A comprehensive review of the Zanzibar economy covering inflation trends, government fiscal operations, and external sector performance — including the island's surging current account surplus driven by record clove harvests and robust tourism receipts.
Zanzibar's headline inflation remained stable at 4.8 percent year-on-year in February 2026 — unchanged from the same period in 2025. On a month-on-month basis the rate eased sharply to 0.5 percent from 2.3 percent in January 2026. The overall outturn masks a significant divergence: food prices are running hot at 9.3 percent, while non-food inflation has collapsed to just 1.4 percent, driven by moderation in housing, water, electricity, gas and fuel costs.
| Main Group | Weight (%) | MoM Feb-25 | MoM Jan-26 | MoM Feb-26 | Annual Feb-25 | Annual Jan-26 | Annual Feb-26 |
|---|---|---|---|---|---|---|---|
| 🌾 Food & Non-Alcoholic Beverages | 41.9 | −0.1 | 4.7 | 0.0 | 6.4 | 9.1 | 9.2 |
| 🍺 Alcoholic Beverages, Tobacco & Narcotics | 0.2 | 3.4 | 0.0 | 0.0 | 1.0 | 6.6 | 3.1 |
| 👗 Clothing & Footwear | 6.3 | 0.1 | 0.5 | 0.3 | 2.8 | 3.0 | 3.1 |
| 🏠 Housing, Water, Electricity, Gas & Other Fuels | 25.8 | −0.2 | −0.5 | 2.0 | 5.2 | −2.3 | −0.2 |
| 🛋️ Furnishings, Household Equipment & Maintenance | 4.8 | 0.4 | 1.8 | 0.2 | 3.6 | 3.0 | 2.8 |
| 🏥 Health | 1.3 | 0.0 | 0.0 | 0.0 | −2.0 | 1.4 | 1.4 |
| 🚗 Transport | 9.1 | 0.2 | 0.7 | 0.4 | 1.4 | 2.0 | 2.2 |
| 📱 Information & Communication | 4.2 | 0.0 | −0.3 | 0.0 | 3.3 | −0.1 | −0.1 |
| 🎭 Recreation, Sport & Culture | 1.1 | 0.0 | −0.1 | 0.0 | 3.4 | 4.1 | 4.1 |
| 📚 Education | 1.6 | 0.0 | 1.1 | 0.0 | 2.6 | 1.9 | 1.9 |
| 🍽️ Restaurants & Accommodation Services | 1.4 | 0.0 | 5.4 | 0.0 | 0.6 | 7.1 | 7.1 |
| 💳 Insurance & Financial Services | 0.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| 💄 Personal Care & Miscellaneous Goods | 1.7 | 0.3 | 0.1 | 0.6 | 3.5 | 1.8 | 2.2 |
| 📋 All Items — Headline Inflation | 100.0 | 0.0 | 2.3 | 0.5 | 4.8 | 4.3 | 4.8 |
| Selected Groups | |||||||
| 🌾 Food (Total) | 40.5 | −0.1 | 4.8 | 0.0 | 5.8 | 9.2 | 9.3 |
| 🏙️ Non-Food | 59.5 | 0.0 | 0.3 | 0.9 | 4.1 | 0.4 | 1.4 |
Zanzibar's government revenue performance in February 2026 was broadly strong, with domestic revenue exceeding target by 4.4 percent. Tax revenue drove collections across all categories, reflecting improved administration and compliance. However, total expenditure of TZS 407.7 billion — heavily skewed toward development spending at 61.5 percent — resulted in a fiscal deficit of TZS 222.5 billion, financed entirely through borrowing.
Zanzibar's external sector delivered an outstanding performance in the year ending February 2026, with the current account surplus surging 29.2 percent to USD 912.1 million. The improvement was driven by a combination of strong tourism receipts, record clove harvests, manufactured goods exports, and growth in seaweed production — the island's four pillars of export earnings.
