The latest Monetary Policy statement issued by by the Bank of Tanzania (BoT) last weekend which covers the first six months of this fiscal year shows that increased clove output, more tourist arrivals and better infrastructure are the main contributors on the growth.
The Isles gross domestic product (GDP) growth rate for the first quarter of 2011 was estimated to grow by 5.6 per cent, compared with 5.3 per cent recorded in a similar period of 2010. The report shows that during the period, tourist arrivals reached 125,777 from 91,326 recorded in the corresponding period of 2010.
Clove production went up to 22,000 tonnes in 2011from 19,000 in 2010. However, the report cautions that despite the good news, annual headline inflation rose to 20.8 per cent in December 2011 from 6.0 in December 2010. The downward trend has been caused mainly by high fuel and prices.
Annual food inflation was 25.6 per cent compared to 4.8 per cent in December 2010, while non-food was pegged at 15.3 compared to 8.3 per cent. However, the central bank gives hope that inflation is expected to ease during the second half of 2011/12 on account of global oil and food prices coming down.
These achievements are worth praising but the Zanzibar government must diversify its sources of revenues to sustain the economic growth. Depending entirely on clove and tourism as the main sources of revenues may not be the best idea as some external forces like price fluctuations on clove in the world market as well as a fall in tourist arrivals could be a hard task to contain.
Zanzibar has an arable land which could be used to produce more crops for exports and for domestic consumption. Seaweed farming, which is famous in Zanzibar, could also make a big impact on the economy. Deep sea fishing is another area which has not been taken seriously. The government needs to attract both local and foreign investors into such business as well.