In September 2024, Zanzibar's economy showed notable progress, driven by growth in trade, financial services, and construction, highlighting a shift toward greater sectoral diversity beyond traditional tourism. Revenue collection reached 88.6% of targets, underscoring improvements in fiscal management, yet a budget deficit remains due to rising expenditures. This economic snapshot reflects Zanzibar's steady trajectory toward sustainable development, though continued efforts to balance fiscal needs with growth aspirations will be essential to its long-term economic resilience.

1. Sectoral Growth:
   • Trade and Financial Services: Zanzibar’s economic expansion has been supported by growth in trade and financial services, both of which are significant drivers of economic activity and diversification. These sectors enhance the island’s capacity for sustainable development beyond traditional industries.
   • Construction: The construction sector has also shown robust growth, indicating infrastructure development and investment in housing and public projects. This growth supports job creation and has positive multiplier effects on the local economy.
2. Revenue Collection:
   • Target Achievement: Zanzibar achieved 88.6% of its revenue target in August 2024, with total revenue collections amounting to TZS 56.2 billion. This strong performance reflects improved fiscal management and effective tax administration, bolstering government resources to fund essential services and development initiatives.
   • Tax Revenue Contribution: Tax revenue accounted for the majority of collections, reaching TZS 48.7 billion. This reliance on tax revenue highlights improved compliance and enforcement, as well as a broadening tax base that reflects diversified economic activities.
3. Budget Deficit:
   • Despite solid revenue collection, a budget deficit remains due to spending requirements. While fiscal management has improved, the deficit underscores the need for increased revenues or spending adjustments to achieve fiscal balance without over-relying on debt.
4. Tourism and Trade:
   • Tourism: As one of Zanzibar’s most significant economic contributors, tourism continues to drive foreign exchange earnings, support jobs, and stimulate related sectors such as hospitality, transportation, and retail.
   • Trade: The growth in trade activities points to Zanzibar’s increased economic integration, particularly through exports and imports that serve both the local population and tourism-related needs. This sector contributes to economic resilience by providing diverse revenue streams.

Zanzibar’s economic performance is marked by progress in trade, financial services, and construction, showing signs of diversification and sustainable development. While revenue collection is strong, achieving 88.6% of targets, the existing budget deficit highlights areas for further fiscal improvements. Together, these indicators point to gradual but steady growth for Zanzibar, aligned with the broader economic goals of Tanzania.

The economic data for Zanzibar in 2024 with a promising trajectory toward growth, diversification, and fiscal improvement, though some challenges remain:

1. Sectoral Diversification and Resilience:
   • Growth in trade, financial services, and construction suggests that Zanzibar is diversifying its economy beyond traditional sectors like tourism. This diversification enhances resilience, as multiple sectors can drive growth, reducing dependency on a single industry and making the economy more stable during sector-specific downturns.
2. Improved Fiscal Management:
   • Achieving 88.6% of the revenue target reflects significant progress in fiscal management and revenue collection. Strong tax revenues of TZS 48.7 billion indicate better tax administration and compliance, providing the government with a more stable funding base for essential services and infrastructure projects.
3. Persistent Budget Deficit:
   • Although revenue collection is strong, the existing budget deficit shows that expenditures are still outpacing revenues. This deficit could limit funds for future development projects or require additional borrowing, which could raise the debt burden. Addressing this gap may involve further revenue enhancements or strategic spending cuts.
4. Reliance on Tourism and Trade:
   • Tourism remains a major economic driver, bringing in foreign exchange, creating jobs, and supporting various sectors. The growth in trade reflects economic integration and a stable supply chain for local and tourism-related needs. However, tourism dependency can make the economy vulnerable to global events affecting travel, underscoring the need for diversification.
5. Gradual Economic Progression:
   • Overall, Zanzibar’s growth across sectors, improved revenue collection, and steady infrastructure development indicate gradual economic progression. These advancements align with the broader goals of Mainland Tanzania, positioning Zanzibar as an essential contributor to national economic growth.

Zanzibar’s economic data shows a balanced path of growth, supported by sectoral diversification, fiscal improvements, and reliance on tourism and trade. While progress is steady, the budget deficit highlights a need for careful fiscal management to maintain growth momentum without over-reliance on borrowing. This balanced approach is crucial for building a resilient, diversified economy aligned with Tanzania’s overall development goals.