| Description | Feb-25 | Jan-26 | Feb-26p | 2025 (Yr-Feb) | 2026p (Yr-Feb) | % Change |
|---|---|---|---|---|---|---|
| Goods Account | ||||||
| Exports (fob) | 1.3 | 7.2 | 7.1 | 34.2 | 82.2 | ▲ +140.4% |
| Imports (fob) | 40.4 | 84.0 | 64.6 | 507.1 | 630.7 | ▲ +24.4% |
| Goods Account (Net) | −39.1 | −76.9 | −57.5 | −472.9 | −548.5 | ▼ −16.0% |
| Services Account | ||||||
| Receipts | 137.4 | 166.4 | 144.2 | 1,260.1 | 1,542.7 | ▲ +22.4% |
| Payments | 7.9 | 13.6 | 10.2 | 98.5 | 113.2 | ▲ +14.9% |
| Services Account (Net) | 129.5 | 152.8 | 134.0 | 1,161.6 | 1,429.5 | ▲ +23.1% |
| Goods & Services (Net) | 90.3 | 75.9 | 76.5 | 688.7 | 881.1 | ▲ +27.9% |
| Exports of Goods & Services | 138.7 | 173.6 | 151.3 | 1,294.4 | 1,625.0 | ▲ +25.5% |
| Imports of Goods & Services | 48.4 | 97.6 | 74.8 | 605.7 | 743.9 | ▲ +22.8% |
| Primary Income (Net) | 0.7 | 0.4 | 1.4 | 15.3 | 27.7 | ▲ +81.3% |
| Secondary Income (Net) | 0.1 | 0.2 | 0.3 | 1.9 | 3.4 | ▲ +75.3% |
| CURRENT ACCOUNT BALANCE | 91.1 | 76.6 | 78.1 | 705.9 | 912.1 | ▲ +29.2% |
Export of goods more than doubled year-on-year to USD 82.2 million, driven almost entirely by a bumper clove harvest — Zanzibar's signature export commodity. Clove exports surged to USD 33.9 million in the year ending February 2026, with volumes rising to 5,500 tonnes at an average unit price of USD 6,157 per tonne. Manufactured goods also registered remarkable growth of 71.9 percent to USD 22.5 million.
| Commodity / Category | Units | Feb-25 | Jan-26 | Feb-26p | 2025 (Yr-Feb) | 2026p (Yr-Feb) | % Change |
|---|---|---|---|---|---|---|---|
| 🌿 Traditional Exports — Clove | |||||||
| Value | USD '000 | 185.1 | 2,588.1 | 4,806.2 | 4,825.5 | 33,867.6 | ▲ +601.6% |
| Volume | '000 Tonnes | 0.0 | 0.4 | 0.7 | 1.2 | 5.5 | ▲ +358% |
| Unit Price | USD/Tonne | 5,858.0 | 6,901.5 | 6,859.9 | 3,978.8 | 6,156.7 | ▲ +54.7% |
| 🌊 Non-Traditional Exports — Seaweeds | |||||||
| Value | USD '000 | 399.8 | 11.5 | 52.6 | 3,939.2 | 5,259.5 | ▲ +33.5% |
| Volume | '000 Tonnes | 0.6 | 0.0 | 0.1 | 6.9 | 9.3 | ▲ +35.2% |
| Unit Price | USD/Tonne | 643.1 | 408.2 | 560.3 | 570.3 | 563.2 | ▼ −1.3% |
| 🏭 Manufactured Goods | USD '000 | 511.3 | 867.4 | 841.6 | 13,082.5 | 22,489.8 | ▲ +71.9% |
| 🐟 Fish & Fish Products | USD '000 | 4.9 | 104.3 | 65.3 | 1,858.3 | 2,246.5 | ▲ +20.9% |
| 🎁 Other Exports (Souvenirs, Spices) | USD '000 | 203.5 | 3,607.1 | 1,325.9 | 10,536.6 | 18,379.2 | ▲ +74.4% |
| TOTAL GOODS EXPORTS | USD ('000) | 1,304.6 | 7,178.3 | 7,091.5 | 34,242.1 | 82,242.5 | ▲ +140.2% |
Total imports of goods and services rose 22.8 percent to USD 743.9 million in the year ending February 2026. The increase was concentrated in capital goods — particularly industrial transport equipment and electrical machinery — signalling continued investment in Zanzibar's infrastructure and productive capacity. Fuel imports declined 28.5 percent, reflecting softer global petroleum prices.
