Table of Contents
- 1. Zanzibar’s Economic Outlook: 2025–2030 Market Forecasts
- 2. Real Estate Boom: Prime Locations and High-Growth Sectors
- 3. Legal Landscape: New Investment Laws, Tax Incentives, and Ownership Rights
- 4. Key Infrastructure Projects: Ports, Airports, and Smart City Developments
- 5. Tourism Rebound: Resorts, Eco-Lodges, and Short-Term Rental Hotspots
- 6. Tech and Innovation: Digital Nomad Visas and Startup Ecosystem Growth
- 7. Foreign Direct Investment Trends: Leading Sectors and Major Players
- 8. Banking and Finance: Currency, Lending, and Repatriation Rules
- 9. Risks and Challenges: Political Stability, Regulatory Shifts, and How to Navigate Them
- 10. Future Outlook: Strategic Recommendations for 2025–2030 Investors
- Sources & References
1. Zanzibar’s Economic Outlook: 2025–2030 Market Forecasts
Zanzibar’s economic outlook for 2025–2030 is shaped by robust growth projections, ongoing legal reforms, and enhanced infrastructure—factors all contributing to a favorable investment climate. According to the Bank of Tanzania, Zanzibar recorded a real GDP growth rate of 6.8% in 2023, with projections for the period 2025–2030 averaging above 7%, fueled primarily by tourism, construction, and agribusiness sectors.
A key driver of investment interest is the ongoing implementation of the Zanzibar Investment Promotion and Protection Act, 2018 (amended 2022), which streamlines procedures for foreign and local investors and provides attractive incentives. The Zanzibar Investment Promotion Authority (ZIPA) has established a “one-stop center” to facilitate business registration, permits, and access to land, significantly reducing bureaucratic hurdles. The Foreign Exchange Act of 2022 further liberalized capital flows, allowing investors to repatriate profits more easily.
Zanzibar’s government has prioritized large-scale infrastructure projects—including the expansion of Abeid Amani Karume International Airport and upgrades to port facilities—to support growing tourism and trade volumes. The Tanzania Ports Authority reports over $230 million committed to port modernization through 2027, expected to double cargo capacity and streamline logistics for importers and exporters.
The real estate sector is particularly buoyant, underpinned by robust demand for hotels, resorts, and residential properties. The introduction of the Strategic Investment Status (SIS) framework grants select investors tax holidays, reduced land rents, and expedited approvals. According to ZIPA, over $1.2 billion in new real estate and hospitality projects have been approved since 2022, with completion timelines stretching into 2026 and beyond.
- The government aims for tourism arrivals to reach 1 million annually by 2030, doubling 2023 levels (Zanzibar Commission for Tourism).
- Continued investment in renewable energy, particularly solar and wind, is supported by incentives under the Zanzibar Energy Policy (2023), targeting 50% renewable generation by 2030 (Zanzibar Utilities Regulatory Authority).
- Special Economic Zones (SEZs) are being expanded, offering duty-free importation of capital goods and 100% foreign ownership for approved investments (ZIPA).
Looking ahead to 2025 and beyond, Zanzibar’s combination of pro-investment legal frameworks, government-backed infrastructure, and sector-specific incentives positions it as a high-potential destination for investors seeking growth opportunities within East Africa.
2. Real Estate Boom: Prime Locations and High-Growth Sectors
In 2025, Zanzibar’s real estate sector continues to experience a pronounced boom, driven by sustained foreign investment, government reforms, and a burgeoning tourism industry. This momentum is most palpable in prime coastal locations such as Kendwa, Nungwi, Paje, and the historic Stone Town, where luxury resorts, boutique hotels, and mixed-use developments are proliferating. The Zanzibar Investment Promotion Authority has reported a consistent increase in approved real estate projects, particularly in the hospitality and residential sectors, underscoring the archipelago’s appeal as a high-growth investment destination (Zanzibar Investment Promotion Authority).
