It’s not the size of the dog in the fight…

It takes about ninety minutes to drive from the main port in Unguja, the largest island that comprises Zanzibar, to its northernmost tip, assuming you don’t first suffer death by dala-dala. Making this journey earlier this week, something my companion said raised a question: Is Zanzibar simply too small to form a viable unit of development? And, if we accept that size alone is not its impediment, why has Zanzibar developed so slowly since its heyday as a port and centre of regional trade when other island-states have boomed?

This is not simply a parochial question, significant only to its one million-odd inhabitants. To reflect on it forces us to engage with the historical development processes of other island-states and Zanzibar’s own involved history; it raises questions of the role of geography; of colonialism; of local identity, culture and political history in development. A blog post can only touch on these questions, but they illuminate some of the bigger issues with which we need to get to grips in other African countries if we want to have a fuller understanding of why they are stagnating or developing only slowly.

The question is also ripe with political significance. Though it’s part of the Union Republic of Tanzania, and lies just 35km away, Zanzibar has a distinct cultural, political and economic history, which form the basis of a vigorously independent identity. This is reflected institutionally: Zanzibar has its own President and House of Representatives, its own Budget and its own revenue collection authority. This identity and set of institutions has not seen off poverty: most of Zanzibar’s population remains food-insecure, and the economy is heavily dependent on a few unreliable sources of income, chiefly spices and tourism.

First, it’s worth briefly dismissing the ‘size-matters’ argument as sufficient to explain why Zanzibar has not escaped from poverty. Island-states have developed elsewhere in the world, particularly in East and South-East Asia. An interesting comparison is with Hong Kong. Zanzibar is actually larger than Hong Kong by about 600 square kilometers, though its population density is far lower. Hong Kong’s geopolitical situation also bears resemblance to Zanzibar’s: it is a small island off the coast of a massive continent, and in particular, off the coast of one of the continental powers. The climates are not wildly dissimilar: rainfall is seasonally isolated, but severe when it does occur; for most of the year it remains hot and humid. (Indeed, Zanzibar is unique in Africa in that its climate supports growth of fruit that is otherwise found only in South East Asia). It is a natural port that attracted colonial and commercial interest for this reason. It has relatively recently ‘unified’ with its mainland power, while retaining a degree of autonomy (and in both cases, this autonomy is much clearer in principle than practice).

Despite these similarities, their histories are not even distant relatives. Hong Kong’s importance as a port was gradually superseded by its importance as a financial centre, and it became a service-oriented economy, which propelled it to remarkable growth rates in the second part of the twentieth century as one of the most successful East Asian Tiger economies. Zanzibar, on the other hand, was overtaken as a port by Dar es Salaam, and its economy diversified from its plantation-and-subsistence agriculture mix only by the addition of tourism as a major source of revenues. Poverty and hunger remain common and private enterprise outside of the tourist industry demonstrates little dynamism.

Now, at this juncture, I will admit that I’m not an expert on Zanzibari history. However, I’d like to propose a series of considerations that, taken together, probably go a long way to explain low growth and which might inform future policy making.

The first thing to consider is the nature of its early economic history. Both Hong Kong and Zanzibar rose to economic prominence as ports. But while Hong Kong was an import-export hub for commodities that changed over time, Zanzibar’s primary trade was in people-as-commodities: slavery. The importance of slavery cannot be overstated in Zanzibar’s historical political economy. John Iliffe, formerly Professor of African History in Cambridge, wrote:

In Zanzibar … the whole economy depended on slavery, and British rule rested on alliance with Arab slave-owners

– (Africans, Second Edition)

Thus, in the late C19th, when slavery was abolished, the entire foundation of the economy was undermined; and because Britain’s political base had also depended on slavery, Zanzibar had to rebuild its economy without the benefit of a thought out period of transition. What’s more (to speak as an economist for a moment), even though slavery ended, labour market flexibility was unchanged: vagrancy laws ensured that freed slaves had to remain on their plantations as indentured labour of a form. The miserable trade was miserable even in its abolition.

