Despite substantial improvements in living conditions and a drop in poverty between 2009 and 2019, poverty reduction in Zanzibar has been slow relative to its economic growth.
A new World Bank Group report, “Towards a More Inclusive Zanzibar Economy: Zanzibar Poverty Assessment 2022” shows while Zanzibar’s gross domestic product (GDP) per capita grew at 2.9 percent per year during 2009 to 2019, consumption per adult equivalent grew by only 1.7 percent per year over the same period.
The ‘growth elasticity of poverty’, which reflects the extent to which economic growth leads to poverty reduction, was low, although similar to the average of Sub-Saharan Africa and somewhat higher than mainland Tanzania.
Despite the relatively high GDP growth, the creation of wage jobs between 2014 and 2019 was limited and unemployment went up from 17 to 19 percent, while inactivity increased, according to the labor force surveys conducted in those years.
Despite poverty declining by nine percent between 2009 and 2019, falling from 34.9 to 25.6 percent, the high population growth has resulted in the number of poor people remaining high in Zanzibar, according to the report.
With a population growth above three percent per year, according to the preliminary results of the 2022 population and Housing Census, Zanzibar has one of the highest population growth rates in the world and the number of poor people in Zanzibar barely changed between 2009 and 2019.
Moreover, the difference in the poverty rate between urban and rural areas increased, driven by large welfare gaps between Zanzibar’s main islands of Unguja and Pemba.
The report calls for urgently taking advantage of opportunities for more inclusive growth through higher local content tourism, diversification of tourism products, and leveraging the ‘blue economy’ for improving household incomes more broadly.
The Poverty Assessment shows fast improvement in various non-monetary poverty indicators (living conditions).
Between 2009 and 2019, gross enrollment in secondary education (forms 5 and 6), for example, increased from 51 to 66 percent. The proportion of households with access to the electricity grid network grew from 38 to 57 percent, with another six percent having access to solar power.
This shows that the significant increase in investments in basic social services in all districts in Zanzibar as part of the implementation of its Development Vision 2050 has led to important gains in human capital.
However, as only half of the economic growth per head translated into improved welfare, there are important opportunities for making Zanzibar’s GDP growth result in better welfare for its population.
Tourism contributes an estimated 27 percent to Zanzibar’s GDP, around 80 percent of its foreign exchange earnings, and an estimated 60,000 jobs.
With the COVID-19 crisis, GDP growth in Zanzibar slowed to an estimated 1.3 percent in 2020, driven by a decline in tourism activity.
GDP per capita fell by 1.6 percent. Most severely hit was the accommodation and food services sub-sector which decreased by 13 percent. Urban poverty may have increased by almost 2 percentage points in 2020, according to simulations.
The poverty assessment was conducted in partnership with the Office of the Chief Government Statistician (OCGS) and was based on the OCGS Household Budget Surveys. The previous World Bank Poverty Assessment for Zanzibar was published in 2017.
Comments are closed.