Legal reforms have played a pivotal role in catalyzing this growth. The government’s 2023 revision of the Zanzibar Investment Act now permits foreign nationals to acquire long-term leases of up to 99 years for property development, provided projects align with designated investment zones and contribute to local economic advancement (House of Representatives Zanzibar). This legislative clarity, alongside streamlined approval processes, has enhanced investor confidence and facilitated record inflows of capital into the real estate market.
Tourism remains the principal driver. In 2024, Zanzibar welcomed upwards of 600,000 international visitors, a figure expected to increase in 2025 as new direct flight routes are established and global travel recovers fully (Zanzibar Hotel Association). This surge has fueled demand for high-end accommodations, branded residences, and eco-friendly resorts, prompting international developers to initiate large-scale projects along the island’s northern and eastern coasts. The hospitality sector’s rapid expansion is complemented by emerging demand for serviced apartments and mixed-use developments tailored to digital nomads and expatriates, reflecting broader lifestyle and remote work trends.
- Stone Town: Investment in boutique hotels and heritage property conversions is on the rise, leveraging its UNESCO status and unique architectural character.
- Nungwi & Kendwa: These northern beach areas are witnessing luxury resort and villa developments, attracting both holidaymakers and investors seeking high rental yields.
- Paje & Jambiani: The southeastern coast is emerging as a hub for eco-resorts and wellness retreats, aligning with global sustainability trends.
Looking ahead, the outlook for Zanzibar’s real estate sector remains robust through 2025 and beyond. The government’s continued focus on investment-enabling policies, infrastructure upgrades (notably the expansion of Abeid Amani Karume International Airport), and targeted tourism promotion are expected to further amplify growth opportunities (Revolutionary Government of Zanzibar). However, investors are advised to conduct thorough due diligence regarding land tenure, environmental regulations, and community engagement to ensure sustainable and compliant project execution.
3. Legal Landscape: New Investment Laws, Tax Incentives, and Ownership Rights
Zanzibar’s investment landscape is undergoing significant transformation as the government seeks to attract foreign direct investment (FDI) and drive economic growth. Central to these efforts is the implementation of updated legal frameworks, tax incentives, and ownership rights tailored to make the archipelago an appealing destination for international investors, particularly in the real estate, tourism, and infrastructure sectors.
In 2023, the Zanzibar Investment Promotion Authority (ZIPA) launched a revised set of regulations under the Zanzibar Investment Promotion and Protection Act, which remains foundational through 2025. This act streamlines the approval process for investment certificates, provides clear guidelines for land acquisition, and enhances investor protections. Notably, the Act enables foreign investors to secure long-term leases of up to 99 years for land use, a significant shift in a region where outright foreign land ownership is restricted. This legal certainty has encouraged a steady rise in project registrations with ZIPA, particularly from Gulf and European investors.
Taxation reforms have further strengthened Zanzibar’s competitive edge. The Zanzibar Revenue Authority has rolled out targeted incentives under the Special Economic Zones (SEZs) regime, including exemptions on import duties, value added tax (VAT), and corporate income tax holidays for qualifying projects. As of 2025, the government continues to offer a reduced corporate tax rate of 15% for strategic sectors, compared to the standard Tanzanian mainland rate of 30%. Additionally, investors in tourism and hospitality developments—key pillars of Zanzibar’s economy—can benefit from duty-free importation of construction materials and capital goods.
On the ownership front, while Zanzibar’s constitution and land laws prohibit freehold acquisition by non-citizens, innovative legal instruments such as long-term leases and government-issued Certificates of Occupancy have become standard practice. These mechanisms provide security of tenure and are recognized by local courts. Recent legislative clarifications, reflected in ZIPA’s 2024 investment guidelines, have further simplified the process for foreign investors to obtain these rights, provided developments align with the government’s economic priorities.
Looking ahead through 2025 and beyond, Zanzibar’s legal landscape appears poised for further refinement. The government, in collaboration with stakeholders like the Tanzania Investment Centre, is drafting amendments to harmonize investment procedures between Zanzibar and the Tanzanian mainland. These anticipated changes aim to streamline processes, enhance investor protection, and ensure compliance with regional and international standards. As a result, the outlook for foreign and local investors in Zanzibar remains highly favorable, driven by robust legal frameworks and attractive fiscal incentives.
