising trade activity into a broader industrial base.

Expanding processed agricultural products, manufacturing and other value-added exports could reduce dependence on raw and primary commodities while increasing the value captured from international trade. The wider Tanzanian economy is also benefiting from stronger exports.

Mainland goods exports increased 19.2 per cent to 11.8 billion US dollars in the year ending June, driven by gold, manufactured goods, tobacco, cashew nuts and coffee, while goods and services exports rose 17.2 per cent to 19.9 billion US dollars.

However, imports grew 18.1 per cent to 20.8 billion US dollars, faster than the rise in exports, leaving currentaccount deficit at 2.30 billion US dollars.