From Vision to Action: Evaluating Zanzibar’s Blue Economy Journey

The utilization of ocean-based economic activities—commonly referred to as the blue economy—is increasingly recognized as a vital and realistic pathway for Small Ssland Developing States (SIDS) to achieve rapid economic growth and sustainable development. The ocean is not only a crucial life-support system for all life on earth, but it also plays a central role in global livelihoods and economic stability.

It is estimated that every dollar invested in the blue economy yields, on average, a fivefold return. Beyond its financial promise, the blue economy supports the livelihoods of over 3 billion people worldwide—many of whom reside in developing countries. 

This sector’s economic potential is immense. Globally, the Gross Value Added (GVA) from ocean-based industries stood at USD 1.5 trillion in 2010 and is projected to double, reaching USD 3 trillion by 2030, according to the United Nations. 

In Africa, the blue economy is expected to generate approximately USD 405 billion and create around 57 million jobs by 2030. This sector is, therefore, increasingly viewed as the next economic frontier—especially for SIDS.

Zanzibar has clearly recognized this remarkable opportunity. It is reflected in key national frameworks such as the Zanzibar Development Vision (ZDV) 2050, the Zanzibar Development Plan (ZADEP) 2021–2026, and the Zanzibar Blue Economy Policy 2022. 

These documents lay out ambitious policies and strategies for leveraging ocean resources to foster inclusive growth, sustainability, and economic resilience. However, while drafting policies is an essential first step, their effective implementation remains the real challenge. This article explores the overall performance of the blue economy over the last 5 years, focusing on its core features and progress toward achieving its strategic goals.

The state of the blue economy financing in Zanzibar

The blue economy, being capital and knowledge-intensive, is driven by high-productivity sub-sectors. In Zanzibar, public investment has supported components of the blue economy such as aquaculture, marine fisheries, fish processing, offshore energy, ports, and coastal tourism. However, private sector participation—both domestic and foreign—remains limited.

Tourism, particularly coastal based, is Zanzibar’s main economic engine, contributing 46.6% of GDP and serving as the top source of income, foreign exchange, and FDI. In contrast, fisheries—currently the main sub-sector of the blue economy—contribute just 4.1% of GDP, yet support nearly 90,000 jobs (8.5% of the workforce) and are a vital food source (OCGS, 2023). This disparity highlights the urgent need to transform fisheries within the blue economy framework.

To fully unlock the blue economy’s potential—already contributing 29% of GDP and 33% of employment (ZIPA, 2023)—investments must leverage Zanzibar’s strategic location, rich maritime history, and coastal assets. 

With targeted financing and greater private sector engagement, Zanzibar must not only strengthen coastal tourism but also develop untapped sectors like aquaculture, ocean energy, marine biotechnology, and seabed mining. 

Diversifying the blue economy in this way would boost economic resilience, create jobs, and position Zanzibar to better withstand climate and external shocks. 

Marine Tourism offers vast potential through high-end eco-friendly resorts, halal tourism, investment in small islands, and sustainable marine activities like marine parks and eco-resorts. 

While the government has provided substantial financial support to micro, small, and medium enterprises (MSMEs), few have successfully scaled into competitive SMEs serving the high-end tourism market. 

To fully capitalize on marine tourism, strategic support must focus not just on access to finance, but also on capacity building, market access, and investment readiness—empowering local businesses to thrive in the premium tourism space.

It is estimated that every dollar invested in the blue economy yields, on average, a fivefold return.

Maritime Transportation has seen a significant investment made by AZAM Marine Company and ZAN FAST FERRIES to exemplify the ability of the few but large locals to invest in strategic sectors. While private capital is driving new port developments in Mpiga Duri and Fumba, the real game changer is the Mangwapani Port project. To maximize impact, it would be strategic for the government to prioritize and streamline efforts around this critical infrastructure.

Aquaculture provides high-return opportunities, particularly in value-added seaweed processing and tech-driven sea cucumber farming and hatcheries. While seaweed farmers receive strong support, empowering local SMEs is key to unlocking full value. The launch of Zanzibar Seaweed Corporation (ZASCO), partly owned by UK investors (13%), has temporarily raised seaweed prices. ZASCO’s real economic returns could attract more private investment—or deter it—depending on performance.

Fisheries is the main sub-sector of the blue economy supporting 90,000 jobs (8.5% of the workforce) and serving as a key food source, but contributing just 4.1% (OCGS, 2024). This stark imbalance signals a critical need for transformation. Investment remains limited in deep-sea fishing, processing, packaging, and infrastructure like cold storage, gear, and boat factories—despite growing demand from tourism and export markets. Joint ventures with state-owned fisheries remain untapped, representing a major missed opportunity for maximising wealth.

Offshore exploration of Oil and Gas dates back to the 1950s but gained real momentum with the 2016 Oil and Gas Act, which led to the creation of Zanzibar Petroleum Development Company (ZPDC) and Zanzibar Petroleum Regulatory Authority (ZPRA). In 2018, a Production Sharing Agreement with RAK Gas was signed but ultimately stalled. 