| Category / Item | Feb-25 | Jan-26 | Feb-26p | 2025 (Yr-Feb) | 2026p (Yr-Feb) | % Change |
|---|---|---|---|---|---|---|
| 🏗️ Capital Goods | ||||||
| Machinery & Mechanical Appliances | 0.7 | 7.9 | 5.3 | 21.8 | 43.2 | ▲ +98.2% |
| Industrial Transport Equipment | 0.8 | 21.7 | 8.0 | 20.6 | 43.0 | ▲ +108.7% |
| Electrical Machinery & Equipment | 0.6 | 7.9 | 5.1 | 12.8 | 34.2 | ▲ +167.2% |
| Capital Goods Total | 2.7 | 39.0 | 19.5 | 60.4 | 133.1 | ▲ +120.4% |
| ⚙️ Intermediate Goods | ||||||
| Industrial Supplies | 6.7 | 21.6 | 16.7 | 110.0 | 175.1 | ▲ +59.2% |
| Fuel & Lubricants | 16.8 | 11.5 | 10.7 | 159.7 | 114.2 | ▼ −28.5% |
| Parts & Accessories | 0.8 | 1.7 | 3.1 | 15.6 | 28.5 | ▲ +82.7% |
| Intermediate Goods Total | 32.8 | 37.0 | 35.7 | 379.1 | 403.8 | ▲ +6.5% |
| 🛍️ Consumer Goods | ||||||
| Food & Beverages (Household) | 1.2 | 1.8 | 1.8 | 17.3 | 17.9 | ▲ +3.5% |
| Other Consumer Goods | 3.6 | 4.2 | 6.7 | 48.2 | 70.6 | ▲ +46.5% |
| Consumer Goods Total | 5.0 | 8.1 | 9.4 | 67.6 | 93.8 | ▲ +38.8% |
| TOTAL IMPORTS (f.o.b) | 40.4 | 84.0 | 64.6 | 507.1 | 630.7 | ▲ +24.4% |
TICGL's independent research interpretation of Zanzibar's February 2026 economic data — covering inflation risks, fiscal dynamics, and the structural drivers of the island's external sector performance.
1. Food Inflation at 9.3% Demands Targeted Policy Response. While headline inflation held steady at 4.8% year-on-year, the food component surged from 5.8% (Feb-25) to 9.3% (Feb-26). With food carrying a 41.9% weight in Zanzibar's CPI basket — the largest single category — this divergence signals acute affordability stress for lower-income households. The fall in non-food inflation to 1.4% (from 4.1%) masks the real burden being borne by food-dependent households. TICGL recommends targeted social protection measures and food supply chain interventions to address this imbalance.
2. Clove Boom Provides a Structural Window — But Diversification Remains Essential. The more-than-sixfold surge in clove export earnings (from USD 4.8M to USD 33.9M year-on-year) is transformative for Zanzibar's goods trade balance. However, agricultural commodity dependence introduces cyclical risk: clove yields are notoriously volatile due to biennial bearing patterns and weather sensitivity. TICGL advises investors and policymakers to view this as a strategic window to build agro-processing capacity, develop cold-chain infrastructure, and attract value-added spice processing investment — converting raw commodity revenues into durable industrial gains.
3. Services Sector — Tourism is the Backbone at 94.9% of Exports. Services receipts grew 22.4% to USD 1,542.7 million, with tourism (travel) overwhelmingly dominant. This dependency on tourism as the economic engine means Zanzibar remains acutely exposed to global travel disruptions, geopolitical shocks, and climate-related events. The island's resilience strategy must include diversification into MICE tourism, health tourism, and digital nomad infrastructure — all high-margin, low-seasonality segments where Zanzibar has competitive advantages.
4. Capital Goods Import Surge Signals Investment Acceleration. Capital goods imports more than doubled year-on-year (USD 60.4M → USD 133.1M), with industrial transport equipment and electrical machinery recording triple-digit growth. This surge likely reflects construction activity tied to hotel expansion, port infrastructure, and renewable energy projects. The decline in fuel imports (−28.5%) alongside rising capital goods is a positive structural signal — suggesting the economy is shifting from consumption-driven imports toward investment-driven imports, which generate productive capacity and future export capability.
5. Fiscal Deficit Management Needs Structural Attention. The TZS 222.5 billion fiscal deficit, financed entirely through borrowing, alongside development expenditure running at 133% of estimates, raises questions about expenditure control and fiscal sustainability. Positively, 88.3% of development financing was domestically sourced, reducing foreign exchange exposure. However, sustained domestic borrowing for capital spending could crowd out private sector credit if not balanced by revenue mobilisation. TICGL recommends an accelerated push to expand the non-tax revenue base — particularly through tourism levies, marine park fees, and PPP-structured infrastructure — to reduce reliance on debt financing for development.