The share of development spending in the national budget increased from 17 per cent to 46 per cent between 2013/14 and 2017/18, Zanzibar 2018 National Budget Brief reveals.
Bank of Tanzania (BoT) monthly (November 2019) economic report analyzed the economic development of Zanzibar, a semi-autonomous region of Tanzania, (an archipelago in the Indian Ocean composed of several islands), highlighting various keys issues and developments particularly in managing inflation.
The report indicated that the headline inflation remained below the medium target of 5 per cent, same as the previous month of October, while annual headline inflation was 2.4 per cent in October 2019 compared with 3.7 percent recorded in October 2018 largely due to easing in non-food inflation.
On the same mark, the report indicated that twelve-month non-food inflation eased to 2.7 percent in October 2019 from 4.5 percent in the corresponding month of 2018 mainly due to a decline in prices of kerosene, diesel and petrol, while in October the inflation was moderated by prices of fish, rice, and bananas.
Zanzibar’s economy has been experiencing promising changes, according to Zanzibar Investment Guide document 2018-2019, the island economy grew to 7.5 per cent in 2017, while the average rate was 6.5 per cent in real terms.
Consequently, raising the per capita income from $830 million in 2016 to $907 in 2017. Despite the economy revolving around agriculture (crop farming and forestry) and the fisheries for the past years, the Zanzibar 2018 National Budget Brief, indicated a 3.5 per cent decrease (over the past seven years) on the sector’s dependence in determining the economic growth of the archipelago, while industry and services sectors have also been adding their contributions to the economic growth.
Zanzibar government managed to amount over $29 million in domestic revenue and over $866,000 was foreign grants. In the past month, the BoT report indicates the island amounted to over $31 million in domestic revenue.
In addition, the report noted that domestic revenue collections were 83.5 percent of the target for the month, while foreign grants surpassed projections for the month by 18.1 percent. Out of domestic revenue, about $26 million was tax revenue, which was below the monthly target by 16.4 percent, and the balance was non-tax revenue.
On a comparison basis, the past month revenue collections were 85.5 percent of the target for the month and higher than the amount collected in September 2018 by 12.9 percent.
However, the government expenditure amounted to over $41 million of which $27 was recurrent expenditure (payments made by the government) and over $14 million was spent on development projects.
“Local funding of development projects accounted for 67.5 per cent and the balance was foreign funding. The overall fiscal deficit amounted to over $3 million in October 2019, which continued to be financed by foreign loans,” the report notes.
The export sector sustained a rather modest fall less than the previous month of 12.7 per cent. According to the report cloves—which is one of the significant and main cash-crop in Zanzibar—have not been performing better.
“During the year ending October 2019, the value of goods and services export decreased by 7.5 per cent from the amount registered in the similar period in 2018 on account of a decline in the value of goods export. The weak performance of goods exports was mostly driven by cloves exports; whose value fell by 94.0 percent to $2.3 million in the year ending October 2019,” the report argues.
The report also argues that the latter was largely on account of a decline in the volume of cloves exported, which is associated with the cyclical nature of the crop. Likewise, the value of seaweeds exports declined to $4.1 million from $4.7 million during the year ending October 2018. Conversely, the value of fish and fish products exports almost doubled on account of increased demand for fish, particularly anchovies, in the Great Lakes region.
On the other hand, the report highlighted that the import sector, which comprises of goods and services imports, sustained an increase by 16.2 per cent equivalent to $329.5 million in the year ending October 2019 from the amount recorded in the year ending October 2018.
The report also argued that this was due to the increase in payments for services and the value of intermediate and consumer goods imports.
In addition, the report showed that earnings from services grew by 13.9 percent to $195.9 million in the year ending October 2019, mainly owing to an increase in receipts from travel-related services including tourism—which is one of the most foreign currencies attracting sector in Zanzibar.
Source: The Exchange