The beer gamble that is threatening Zanzibar’s economy

Prices of beer and other alcoholic beverages have continued to surge in Zanzibar amid limited supply, forcing those who imbibe to dig deeper into their pockets.

But that situation could also derail Zanzibar’s ambition to attract more tourists, especially those who use booze to unwind.

It started after the Zanzibar Liquor Control Board refused to renew the licences of alcohol importers without giving reasons. The Tanzanian archipelago has no local brewery and it is illegal to brew alcohol either.

What has followed is sellers scrambling for what is available from the Tanzania mainland and prices have shot up.

At the Sauti za Busara fete last weekend, thousands of tourists showed up to take part in this annual occasion. But something was missing from their merry.

At the Ngome Kongwe, only Tanzania Breweries Limited products were available. Usually, imported brands such as Heineken, Windhoek and Savannah are common here. Now, even local brands are selling at 300 percent more.

Players in the local tourism sector now fear that the continued price surge could turn the archipelago into a very expensive destination.

Tourism accounts for 30 percent of Zanzibar’s GDP.

Bar owners, too, fear that the continued scarcity could affect their quarterly tax returns. They largely spoke on the background, fearing appearing to contradict local government policy.

Revenue collection

Insiders believe that the taxman could have lost close to $10 million in the last 45 days across the entire value chain.

But, the Zanzibar Revenue Authority (ZRA) Commissioner Yusuf Mwenda says it is too early to gauge the effect of the scarcity of alcohol on revenue collection in the first quarter of 2024.

“...there has been no effect in revenue collection on the entire value chain. However, we are making close monitoring on the trend and business,” said Mr Mwenda.

“Thereafter, with the data, we may establish the reality,” he added.

Ironically, Mr Mwenda had last week called a meeting with the three new licensed suppliers to discuss various issues, including the insufficient supply of beverages and how it affects revenue collection.

“One of the areas where we collect considerable revenue is in the tourism value chain which includes hotels and entertainment joints, therefore the insufficient supply of beverages affects our revenue collection,” Mr Mwenda told the importers.

Mr Francis William Kessy from Kifaru Holdings, one of the new suppliers, said he was confident that after clearing the initial hitches they could stabilise the market. He could not give any timelines though.

Ms Nicole Verjus from Bevco said they have ironed out importation issues with the Tanzania Revenue Authority.

As the three new players pull up their socks, businesspeople we spoke to say the root of the problem lies with the Zanzibar Liquor Control Board.

Their delayed permits for the three established importers - One Stop, Scotch Store, and ZMMI - sparked the initial hiccups.

But a more drastic decision followed on January 2. The board declined to renew licences for these players, who had served the islands for over two decades. The importers claimed they were given no time nor reasons.