This now raises the role of foreign rule. Zanzibar was a protectorate, rather than a colony, but the impact was similar. British rule maintained in Zanzibar for a little over sixty years from the end of slavery. Amidst the wave of African nationalism that swept the continent at the end of colonialism, the Arab ruling class developed a Zanzibar Nationalist Party in 1956; it was this party that was overthrown in the insurrection of 1964, leading to union with Tanganyika to form Tanzania. Two points merit consideration. Firstly, the British left Zanzibar in 1963 with an economy and infrastructure network not far advanced from 1900. Exacerbating this, despite the union with Tanganyika, independence reduced the availability of capital to develop the island. Secondly, the two major political upheavals of independence and revolution would likely have rendered many institutions redundant and authority open to challenge, which probably also had an impact on revenue collection and private enterprise. This is something I’d like to learn more about, but it seems to me that the dual shocks to the system would have had a much bigger impact than decolonization alone. Another island-state, Singapore, also gained independence in the early 1960s. Unlike Zanzibar, Singapore immediately attracted foreign investment and followed an economic plan to modernize.

And what about local identity and culture? My feeling is that the strongly independent identity should be a boon for development rather than a restraint. Many of the transformational aspects of development, in particular those relating to changing ownership patterns can cause dramatic social upheaval; a strong and unified identity may help avert this. On the other hand, there is the danger of too great a distancing from ‘outsiders’, which may not be to the benefit of an island which, due to its size, is going to be a net importer of most goods in the long run and, in the absence of massive population growth, will also need to be outwards-oriented in production.

Culture is not so straightforward. It is difficult to attribute success or failure to culture in large part because it is a concept often used in an imprecise manner in economic analysis, and also because it is politically and socially difficult to do so. We should not ignore it as a factor, though. Singapore and Hong Kong have both developed rapidly due to structural development married to a remarkably industrious culture. The amount of work put into small enterprises to give them their best chance of material success is remarkable. I’m not sure how well Zanzibar has fostered a similar kind of industriousness, but it’s worth examining. There is no middle- or large-scale enterprise in Zanzibar outside of the plantations, so to achieve rapid development, Zanzibar needs to demonstrate increasing incomes across the board (since exports of industrial goods are unlikely, they will need to be consumed domestically) alongside increasing productive capacity. An industrious revolution is required just as much as an industrial one.

Focusing as I have on historical and social issues in Zanzibar is no snub to the importance of economics to resolve problems in development here. However, what I aim to show is that a solid understanding of the historical and physical specificity of a place can give you insight into what kind of economic approach development policies require. For example, the analysis of geography demonstrates that the productive potential of the economy is strong, but it may be restrained by the major element that separates Zanzibar from small Asian island-states: population density. With low population density, effective demand may be difficult to sustain. The options are therefore to either create local demand through policy or aim for export markets from the outset. Similarly, the analysis of the dominant historical role of slavery exposed two issues that require an economic approach to resolution: the long-term stagnation of the economic structure and the relative lack of mobility of labour for much of Zanzibar’s history.

This kind of analysis is required far more broadly in Africa. It’s common for lip-service to be paid to various countries’ troubled pasts, but far less so to come across good economic analysis with a rigorous historical grounding. This is a drum I expect to beat loudly in the future.

2 thoughts on “It’s not the size of the dog in the fight…

  1. karen mckeon wilson

    July 11, 2009 at 9:19am

    Hi Ranil, Rebecca sent me this piece you have written. It is an excellent piece and I enjoyed reading it. My comment is; having insight is one thing, but how to start help a country like Zanzibar improve economically is another given the nature of a people used to a completely different cultural upbringing to the Chinese. Plus there is the question of corruption, which hinders any bold, brave individual who tries to make a business in East Africa. I would be so interested to read, or listen to anyone who has an idea as to how to proceed. If Zanzibar was owned by the Chinese it would be a great ‘success’ economically. Perhaps ‘success’ should be rethought… do you like the Western world and all its excess? anyway, it was so interesting reading, I will read the other blogs you have there. love from Karen

  2. Ranil Dissanayake

    July 13, 2009 at 7:29am

    Hi Karen,

    I talked about the culture issue a bit there – it’s a bit early for me to make any judgements on the impact of culture here, because I simply don’t understand it well enough. I do believe that HK’s culture is integral to its development and history.

    But there are other issues as, which feed into the development of culture; for example, the export of people from what appears to be an underpopulated place (in terms of population density) probably had some long-term impact on development…

    And corruption as well – but corruption occurs everywhere during development processes. What we need to ask is why does it have different effects in different places (agree it appears crippling here) and why does it not get rooted out domestically. Remember the ICAC’s big campaign in the 1980s/90s in HK? That was driven domestically; why is there no equivalent movement in many African countries?

    And yes, what constitutes success is open to debate, but I do think the need to improve basic material conditions is unquestionable. That’s where the involvement of aid etc. will end; it then becomes a domestic question of how countries want to develop their economies from that point.

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