Imagine a Zanzibar where every entrepreneur, student, and farmer is seamlessly connected to the digital economy. This vision is becoming a reality as the island undergoes an unprecedented technological transformation.
Over the past 25 years, Zanzibar has experienced significant digital growth, a process accelerated by the COVID-19 pandemic. In just five years, the number of telecommunications operators (MNOs and ISPs) grew from six to nearly 10, while internet users tripled, and bandwidth expanded almost fivefold.
Looking ahead, projections suggest a fivefold increase in customer numbers and an eightfold increase in internet bandwidth over the next five years. The digital sector is expected to contribute roughly 5% to Zanzibar’s GDP, driven by growing demand and advancements in Artificial Intelligence (AI).
The Evolution of Digital Connectivity
Having witnessed Zanzibar’s ICT landscape evolve from its early days, I have observed an exciting journey. From slow dial-up connections and microwave broadband to today’s lightning-fast fiber optic technology, the internet has transformed from a basic utility to a dynamic tool driving growth in key sectors like fintech, hospitality, blue economy, education, and healthcare.
Looking to the future, Zanzibar’s digital landscape will be reshaped by innovations in Artificial Intelligence, Machine Learning, and Big Data, all of which hold the potential to transform business operations and improve quality of life.
Zanzibar’s Commitment to Digital Transformation
Zanzibar has made significant strides in its journey toward digitization, though this transformation has been gradual. A key milestone was the establishment of IIT Madras’ first overseas campus in Zanzibar, which will help produce the next generation of tech-savvy graduates.
Additionally, plans to develop a Silicon Valley in the Fumba area to position Zanzibar as an emerging IT hub in East Africa are in progress. Today, the Zanzibar government recognizes the role of ICT and digitization as crucial drivers of economic development.
What was once considered a luxury is now viewed as an essential service, akin to basic needs such as food and shelter.
Unleashing New Horizons: Unlocking Opportunities Ahead
Zanzibar is poised to gain substantial benefits from investing in its digital future. Key sectors of the economy will experience significant growth as reliable, high-speed internet infrastructure becomes the backbone of development:
- Economic Growth and Investment
Attracting Investment: A robust digital infrastructure would make Zanzibar more attractive to both local and international investors, particularly in sectors like tech, telecommunications, and digital services. The fact that a 10% increase in broadband penetration can lead to a 1.38% increase in GDP growth in developing economies means Zanzibar could experience significant economic benefits, boosting its overall economic performance.
Digital Economy Growth: Zanzibar can leverage the growth of the global digital economy, which is growing at 2.5 times the rate of the traditional economy. As a small but growing economy, it could capitalize on this trend to stimulate development in various sectors, including tech startups, e-commerce, and tourism.
Blue Economy
Zanzibar’s coastal and marine resources play a critical role in its blue economy, contributing to the livelihoods of over 60,000 people through sectors like fisheries and eco-tourism. Enhanced connectivity is crucial to supporting sustainable practices in marine conservation and fisheries management, especially in collecting environmental data and collaborating with stakeholders. The growth of Zanzibar’s blue economy, which contributes a significant portion to the national GDP, could see increased efficiency through technological advancements, contributing to a projected growth of the global blue economy, estimated at over USD 3 trillion by 2030.
2. Job Creation and Talent Pool
Increased broadband penetration and digital infrastructure would create jobs in IT, telecommunications, and digital entrepreneurship. With Zanzibar’s potential for tech innovation, this could boost employment, attract young talent, and foster local startups, increasing opportunities in the tech ecosystem.
3. Business Productivity
Reliable internet would significantly improve business productivity in Zanzibar. With the ability to access high-speed internet, businesses could lower operational costs, automate processes, and implement modern business solutions. This would lead to a 20-25% increase in efficiency, enabling businesses to scale more quickly and compete on a larger stage.
4. Growth of Emerging Industries
FinTech: With 70% of Zanzibar’s population under 30 years of age, the demand for digital financial services is increasing rapidly. This provides a solid foundation for the expansion of mobile banking and digital payment systems, which can drive financial inclusion for over 50% of the population that remains unbanked. As of 2023, mobile money transactions in Tanzania (including Zanzibar) were valued at over USD 7 billion, signaling a strong growth potential for the FinTech sector.
Tech Startups and E-commerce: Zanzibar, with its increasing connectivity, could support the growth of e-commerce, projected to reach $75 billion in Africa by 2025. This would directly benefit local businesses in Zanzibar, facilitating digital commerce and expanding market reach.
Agriculture and Fishing: Digital platforms in agriculture could assist Zanzibar’s farmers by offering access to market trends, weather forecasts, and modern farming techniques. This could lead to improved yields by up to 70%, positively impacting the local agricultural sector, which plays a key role in Zanzibar’s economy. Similarly, the fishing industry could benefit from digital tools that improve logistics, market access, and resource management.
Tourism Growth: Zanzibar’s tourism industry is one of the island’s largest economic sectors, contributing approximately 30% of the GDP. Data from the Office of the Chief Government Statistician reveals the archipelago welcomed 638,498 visitors in 2023, a significant rise from the 548,503 visitors recorded in 2022. Improved internet connectivity can enhance the guest experience, boost real-time booking systems, cloud management, and enable more efficient online marketing. These advancements will help Zanzibar’s visibility on global travel platforms, potentially increasing the number of visitors and strengthening Zanzibar’s position in the global tourism market.
5. Overall Societal Impact
Increased connectivity could also enhance access to online education, telemedicine, and other essential services, improving the quality of life for the local population. This could contribute to long-term improvements in health, education, and overall living standards in Zanzibar.