4. Key Infrastructure Projects: Ports, Airports, and Smart City Developments
Zanzibar is undergoing a transformation driven by significant infrastructure investments, positioning the archipelago as a strategic hub for trade, tourism, and innovation in East Africa. For investors considering Zanzibar in 2025 and beyond, understanding the scale and scope of current infrastructure initiatives—particularly in ports, airports, and smart city developments—is crucial.
- Seaport Expansion: The Zanzibar Ports Corporation is executing a modernization program at the Malindi Port, the main maritime gateway for the islands. The upgrade includes expansion of cargo handling facilities, deepening of berths, and installation of advanced logistics systems. These improvements are designed to accommodate larger vessels and streamline trade, with completion phases extending into 2026. The government’s commitment to enhancing port capacity is underscored by efforts to attract public-private partnerships for future port projects.
- Airport Upgrades: The Zanzibar Airports Authority has overseen the commissioning of the new Terminal 3 at Abeid Amani Karume International Airport. Operational since late 2023, the terminal has increased annual passenger capacity to over 2 million, supporting the surge in international tourism and business travel. Ongoing work includes runway expansions and the integration of digital border management systems, with further upgrades planned through 2027 to enhance efficiency and safety.
- Smart City Initiatives: The ambitious Fumba Town Development, spearheaded by CPS Africa, exemplifies Zanzibar’s push toward sustainable urbanization. Located southwest of Stone Town, this mixed-use smart city project is introducing eco-friendly infrastructure, renewable energy solutions, and advanced waste management. Phased construction is progressing, with residential, commercial, and hospitality components attracting both local and international investors. Similar projects, such as the Blue Amber Resort by PENINSULA Real Estate Development Ltd, are reshaping the north-eastern coast, with focus on integrated resort and residential infrastructure.
These infrastructure advancements are reinforced by supportive legal frameworks, including the Zanzibar Investment Promotion Authority’s incentives for foreign investors and streamlined project approvals. With regional connectivity improving and urban developments setting new benchmarks for sustainability, Zanzibar is well positioned for robust investment growth through 2025 and into the following years.
5. Tourism Rebound: Resorts, Eco-Lodges, and Short-Term Rental Hotspots
The tourism sector in Zanzibar is experiencing a robust rebound in 2025, positioning the archipelago as a prime destination for hospitality investment. Official data from the Office of the Chief Government Statistician Zanzibar indicates that international arrivals surpassed pre-pandemic levels by late 2024, reaching over 650,000 visitors annually, with continued growth projected through 2027. This surge is driving demand for diverse accommodation types, particularly high-end resorts, eco-lodges, and short-term rental properties.
A cornerstone of the sector’s growth is the ongoing expansion of luxury resorts. Notable openings and expansions by international brands such as Hyatt and Marriott International underscore confidence in Zanzibar’s tourism potential. Additionally, Zanzibar’s government has streamlined land use and investment processes through the 2023 amendments to the Zanzibar Investment Promotion Authority (ZIPA) framework. These reforms facilitate foreign ownership of hotel and resort developments within designated Tourism Development Zones and reduce bureaucratic barriers for joint ventures.
Eco-lodges and sustainable tourism projects are also gaining traction, aligning with Zanzibar’s “Blue Economy” agenda and environmental preservation goals. The Zanzibar Commission for Tourism has introduced new licensing standards in 2024 that incentivize green building, renewable energy integration, and community-based tourism initiatives. Projects such as Chumbe Island Coral Park and Fumba Town’s eco-resort expansion exemplify investor interest in sustainable hospitality, supported by favorable tax incentives and fast-tracked approvals for eco-certified developments.
The short-term rental market is another hotspot for investors. With the rise of digital nomads and experiential travelers, demand for boutique villas and serviced apartments has surged, especially in popular areas like Nungwi, Paje, and Stone Town. The Zanzibar government now requires all short-term rental operators to obtain a Tourism License and adhere to standardized safety and quality regulations, introduced in 2024 to improve sector oversight and guest experience.
