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Stiff Competition Forces Cigarette Company to Halt Operations

TOMRIC News Agency (Dar es Salaam), 4 July 2001

Zanzibar - Stiff competition has forced Zanzibar Cigarette Company (ZCC), which used to be a major employer in the Isles, to close down operations.

Closing down of the company denies employment to hundreds people and a revenue to the government of Zanzibar, the Minister for Trade and Industry, Marketing and Tourism, Mr. Mohammed Aboud Mohammed has told the House of Representatives.

"The ZCC, which used to contribute a lot to the Isles government, has been closed down due to various reasons including stiff competition mainly by the Mainland-based, Tanzania Cigarette Company (TCC)," he has said. He told the House that his ministry was liaising with the ministry responsible for Finance and Economic Planning with a view to finding an appropriate solution.

He did not disclose them, but he said survival of the company was important in terms of employment and tax revenue to his government.

According to him, by March ZCC produced 5,150 cartons worth Tshs604 million and only 4,140 cartons were sold. The company paid to the government Tshs371 million in form of taxes.

He said further that the government has approved seven industrial projects which he was optimistic they would contribute greatly to the Isles economy. The projects in the offing include for producing coconut oil, mineral water, aluminum door and window frames and glass factory. They also include for soft drinks and food packers.

Industries in Zanzibar have in the past few years been vulnerable to imported cheap products from Arabic countries.

Despite of vulnerability, the government of Zanzibar has been placing much of its hope for development on the tourism and industrial sectors. It has been the disparate plight of the national economy, which forced the government to place emphasis on non-traditional economies. Among them was Economic Recovery Program (ERP), drawn up through the assistance from the British Overseas Development

Administrative (ODA). The ERP recommended tourism as one of the lead sectors in economic development for Zanzibar.

The government passed an Investment Protection Act (1986) to safeguard the interests of the would be investors. The Act encourages both local and foreign investments in Zanzibar across a broad range of industries, offering a variety of business inducements such as tax holiday, preferential income tax rates and special profit repatriation rules, among others. To-date a number of projects have been approved by the government's investment promotion agency, the Zanzibar Investment Promotion Agency (ZIPA).

Zanzibar is a high rate of unemployment, especially among youth and women whose unemployment rate exceeds that of men. The problem is compounded by the high rate of population growth which experts put current estimates at 3 percent. While in 1992 economically active population, over the age of 15 years, was only 292,530 the Department of Statistics in Zanzibar projects the figure to hit at 390,000 by the year 2005.