WB: Zanzibar should diversify tourism
ZANZIBAR can accelerate poverty reduction by seizing more opportunities to diversify its tourism sector and make it more inclusive, the World Bank has suggested.
The Bretton Woods Institution in its Poverty Assessment for Zanzibar report launched on Wednesday recommend making tourism more inclusive by promoting establishment of locally owned small accommodation establishments to accelerate poverty reduction.
It recommends also diversification of tourism to small-group rural destinations and activities, including historical and cultural tourism and marine tourism and promoting investment in Pemba.
“There is also scope to further strengthen backward linkages of tourism to the local economy, as over 80 percent of the requirements in the tourism sector are sourced from outside Zanzibar,” said Rob Swinkels, World Bank Senior Economist and author.
“In addition, in order to meet the food needs of the tourist industry hotels and ensure a year-round supply, irrigation and better aggregation arrangements from smallholders, including contract farming, could help,” he said.
Tourism contributes an estimated 27 percent to Zanzibar’s GDP, around 80 per cent of its foreign exchange earnings, and an estimated 60,000 jobs.
With the Covid-19 crisis, GDP growth in Zanzibar slowed to an estimated 1.3 per cent in 2020, driven by a decline in tourism activity. GDP per capita fell by 1.6 per cent. Most severely hit was the accommodation and food services sub-sector which decreased by 13 per cent. Urban poverty may have increased by almost 2 percentage points in 2020, according to simulations.
Growth has since rebounded to 5.1 per cent in 2021.
According to the report, Zanzibar’s gross domestic product (GDP) per capita grew at 2.9 per cent per year during 2009 to 2019 but consumption per adult equivalent grew by only 1.7 per cent per year over the same period.
The ‘growth elasticity of poverty’, which reflects the extent to which economic growth leads to poverty reduction, was low, although similar to the average of Sub-Saharan Africa and somewhat higher than mainland Tanzania.
Despite the relatively high GDP growth, the creation of wage jobs between 2014 and 2019 was limited and unemployment went up from 17 to 19 per cent, while inactivity increased, according to the labor force surveys conducted in those years.
Despite poverty declining by nine percentage points between 2009 and 2019, falling from 34.9 to 25.6 per cent, the high population growth has resulted in the number of poor people remaining high in Zanzibar.
With a population growth above three percent per year, according to the preliminary results of the 2022 population and Housing Census, Zanzibar has one of the highest population growth rates in the world and the number of poor people in Zanzibar barely changed between 2009 and 2019.
The World Bank called for improvement in skills training and internship programmes as well as the business operating and regulatory environment of Small and Medium Enterprises, especially those that source inputs from low-income communities such as seaweed, fish and other marine products.
That will be essential for local value addition, job creation and poverty reduction, it said.
The Poverty Assessment was conducted in partnership with the Office of the Chief Government Statistician (OCGS) and is based on the OCGS Household Budget Surveys.
The previous World Bank Poverty Assessment for Zanzibar was published in 2017.