Looking ahead, the outlook for tourism-related real estate investment in Zanzibar remains positive. Continued improvements to infrastructure—such as the expansion of Abeid Amani Karume International Airport and road upgrades led by the Ministry of Works, Transport and Communication Zanzibar—are set to further boost accessibility and visitor numbers. With a stable regulatory environment and targeted investment incentives, Zanzibar is well-positioned to attract both institutional and individual investors in the resort, eco-lodge, and short-term rental segments through 2025 and beyond.
6. Tech and Innovation: Digital Nomad Visas and Startup Ecosystem Growth
Zanzibar has emerged as an attractive destination for tech-savvy investors, digital nomads, and startup founders, leveraging its unique geographical position, regulatory reforms, and growing infrastructure. As of early 2025, the government’s strategic agenda includes fostering a digital economy and encouraging foreign direct investment (FDI) in technology and knowledge-based sectors.
A pivotal development has been the introduction of the Digital Nomad Visa, launched by the Zanzibar Investment Promotion Authority (ZIPA) in late 2023. This visa allows foreign remote workers and entrepreneurs to reside and work in Zanzibar for up to one year, with the option to renew. The policy aims to attract a global talent pool, boost the local economy through spending, and promote knowledge transfer. Early data from ZIPA indicates a steady increase in applications, particularly from Europe, North America, and Asia, with several hundred visas issued in the program’s first year.
To further stimulate innovation, the Zanzibar Information Communication Technology (ICT) Innovation Incubator—operated under the Ministry of Infrastructure, Communications and Transport—has expanded its programs, providing co-working spaces, mentorship, and seed funding for local startups. In 2024, the incubator supported over 40 startups, with a focus on fintech, tourism tech, agritech, and e-commerce solutions. The government, through the Zanzibar ICT Agency, continues to invest in digital infrastructure, such as fiber optic connectivity and public Wi-Fi zones, which are critical for tech-driven enterprises.
Legal reforms have also played a crucial role. The Zanzibar Business and Investment Promotion Act (amended 2023) provides incentives for technology investors, including tax holidays, duty exemptions on ICT equipment, and the ability for foreign entities to own 100% of their business within designated innovation zones. ZIPA’s streamlined online portal allows for efficient business registration and permit processing, reducing bureaucratic barriers for tech founders and investors.
Looking ahead, the outlook for tech and innovation investment in Zanzibar remains robust. The government’s Vision 2050 roadmap prioritizes a knowledge-based economy and aligns with East Africa’s broader digital transformation goals. Partnerships with regional tech hubs and international organizations are expected to further enhance the ecosystem. As digital nomadism and remote entrepreneurship grow globally, Zanzibar’s blend of regulatory openness, supportive infrastructure, and lifestyle appeal position it as a rising African tech hotspot for 2025 and beyond.
7. Foreign Direct Investment Trends: Leading Sectors and Major Players
Zanzibar has emerged as an increasingly attractive destination for Foreign Direct Investment (FDI) within East Africa, particularly since the implementation of recent legal and regulatory reforms aimed at stimulating economic growth and diversifying its investment portfolio. As of 2025, FDI inflows have shown a positive trajectory, with the government’s targeted approach driving investor interest in key sectors such as tourism, real estate, renewable energy, and agribusiness.
Tourism remains the leading sector for FDI, leveraging Zanzibar’s global reputation as a premier island destination. In 2023 and 2024, the Zanzibar Investment Promotion Authority (ZIPA) reported significant investments in luxury hotels, mixed-use developments, and eco-tourism projects, with notable participation from international brands and regional hospitality groups. The government’s strategic vision, outlined in the Zanzibar Development Vision 2050, emphasizes sustainable tourism and infrastructure upgrades, which continue to attract both established and emerging players in the sector (Zanzibar Investment Promotion Authority).
Real estate development has also experienced a surge in foreign investment, particularly following the 2021 amendments to the Zanzibar Land Tenure Act, which permit non-citizens to acquire land for investment purposes through long-term leases. Major projects include the Fumba Town development and Blue Amber Resort, both led by international consortia and designed to cater to the growing demand for residential and mixed-use coastal properties (Fumba Town). These large-scale projects demonstrate the willingness of foreign investors to commit capital to Zanzibar’s evolving urban landscape.
