United Republic of Tanzania

Zanzibar Tourism


Background

Tourism is a significant source of income for the Zanzibar economy and is the largest source of foreign exchange. The sector contributes 27 percent of the Islands’ GDP and 80 percent of its foreign exchange earnings. The sector also creates around 15,000 direct and 50,000 indirect jobs. Zanzibar generated $3.8 billion from 376,000 tourist arrivals in the 2016/2017 fiscal year. Tourist arrivals in Zanzibar have been growing over the last 25 years but yield from tourism has not grown at the same pace. Even though the policy framework emphasizes the need to link tourism to other economic sectors, this has not happened organically, and the potential to economically benefit more Zanzibaris has not been met. In the context of continuing growth of tourist arrivals but limited product diversity, and growing pressure on infrastructure, the natural environment and local communities, the government is seeking to define new strategic directions and governance in its tourism sector.

The World Bank is supporting this goal through a pipeline $150 million Boosting Inclusive Growth for Zanzibar Integrated Development Project which aims to define appropriate investments and enhance the value of tourism in Zanzibar’s economy by bringing together the different stakeholders in tourism around a collective vision and strategic direction. CIIP proposal will inform and improve the design of approximately $40 million of tourism related public investments through the lending project, as well as over $50 million in expected private sector and PPP pipeline.

A Zanzibar Tourism Strategic Action plan has been drafted and supported through analytical work conducted by the World Bank and it aims to define government-led interventions, such as reforms and investments, that could increase economic, financial and social yields in ways that create local employment and grow revenues for local companies and in local value chains. CIIP will support the further detailing, socialization and buy-in of the action plan by first defining a prioritized strategic roadmap with an emphasis on market driven product development. CIIP will develop a detailed action plan for local tourism value chain development projecting the impact on jobs and supply chains across 6-8 market segments (e.g. cruise tourism, beach holiday tourism, business, meetings and conference tourism, cultural tourism, short stay excursionists from mainland Tanzania, and marine based tourism). This intervention will define specific investment recommendations around access to skills, access to markets, and access to finance that target value addition across the different market segments and in different parts of the archipelago.

Analytical work supported by CIIP will define tourism-related investments to be funded under the lending project that leverage urban and infrastructure investments to create or add tourism value through, for example, the development of a viable menu of possible tourist activities and experiences in targeted project areas and the identification and prioritization of tourism products, services and training to be supported by capital funding in the project. Building on the market assessments and recommendations the team will (i) conduct baseline data collection of the full inventory of tourism-related goods and service providers and existing products in the project area, (ii) based on market projections, define specific potential growth segments and define investments that the project can make in aspects like access to skills and access to markets, (iii) define specific locations where a clustering of tourism activities can lead to enhanced local economic benefits, and (iv) develop a results framework and M&E plan for the lending project to monitor job creation, tourist’s length of stay and expenditure, investments and new business creation, and business turnover.

 

Competitive Industries Support


 

Background


Tanzania’s economy has grown steadily in recent years, but mainly driven by ICT, financial services and construction sectors which typically do not generate mass jobs. Meanwhile, it is estimated that approximately 800,000 youth are expected to enter the Tanzanian labor market every year for the next 10 years, doubling the workforce from 20 million today to over 40 million by 2030. Jobs are mainly created by private firms in Tanzania, where the public sector accounts for less than 5 percent of total employment. However, the vast majority of private firms are young, vulnerable and stunted: 66% are less than five years old, 40% exit after four years; only 1.5% are registered; and only 6-8% experience growth. 

Industry — including manufacturing and agribusiness — is a high productivity sector that has the potential to absorb large numbers of modestly skilled workers, contribute to accelerated poverty reduction, and diversify the economy.  The Government of Tanzania has put together an Integrated Industrial Development Strategy, which envisions a manufacturing sector that grows 15% annually to become a $16 billion industry by 2025.  A World Bank investment operation was implemented in FY17 to help advance Tanzania’s industrial development, with an emphasis on labor-intensive, resource-based manufacturing & services sectors. CIIP support to this work includes a review of recent policies in support of private sector development, as well as to explore the productivity growth of firms, particularly small manufacturing firms in Tanzania. 

 

Project Results


An evaluation of the lessons from past and current enterprise support programs in Tanzania has been completed. As a starting point, an inventory of around 20 programs in Tanzania related to enterprise support was
compiled, from which 9 programs with direct firm-level support were selected for more detailed subsequent analysis. The study examined various dimensions of these short-listed programs, including, inter alia: objectives, legal and management structure, target sector and firm size, type of support instrument, results achieved. Based on the findings and assessments in each dimension, specific recommendations for the design modalities and implementation approaches for future programs were developed. 

CIIP is also conducted a firm-level survey. The survey instrument targeted medium and large (>50 employees) manufacturing enterprises across 4 cities (Dar, Bukoba, Dodoma and one TBD) in Tanzania and aims to measure the quality of management practices. The focus is on better understanding the type of support required for firms to scale up production and improve product quality, in many cases also in preparation for export. In particular, the focus will be on identifying issues relating to production, management, technology and quality for selected typologies of firms (small, medium and large; survivalist firms, minimum-technology firms, technologically-competent firms and advanced firms) in selected industries (food processing, logistics).

 

Project Documents


 

United Republic of Tanzania

Developing Local Industries Connected to Natural Gas Discoveries