Summary 

  • Silicon Zanzibar will offer incentives under Zanzibar’s existing free economic zone programme.
  • The programme is aligned with Zanzibar’s blue economy plan and is hoped to help boost local digital services and reduce the country’s dependence on the tourism sector. 
  • In August 2022, Kenya-based Wasoko became the initiative’s anchor tenant by announcing its plans for a new innovation hub at Fumba Town, a mixed-use development in the main island of Unguja. 

An ambitious public­–private initiative in Zanzibar is trying to convince tech companies and workers to relocate to the semi-autonomous archipelago off the coast of mainland Tanzania.

Silicon Zanzibar, an initiative led by the Zanzibar Ministry of Investment and Economic Development, alongside tech companies and local developer CPS, will offer incentives under Zanzibar’s existing free economic zone programme. These will include 10 years of corporate tax exemptions and streamlined issuance of work visas for technical talent.

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The programme is aligned with Zanzibar’s blue economy plan and is hoped to help boost local digital services and reduce the country’s dependence on the tourism sector. The World Bank estimates that tourism accounts for 27% of Zanzibar’s gross domestic product and 80% of foreign exchange earnings.

As a private–public taskforce finalises the details, the tech-friendly policies are not expected to be complete until the first quarter of 2023. But early movers are bullish about Zanzibar’s potential.

“As an island and historic trading hub between Africa, Asia and the Middle East, it is very well suited to be a regional hub,” says Daniel Yu, the co-founder and CEO of Wasoko, a Nairobi, Kenya-based platform that facilitates the order and delivery of essential goods to informal retailers across six African countries.

In August 2022, Wasoko became the initiative’s anchor tenant by announcing its plans for a new innovation hub at Fumba Town, a mixed-use development in Unguja, Zanzibar’s largest island with about 900,000 inhabitants. Mr Yu says that “about half a dozen” companies are in the process of incorporating and joining Wasoko. 

While Silicon Zanzibar could prove to be a model for economic diversification in small tourism-dependent locations, it remains to be seen whether a tech ecosystem can be effectively built from scratch.

Capacity building

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The beaches, weather and unique history of Zanzibar — with influences from Africa, Arabia, India and Persia — have made it a popular, relatively cheap choice for tourists. Given that it has direct flights to more than 20 destinations across Africa, Europe and the Middle East, more than 220,000 visitors travelled to Zanzibar in the first seven months of 2022, according to national statistics.

Hafsa Mbamba, the executive secretary to the CEO of Zanzibar’s Tourism Commission, says that the authorities are pushing to reposition Zanzibar as “more than just a beach destination”, diversifying their tourism product through the provision of more digital services.

“Silicon Zanzibar has come at the right time to support this transition, especially in terms of capacity building of local IT experts,” she adds. The government has a goal of reaching 800,000 tourists by 2025.

While Zanzibar has seen its economic prospects improve over the past decade, due to its tourism boom, the World Bank says that about a quarter of the population lives in poverty and general educational outcomes remain poor.

Tobias Dietzold, the chief commercial officer of CPS, the developer behind Fumba Town, is very bullish that attracting tech talent and companies will benefit the overall economy. 

He notes that Silicon Zanzibar shows “a switch of mindset” for the country, where historically governments have tried to protect local people’s jobs by limiting the influx of skilled foreign workers.

“It has advantages as it brings purchasing power and capacity building in our workforce. We are extremely excited about that as investors and developers,” he says.

Willing government

As the economic development benefits of tech entrepreneurship have become evident, several African governments have become open to working directly with entrepreneurs to shape tech-friendly policies. In a similar vein, the routes of Silicon Zanzibar originate from when Wasoko was on the lookout for a new pan-African tech hub outside Kenya.

In April 2022, Mr Yu travelled to Zanzibar to meet with Mudrick Soragha, Zanzibar’s minister responsible for economy and investment, to outline the type of location they were looking for. The Zanzibari government was immediately supportive, says Mr Yu, who thinks they have offered “an open-door policy” for tech companies, which will enable them to bring in the right talent and test new innovations.

“There is a huge opportunity if a jurisdiction like Zanzibar is willing to be progressive,” he says, highlighting that “there is a lot of protectionism” in larger tech hubs, such as Nigeria and South Africa. He notes that it is very difficult to get work visas for talent between these hubs.

Given the recent shifts seen in tech hubs in developed markets, Mr Yu believes there is scope for emerging ecosystems to become hubs when enough talent relocates there.

“The best analogy would be the big move from Silicon Valley to Miami,” he quips, referring to the exodus of talent from the US West Coast tech hub to other cities.

Silicon Zanzibar has already attracted other companies such as Ramani, a supply chain software start-up backed by renowned accelerator Y Combinator, and Kenyan community commerce platform Tushop. More than 50 other companies have also already inquired about setting up a presence in Fumba Town.

Early days

Investors with experience in Zanzibar believe it will take many years before anything resembling an ecosystem forms there and that it is unlikely to compete with other African hubs.

“[Zanzibar] will not be competitive with the big hubs like Nairobi, but it could attract new types of entrepreneurs, like digital nomads,” says Jost Neumann, the director of programmes at the TUI Care Foundation, which has been supporting sustainable tourism projects in Zanzibar.

Despite the influx of interest from tech companies, Mr Dietzold admits that investors have to be “a little bit patient” when first arriving in Zanzibar, because “not everything is yet fully in place”.

“Zanzibar is still a very virgin market with vast opportunities,” says Mr Dietzold, noting that the “very progressive” government and “peaceful” environment are clear benefits.

Even if Wasoko has been “blazing a trail” by being a first mover, Mr Yu believes that the efforts made to attract tech companies to Zanzibar will ultimately be a positive development for the African tech ecosystem.

“My dream is that we spur as much healthy competition as possible so that every jurisdiction in Africa is really trying to innovate and support the development of the digital economy,” says Mr Yu.

This article first appeared in the December 2022/January 2023 print edition of fDi Intelligence. View a digital edition of the magazine here.