The Future of Digitization: AI and Beyond
As Zanzibar embraces the potential of artificial intelligence (AI), machine learning (ML), and Big Data, its digital transformation holds the promise of significant improvements in economic, social, and environmental outcomes. These technologies will revolutionize key sectors and create new growth opportunities.
Economic Development
The use of Big Data analytics will provide invaluable insights, guiding decision-making in agriculture, tourism, and infrastructure. A 2020 study by McKinsey found that data-driven organizations are 23 times more likely to acquire customers, 6 times more likely to retain customers, and 19 times more likely to be profitable. With Big Data, Zanzibar’s key sectors can drive more informed, efficient operations, boosting economic productivity.
Healthcare
AI has the potential to revolutionize healthcare in Zanzibar by predicting diseases and improving early intervention, ultimately reducing healthcare costs. A report by Accenture predicts that AI applications in healthcare could save the healthcare industry up to $150 billion annually by 2026. By expanding telemedicine, AI can increase access to healthcare, particularly in remote areas where medical facilities are scarce.
Education
AI and ML will facilitate personalized learning, ensuring education is tailored to each student’s needs. A study by the Bill & Melinda Gates Foundation revealed that personalized learning improved student outcomes by 12% in literacy and 15% in math. With AI, Zanzibar can address skill gaps and better align curricula with labor market demands, ultimately preparing students for future job markets in emerging sectors.
Sustainability
AI is crucial in promoting sustainability efforts. It can optimize energy use and support eco-friendly practices in industries like agriculture, fisheries, and tourism. A 2020 study by PwC indicated that AI could help businesses reduce their carbon footprint by up to 10%, supporting Zanzibar’s efforts to mitigate climate change while promoting sustainable development across its industries.
Governance
AI can enhance governance by improving transparency, real-time data sharing, and more efficient resource allocation. A 2018 study by the World Economic Forum found that AI-driven transparency in governance systems significantly reduces corruption and promotes accountability. In Zanzibar, leveraging AI can improve the management of public resources, increase citizen trust, and streamline administrative processes.
Overcoming Challenges: The Elephant in the Room
Despite Zanzibar’s enormous potential, several areas present challenges to its digital growth, including affordability, accessibility, and the development of a more comprehensive regulatory framework.
Affordability
Internet access in Zanzibar continues to face affordability challenges, largely due to the absence of direct fiber connectivity. The fiber infrastructure currently terminates on the mainland of Tanzania, and while the Zanzibar government has made significant strides in facilitating the development of an undersea fiber cable to connect Zanzibar to Mainland resources, the ongoing transportation costs contribute to higher service prices.
Moreover, the 17% excise duty on communication services, can limit the affordability of internet services for many households and businesses. Reassessing this excise duty in line with Zanzibar’s Vision 2020-2025 and National ICT Policy goals, which aim to make communication services more accessible, could be an important step toward expanding digital inclusion.
Several African countries like Mauritius have removed excise duties entirely to stimulate growth in the ICT sector, while others, like Rwanda, South Sudan, and Uganda, have lowered their rates to around 10%, helping to foster greater access and development.
Globally, nations such as Argentina, Uruguay, and Pakistan have seen significant benefits after removing excise duties, including increased tax revenue and internet penetration rates ranging from 70% to 141%.
For Zanzibar, with its smaller and developing market, a comprehensive revision of excise duty could enhance economic growth and bring communications services to more communities, enabling progress in sectors such as education, healthcare, and business.
Accessibility
While Zanzibar has made substantial progress in expanding connectivity, challenges in accessibility remain in certain areas. Some elements of the regulatory framework, although well-intentioned, can sometimes make it harder for private sector operators to contribute effectively to infrastructure development. While these measures aim to create a more organized environment, they can occasionally slow down the speed and flexibility required for rapid deployment, especially in underserved regions.
To maximize the benefits of connectivity, fostering collaboration between the public and private sectors is essential. Empowering private operators to play a more active role in infrastructure development could accelerate network deployment, enhance competition, lower costs, and improve service quality, ensuring reliable internet access for all communities, regardless of location
Regulatory Framework
A comprehensive regulatory framework tailored to the challenges of Zanzibar’s ICT sector is still needed. Developing such a framework would be an important step toward closing the digital divide and ensuring equitable access to services across the island.
Driving Forward: Key Recommendations
To unlock Zanzibar’s full digital potential, the following strategies could help position the island as a digital leader in East Africa and beyond:
- Reevaluate Excise Duties: Lowering internet costs will expand access to essential digital services, ultimately improving affordability and accessibility.
- Encourage Infrastructure Development: Empower private operators to expand broadband infrastructure, particularly in underserved areas, to improve service availability.
- Develop a Progressive Regulatory Framework: Establish clear and adaptive regulations that encourage innovation, ensure fair competition, and protect consumers, while also promoting investment.
- Invest in Digital Literacy: Equip the population with the necessary skills to thrive in the digital economy, ensuring they are well-prepared to participate in emerging industries.
- Promote Public-Private Partnerships: Collaborations between the government and private sector will accelerate digital transformation and drive sustainable growth.
By addressing these challenges and leveraging the opportunities ahead, Zanzibar can position itself as a digital leader in East Africa and beyond. The future of Zanzibar is undeniably digital, and embracing this transformation will unlock its full potential for economic growth and social advancement.
Caption: Farmer with tablet controls spreading agricultural drone that spreads fertilizer. Smart farming and precision agriculture.
Managing Director
Zanlink – Liquid-Intelligent Technologies
sanjay.raja@liquidtech.co.tz
