Unguja. Industrial production growth in Zanzibar has slowed, falling from 8.4 percent in the third quarter of 2024 to 2.7 percent in the same quarter of 2025.
Industry stakeholders have cited several factors behind the decline, including weak protection of local products, high taxes and levies, poor cooperation between the government and private sector, and unreliable electricity supply.
The 2026/27 National Budget and Planning Trends report shows that Zanzibar’s overall economy grew by 7.0 percent between July and September 2025, down from 7.5 percent in the same period in 2024.
A key contributor to the slowdown is the industrial sector, which expanded by only 2.3 percent in Q3 2025 compared with 5.7 percent in the corresponding quarter of 2024.
Presenting the report recently during the second session of the 11th Zanzibar House of Representatives, Finance and Planning minister, Dr Juma Malik Akil, attributed the slowdown to declining industrial output, from 8.4 percent growth in Q3 2024 to 2.7 percent in Q3 2025.
In response, the Ministry of Trade and Industry convened meetings with industrial stakeholders to identify challenges and devise strategies to revive the sector, which is vital for employment creation and economic growth in Zanzibar.
National targets include reducing import dependency by 60 percent by 2030.
During the meeting, chairman of the Zanzibar Council of Industries and Production (MCZ), Mr Ahmed Yussuf Baalawy, said a major challenge is limited collaboration between the private sector and the government.
He noted that although plans exist, implementation remains weak and, without deliberate action, no meaningful change will occur.
Mr Baalawy stressed the need to protect locally manufactured goods to secure both domestic and export markets.
“Without safeguarding our local industries, they cannot grow. We will continue discussing without results if implementation is ignored,” he said, citing Dubai as an example where manufacturing drives economic growth.
He also faulted the Revolutionary Government of Zanzibar for being the largest purchaser of goods while favouring imports over locally manufactured products.
“How can industries grow under such circumstances? We must prioritise local production,” he said.
Mr Baalawy further pointed to imbalances in Value Added Tax (VAT), which he said burden hotels and factories, while competitors in the informal sector often evade payment.
Speaking on the challenges, Inaya Zanzibar Ltd, a cosmetics and leather-care manufacturer executive officer Cheherazade Cheikh, cited high taxes as a major constraint despite repeated advocacy.
Liaison manager at Zanzibar Sugar Factory, Ms Beatrice Millinga, noted the absence of direct collaboration between government institutions and private companies.
“There is a significant gap. Government sectors often lack coordination. We need systems that link us if we are to increase production,” she said.
Drop Zanzibar Water Factory manager, Mr Mahamoud Hassan, said electricity shortages remain a critical challenge.
"Running factories require stable power. Zanzibar lacks adequate electricity. Power cuts disrupt production. We need a reliable supply,” he said, calling for an actionable implementation plan.
He warned that without dependable electricity and infrastructure, local industries cannot compete domestically or internationally.
Another stakeholder, Mr Hussein Meena, accused government agencies of operating like businesses rather than service providers, contributing to bureaucratic hurdles such as multiple licensing requirements.
He added that exported goods face barriers, including the requirement to use Tanzanian rather than Zanzibar branding to access mainland and regional markets.
The Zanzibar Exporters Association (ZEXA) secretary, Mr Khamis Issa Mohamed, also cited weak collaboration between the private sector and government institutions.
“High taxes and levies exceed profits, discouraging producers. Many of our concerns are raised but remain unresolved,” he said.
Addressing the same meeting, the ministry’s Permanent Secretary, Dr Habiba Hassan Omar, acknowledged the sector’s importance for employment and economic growth but conceded that industrial expansion has been modest compared to national expectations.
She said challenges include national issues such as electricity and ports, sector-specific matters including business policies, and cross-cutting concerns such as taxes and levies.
“We will develop strategies to cluster industries in designated areas to improve infrastructure, tax administration and overall support,” said Dr Omar.