Recently, the Revolutionary Government of Zanzibar launched its first licensing round, offering eight onshore blocks—each spanning 2,846 to 5,666 km²—rich in oil and gas reserves, and open to local and international investors. The key challenge now is enabling local investors, who lack individual capacity, to access financing tools and partnerships to participate in this high-potential sector.

Renewable Energy is a key pillar of Zanzibar’s Blue Economy Policy (2022), covering solar, wind, and tidal sources. While offshore energy remains costly and technology-intensive, current focus rightly centers on solar power. This is reflected in the landmark Power Purchase Agreement with Mauritius-based Generation Capital Ltd and Tanzania’s Taifa Energy to build Zanzibar’s first large-scale solar plant—a 30MW facility costing USD 140 million. Continued investment in solar offers the most practical, scalable path for clean energy growth at this stage.

Zanzibar’s Scarcity of the Vibrant Medium Sized Enterprises to Drive the Blue Economy 

The Zanzibar Blue Economy Policy 2022 outlines clear strategies to unlock ocean-based economic potential. However, a key challenge remains: efficiently mobilizing and directing funds into high-impact sectors. 

According to ZADEP 2021–26, Zanzibar plans to invest over USD 460 million in key infrastructure, USD 242 million for multipurpose ports at Mangapwani and Mkoani, USD 180 million for five fishing ports, and USD 41 million for fisheries development, including boats, cold storage, and seaweed processing. To boost local private sector participation, the government recently launched a Sukuk (Islamic bond). Its success will become clearer as the first of three tranches concludes.

The Government of Zanzibar has demonstrated strong commitment to marine-based industrialization—not just through policy, but by actively channeling capital into state-owned enterprises to develop industries for marine food products and semi-processing. 

Further commitment shown by the government of Zanzibar was the creation of the Zanzibar Economic Empowerment Agency (ZEEA). In 2022/23, this agency was capitalized with USD 7.5 million to establish a revolving fund aimed at supporting local enterprises. However, few—if any—of the supported businesses have grown into medium and large sized enterprises within the blue economy, highlighting a need for more targeted support and scale-up strategies.

Despite government efforts to boost local private sector involvement in the blue economy—such as establishing Economic Free Zones—private capital inflows remain weak. 

In response, the state often relies on SOEs to fill funding gaps, but this approach is prone to inefficiencies. According to agency cost theory, misaligned incentives in SOEs can lead to poor investment decisions lacking viable business models or risk-adjusted returns. Over-reliance on public finance may also crowd out private investment. Empirical evidence shows that private capital generally delivers stronger economic returns, while SOEs often face mismanagement, corruption, and market distortions.

Foundation and Incentive to attract the blue economy investments in Zanzibar

It is becoming increasingly accepted in Zanzibar that unlocking the economic potential of ocean-based industries requires bold, capital-intensive investments to drive growth and structural transformation. 

Zanzibar is now at a critical junction facing pressing urgency to mobilize and attract private investors for financing the blue economy investment case.

The development of Zanzibar’s blue economy is a long-term journey that can unfold in two key phases. Inthe short to medium term, the focus should be on establishing semi-processing and low-tech industries, led primarily by private sector investment. 

As private capital flows increase and digital infrastructure strengthens, Zanzibar can transition into the second phase—advancing into high-value industries such as marine aquaculture, offshore oil and gas, renewable energy, seabed mining, marine biotechnology, and high-tech marine products. This phased and realistic approach lays a sustainable foundation for long-term economic resilience and transformation.

To quickly attract private capital into Zanzibar’s blue economy, a focused and strategic approach is essential. The following key actions can deliver early wins and build long-term momentum:

1. Leverage on Digital Technologies to de-risk investments, diversify risk, and reduce information gaps between investors and projects, enabling faster, smarter investment decisions.

2. Introduce Targeted Incentives to offer special tax breaks and industrial incentives, especially in fisheries and seaweed sectors, to boost private sector participation and improve return on investment.

3. Mitigate Perceived Risks by harnessing private equity investment vehicles to pool local and large private capital. Pair this with climate adaptation strategies to reduce climate-related risks.

4. Expand PPPs in key sectors like ports and renewable energy to share risk and attract large-scale investment, following successful models like Mauritius and Singapore.

5. Strengthen Marine Resource Management to ensure sustainable access to resources and support resilient, fast-growing sectors like ecotourism.

7. Improve Access to Capital through working with the Bank of Tanzania and other relevant financial institutions to lower borrowing costs and expand access to affordable financing for blue economy ventures.

8. Strengthen the Fisheries Investment Case by using fish stock assessments and predictive analytics to demonstrate viable, risk-adjusted returns and attract private capital.

9. Ensure Local Ownership in Oil & Gas by incorporating local investors into licensing for oil and gas blocks to increase domestic participation and benefit-sharing.

These steps offer a practical roadmap for accelerating private investment and unlocking Zanzibar’s full blue economy potential.