Beer gamble that puts Zanzibar’s economy at risk

Unguja. Prices of beer and other alcoholic beverages have continued to surge in Zanzibar, with supply dwindling by the day as revellers continue to dig deeper into their pockets.

A survey carried out during the Sauti za Busara weekend, which had attracted thousands of tourists, showed no relief in the supply.

At the Ngome Kongwe, only TBL products were available, those who are accustomed to imported brands such as Heinneken, Windhoek and Savannah had to settle for something else at an almost 300 percent hike.

The most affected is the tourism sector, where industry players fear that the continued price hikes and fluctuations could turn the island into a very expensive destination. Tourism accounts for 30 percent of Zanzibar’s GDP.

“We cannot afford to go on like this, we risk outpricing ourselves from the market with unpredictable rates,” said one hotelier in Paje who preferred anonymity.

Bar owners, too, fear that the continued scarcity could affect their quarterly tax returns.

“Definitely, if we don’t have stock, it means we can’t sell, which means very little tax returns to ZRA,” says a retailer at Amani.

What started off as a well-calculated move by the Zanzibar Liquor Control Board to shake up the import structure is fast turning into a gamble that could cost the archipelago economy billions in lost revenue.

Insiders believe that the tax man could have lost close to $10 million in the past 45 days across the entire value chain. What this shakeup means and its desired consequences for the entire economy will become clearer sooner than later.

This gamble by the Liquor Control Board has exposed vulnerabilities and placed those in charge under a microscope. But even as such fears remain constant, Zanzibar Revenue Authority Commissioner Yusuf Mwenda says it is too early to gauge the effect of the scarcity on revenue collection from the entire value chain in the first quarter of 2024.

“We are so far in the first month of January 2024, there has been no effect on revenue collection on the entire value chain. However, we are making close monitoring of the trend and business,” said Mr Mwenda.

According to Mr Mwenda, the ZRA team is on the ground monitoring the situation and it is only after that, that they will be in a position to say anything.

“Our people are on the ground monitoring the trends and market. Thereafter, with the data we may establish the reality.”

Ironically, even as Mr Mwenda allayed the fears last week, he called for a meeting with the three new importers, where he addressed several issues, including the insufficient supply of beverages and how it affects revenue collection.

“One of the areas where we collect considerable revenue is in the tourism value chain, which includes hotels and entertainment; therefore, insufficient supply of beverages affects our revenue collection,” Mr Mwenda told the importers.

He added: “Before them, the others were paying taxes, so because it has been deemed that they are more capable, we expect them to pay more.”

Mr Francis William Kessy from Kifaru Holdings is confident that after clearing the initial hitches, they now have the capability to stabilise the market. Apart from the assurances, he, too, could not give any timelines.

Miss Nicole Verjus from Bevco echoed Kessy’s sentiments, saying that after the meeting with ZRA officials, importation is going to be smoother than before.