In line with global and regional sustainability goals, the renewable energy sector is rapidly gaining traction. The Zanzibar government has partnered with international firms to expand solar and wind capacity, aiming to reduce reliance on mainland energy supplies and foster a greener economy. Noteworthy is the Zanzibar Energy Sector Transformation Project—backed by the World Bank and other organizations—which has incentivized private sector participation and technology transfer (World Bank).
Agribusiness and the blue economy (marine resources) are also witnessing new inflows of capital, bolstered by government initiatives to modernize agricultural production and develop value chains for spices, seaweed, and fisheries. These sectors benefit from fiscal incentives and streamlined investment processes introduced by ZIPA in 2022 and 2023, which aim to further position Zanzibar as a trade and processing hub for the wider region (Zanzibar Investment Promotion Authority).
Looking ahead, the outlook for FDI in Zanzibar remains positive through 2025 and beyond, driven by regulatory clarity, infrastructure investments, and sustained government commitment to creating an investor-friendly environment. The presence of established international developers and new market entrants suggests continued diversification of the investment landscape, with a focus on sustainability and value addition.
8. Banking and Finance: Currency, Lending, and Repatriation Rules
Zanzibar, as a semi-autonomous region of Tanzania, operates within the broader Tanzanian financial and banking framework, though it maintains certain unique regulations relevant to investors. The national currency is the Tanzanian Shilling (TZS), and all official transactions—including property purchases and business operations—must be conducted in TZS. This requirement is enforced by both the Bank of Tanzania and the Zanzibar Revenue Board. However, in practice, some real estate and investment transactions—especially those involving foreign investors—may initially be quoted in US dollars or euros before conversion to shillings at the point of contract and payment.
The banking sector is well established, with both Tanzanian and international banks operating in Zanzibar. Notable institutions include NMB Bank Plc, CRDB Bank Plc, and Absa Bank Tanzania. These banks offer a range of services for investors, including business accounts, transaction services, and financing options. As of 2025, lending to foreigners is technically permitted, but in practice, local banks generally require significant collateral and a demonstrable business presence in Tanzania. Mortgage and property financing for non-residents remain limited, with most foreign investors relying on offshore funding or cash purchases.
Recent regulatory developments have sought to further clarify the rules around foreign direct investment and capital movement. The Zanzibar Investment Promotion Authority (ZIPA) oversees investment approvals and ensures compliance with the Zanzibar Investment Promotion and Protection Act No. 14 of 2018. This legislation guarantees the right of investors to repatriate profits and capital, subject to tax clearance and compliance with local laws. Foreign investors are allowed to open foreign currency accounts with licensed banks in Zanzibar, easing the process of moving funds in and out of the jurisdiction (Bank of Tanzania).
To repatriate profits, dividends, or proceeds from an investment, investors must obtain a tax clearance certificate from the Zanzibar Revenue Board and comply with any sector-specific regulations. The process is generally straightforward but can involve detailed documentation to demonstrate compliance with both investment and tax requirements. In 2025, the Tanzanian government continues to prioritize anti-money laundering and foreign exchange controls, so enhanced due diligence by banks is the norm for large international transactions.
Looking ahead, the outlook for banking and finance in Zanzibar is stable, with ongoing modernization of payment systems and regulatory frameworks intended to attract further foreign investment while maintaining financial integrity. Investors are advised to partner with established banks and stay abreast of evolving policies to ensure efficient transaction management.
9. Risks and Challenges: Political Stability, Regulatory Shifts, and How to Navigate Them
Investing in Zanzibar presents significant opportunities, but investors must be aware of several risks and challenges, particularly around political stability and regulatory shifts. Understanding these dynamics—and strategies for mitigating associated risks—will be critical for those looking to capitalize on Zanzibar’s growth in 2025 and the coming years.
