Could you give us a brief historical background on ZIPA?
During the change of policies in Zanzibar in the mid 80s, the government diversified the economy to allow private participation in business. That was early 1984 and by 1986, the government thought it would be appropriate to introduce a legal framework that will allow private participation in business and trade. That act was called Zanzibar Investment Protection and Promotion Act. At the same time the department of investment was established in the Ministry of Finance. In 1991, it changed from a department to a commission. In 1992 the new commissioner thought it would be an appropriate for the investment institution to be directly under the Ministry of Finance. Business doesn't want bureaucracy and therefore the commissioner asked for autonomy of that institution and the name was changed from Department of Investment to Zanzibar Investment Promotion Agency (ZIPA). The main objective is to allow private participation in investment and trade. Due to the changes of globalisation we have also to change and therefore we had to change our investment act to fit with the 21st century. We are working together with UNIDO, the World Bank and UNDP. We have now a final draft of the new act which will hopefully get through the legislature very soon. For the time being we are still using the old act. The new act was expected to come through this year but with the general elections coming soon we are a bit delayed.
What are the sectors here in Zanzibar which offer the most potential for investors?
When we opened up investment in 1996, the name Zanzibar reflected something attractive, historical, magic. With that idea in mind, what comes first is tourism. Tourism is the sector that opened up investment. It is the leading sector. In 1999, of the total 16 projects approved, 5 were in tourism. In 1998 out of 11, four were in tourism. In 1997 out of the 26 approved projects 12 were in tourism. Tourism is the leading sector but we want to make manufacturing the leading sector in the future.
How do you want to turn manufacturing into the leading sector? What are you currently putting in place to attract more investment into that area?
In 1992 the government "established Free Economic Zones". This will attract manufacturing and assembling for export. Whereby all material coming in zones is duty free, all exports will not be taxed. This is an incentive we offer. We can offer a lot of row material locally. Zanzibar is an island, we have 200 miles of sea and we want to promote fishery. But we don't want off shore processing. We also promote food processing of agricultural products. We have a lot of fruits and the fruit processing machinery is adjusted according to the fruit that we have.
The government has also established the Zanzibar Free Economic Zone Authority (ZAFREZA). To what extent would you say are you, ZIPA and ZAFREZA contributing to the economic growth here in Zanzibar?
I wouldn't be able to give you figures in terms of revenue generated and employment, but we are currently doing a research on that. ZIPA is contributing to the economy through its projects. We have 211 projects and these projects pay 20% VAT on their sales or have employment that pays tax on their earnings. They use electricity, water, telephone, etc. or import goods so there is movement of cargo at the port. There is a lot of activities taking place through our projects. The government not only benefits by collecting direct tax, but there is indirect tax from other utilities attributed to the investments. The more employment you have the higher social stability is. Peace and stability have a direct bearing on the economic development as well.
How many staff do you have and how does ZIPA generate funds?
ZIPA has its head office in Zanzibar and we also have an office in Pemba. We have 65 employees. Of the 65, we have 4 experts from the other ministries: immigration, labour, tourism and the land commission.
We generate funds through giving out licences. Everybody who applies for a project has to purchase the application form, which is US $200. The certificate for any approved project costs US $500-US $800 depending on the size of the project. During the construction period of a project the company has to pay license fees. When the company starts operation they will pay business licences. For tourism projects they pay to the commission for tourism and for all other projects they pay to us. This is our main revenue. We also collect revenue on share transfers. If a company sells an amount of its shares we charge them transfer costs. We imposed this fee in 1997. Imports are duty free but the government imposes 5% administration costs. 3% goes to the treasury and 2% to us. We collect 50 - 60% of our budget and the rest is funding by the government. | Your main role is promoting investment in Zanzibar. What are the main aspects that make Zanzibar attractive for investment and what are the aspects that make Zanzibar a supportive environment for investors?
One reason that makes Zanzibar attractive is its location. Zanzibar is strategically well positioned. The second is access to markets. Tanzania is a member of SADC and we can access all the member countries. We also have easy access to the middle East and Asian countries. The third attraction of Zanzibar is the political stability and the security we have compared to neighbouring countries.
ZIPA is also a facilitation agency. From the time that the investor starts enquiring from us to the time the investor implements the project they have to come through us and we don't charge for our services. Another element which makes Zanzibar a supportive environment for investors is the hospitality of our community. Our people are very welcoming and helpful.
What are the countries you are targeting while promoting foreign investment?
We were targeting Europe but we are now starting to target the Middle East and Asia. In the 80s Asian countries had a boom. They are moving from manual industries to high-tech. That is why we would like to attract the labour intensive industries. Asia, Europe and the US are very much focused on high tech industries rather then labour intensive manufacturing. As far as tourism is concerned, we are targeting above all Europe. Most of our tourists come from Europe. We also want to promote interstate investment, which means within SADC and the East African Co-operation.
In terms of your future outlooks, how do you see the future of Zanzibar as an investment destination in the next 3-4 years and ZIPA's role within this future?
Zanzibar is an island and its economy is typical for an island as supposed to the mainland. The economies of islands are more service orientated. I am looking at a time where Zanzibar will have a real service oriented economy whereby financial institutions have a hopeful future with off-shore banking. Zanzibar will be a hub of telecommunications and air transport. It will not only be a destination but also a hub, which is even more important than being a destination. It will attract more activities like servicing, aircraft maintenance, and so forth. I am also looking at a stage where the free port concept will be realised and Zanzibar will be transformed into a place where goods come in and they will be shipped to other countries and Zanzibar will fully utilise its resources so that we can be one of the top sea food processing places. This is my vision. I can't look at Zanzibar to be an agricultural driven economy since our land is limited. I am looking at Zanzibar as a fully service oriented economy.
Can you give us three main incentives you offer investors who want to come and invest here in Zanzibar?
We thought fiscal incentives are very good, but everybody else offers them. Each country offers tax holidays and duty free on imports. Although these fiscal advantages are incentives we give as well, we also offer others. We don't sell land for example, we lease it to the investors and our rates are very low compared to other countries. Our wages are also very low. These I would say are three of the main incentives.
What would be your final message to our readers who are potential investors?
We are open for anyone. We will try to accommodate each investor who is interested in setting up a project here in Zanzibar in the best way we can. We are open for dialogue and we are always looking for a win-win outcome, where the investor gains through his investment and by making profit and we win by increasing our technology, our employment and boosting our economy. |