Zanzibar operates as a semi-autonomous region within the United Republic of Tanzania, with its own government and legal framework. While the archipelago has enjoyed relative political stability in recent years, periodic tensions between the two main political parties—the Chama Cha Mapinduzi (CCM) and the Alliance for Change and Transparency (ACT Wazalendo)—can influence investor sentiment and policy implementation. The government has taken steps to reassure investors, launching initiatives like the Zanzibar Investment Promotion Authority (ZIPA) to facilitate and protect foreign investment, but the underlying political dynamics remain an area to monitor.
A central consideration for investors is Zanzibar’s evolving regulatory environment. In 2023 and 2024, the government enacted key reforms to attract both local and foreign investment, including amendments to the Zanzibar Investment Promotion and Protection Act and revisions to land laws governing ownership and leasing for non-citizens. The Zanzibar Investment Promotion Authority now offers incentives such as tax holidays, customs duty exemptions, and streamlined licensing for projects in designated Free Economic Zones. However, the implementation of these reforms is ongoing, and regulatory clarity—particularly concerning land tenure, repatriation of profits, and dispute resolution—remains a challenge for some sectors.
Another risk is the possibility of regulatory shifts as Zanzibar’s economy grows and diversifies, particularly in real estate, tourism, and blue economy sectors. For example, the government periodically reviews foreign land ownership policies and investment incentives to align with national development goals. Sudden regulatory changes could impact project timelines or financial projections, especially for long-term investments. As such, investors are encouraged to maintain active engagement with government agencies, such as ZIPA and the Revolutionary Government of Zanzibar, to stay informed about policy updates.
To navigate these risks, investors should conduct thorough due diligence, seek legal counsel well-versed in Zanzibar’s commercial laws, and consider structuring investments to allow for flexibility in the face of regulatory or political changes. Establishing local partnerships can also help mitigate risks related to administrative procedures and community relations. By proactively addressing these challenges, investors can better position themselves to benefit from Zanzibar’s promising investment environment in 2025 and beyond.
10. Future Outlook: Strategic Recommendations for 2025–2030 Investors
Zanzibar is poised for significant investment growth between 2025 and 2030, underpinned by government-led reforms, infrastructural developments, and a burgeoning tourism sector. The archipelago’s strategic location and improving regulatory environment position it as a compelling destination for investors seeking exposure to East Africa’s expanding markets.
A major driver of investment is Zanzibar’s Vision 2050 plan, which emphasizes economic diversification, sustainable tourism, and infrastructure modernization. The government, through the Zanzibar Investment Promotion Authority (ZIPA), continues to streamline procedures for foreign direct investment (FDI), including the introduction of online registration and licensing platforms. In 2024, the Zanzibar Investment Policy was updated to further incentivize investors via reduced minimum capital requirements and tax holidays for strategic sectors, notably tourism, real estate, and blue economy initiatives.
Recent legislative changes have clarified land ownership rights and long-term lease structures for non-citizens, with the Zanzibar House of Representatives amending land laws in late 2023 to allow for renewable leases up to 99 years for approved investment projects. This change is expected to spur new developments, as it provides greater security and transparency for international investors.
Tourism remains a cornerstone of Zanzibar’s economy, contributing over 27% to GDP in recent years, according to the Bank of Tanzania. The sector is projected to expand further as new hotels, resorts, and eco-friendly developments come online, supported by infrastructure upgrades such as the ongoing expansion of Abeid Amani Karume International Airport and improved road networks. The government’s focus on high-value, sustainable tourism is expected to attract both institutional and private investors looking to capitalize on rising visitor numbers and premium offerings.
The blue economy—encompassing marine resources, aquaculture, and port development—is another strategic priority. Initiatives led by the Zanzibar Investment Promotion Authority and the Ministry of Finance and Planning Zanzibar aim to develop deep-sea fishing, seafood processing, and logistics facilities, presenting new opportunities for investment in value-added industries.
Strategically, investors should monitor regulatory updates and prioritize projects aligned with government priorities—such as sustainable tourism, renewable energy, and blue economy ventures—to benefit from incentives and public-private partnership opportunities. Engaging with ZIPA and leveraging the region’s evolving legal and financial frameworks will be critical for maximizing returns and mitigating risks through 2030 and beyond.
