Tourism Review

Leakages in the tourism systems: case of Zanzibar

Wineaster Anderson,
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 Leakages in the tourism systems: case of
Zanzibar
Wineaster Anderson

Wineaster Anderson is Abstract

based in the Department of Purpose – The objective of this study is to estimate leakages in tourism systems. More precisely, the
Marketing, University of Dar study aims to investigate the sources of the annual requirements in the resorts and to identify the triggers
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es Salaam, Dar es Salaam, for leakages in tourism systems in Zanzibar. It then seeks to explore the challenges that operators face
Tanzania when sourcing the inputs locally. Likewise the study seeks to trace the distribution channel of the tourists
arriving in Zanzibar from generating markets.
Design/methodology/approach – Interviews involving 150 resorts were conducted during 2010 in the
island of Unguja, where almost 97 percent of Zanzibar’s resorts are found. Both quantitative and
qualitative methods of analysis were employed.
Findings – The findings reveal massive internal (import-coefficient leakages) and external leakages
that only 16 percent of the resort requirements are sourced within Zanzibar. Unreliable capacity in terms
of quantity and quality of the local supplies are among the leading factors that trigger high leakages.
Most resorts in Zanzibar are owned, managed and operated by non-locals. Tourism in this archipelago is
revolving around the beach product; whereby the direct charter inclusive tourists, mainly from Europe,
dictate the tourism channels. Nevertheless, a number of tourists buy pre-arranged tours to Zanzibar as
an ‘‘add-on’’ to their mainland Tanzania safaris.
Practical implications – This study lays out the case for the need for more local linkages in the supply
chain by revealing the extent to which the accommodation sector depends upon imported as opposed
to local goods and services. Practical strategies to minimize leakages are proposed.
Originality/value – An abundance of literature has been written on linkages and leakages in tourism in
several destinations. The same amount of work has yet to be done in sub-Saharan Africa. The choice of
Zanzibar is therefore justified.
Keywords Leakages, Tourism, Zanzibar, Local economies, Marketing strategy, Profit and loss accounts,
Tourism management
Paper type Research paper

Introduction
Although an abundance of literature has been written on linkages and leakages in the
tourism systems in several destinations, such as the Caribbean and Mediterranean (Torres,
2002; Issa and Jayawardena, 2003; Abdool and Carey, 2004; Torres, 2004; Karramel and
Lengefeld, 2005; Mitchell and Page, 2005; Anderson, 2008) among others, the same
amount of work has yet to be done in the sub-Sahara Africa (Sharpley and Perunjodi Naidoo,
2010). Leakages have been defined by Mitchell and Page (2005) and Meyer (2006) as the
part of the price of the holiday paid by the tourists, that leaves or never reaches a destination,
due to the involvement of foreign-based transactions. Policy makers and tourism
management in various destinations usually seek to know how tourism promotes the local
economy through bringing together different stakeholders in the local area or commonly
The author is thankful to the known as local linkages in tourism destinations (see Anderson and Juma, 2011; Mitchell and
UDBS-Sida Programme
(2009-2013) for funding the
Page, 2005; Hemmati and Koehler, 2000). However, leakages triumph in many destinations
research due to a variety of factors, including the destinations lacking capacity to meet the demand of

PAGE 62 j TOURISM REVIEW j VOL. 68 NO. 1 2013, pp. 62-75, Q Emerald Group Publishing Limited, ISSN 1660-5373 DOI 10.1108/16605371311310084
 the sector, either due to limited resources or artificial deficiencies (Hemmati and Koehler,
2000). Many islands, for instance, the concentration of most tourism industry globally, are
characterized by smallness and external dependence due to limited natural resources;
which paves way to high leakages. There are several examples of such destinations cited in
the literature, particularly the popular tourism islands in the Mediterranean (Anderson, 2008;
Anderson et al., 2009) and Caribbean (Issa and Jayawardena, 2003; Abdool and Carey,
2004; Torres, 2004; Karramel and Lengefeld, 2005; Mitchell and Page, 2005) whereby most
operational inputs in the tourism industry are imported from outside.
In this particular study, the Zanzibar archipelago, which is made up of the islands of Unguja
and Pemba was chosen as a case. This archipelago comprises of the blend of various
cultures where multitude of tourists visit annually due to its historic legends and various
vacation activities and attractions including sun and sand beach tourism, traditional sailing
dhows, carved wooden door chests and scent of clove (Tiffin, 2008; Tourism Confederation
Of Tanzania, 2009; Anderson, 2010). Zanzibar is also considered as one of the world’s
centers for promoting nature sports including diving as well as fishing tourism (Travel Agent,
2007; UNESCO, 1995). The tourism industry in these islands is fast growing at an average of
4 percent annually; receiving an average of 135,000 tourists every year (Zanzibar
Commission for Tourism, 2009). Tourists to Zanzibar are mainly from Europe (over 60 percent
of overseas visitors) with Italy being, by far, the largest sources (see Table I). The UK,
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Scandinavia, US and Canada are also important origins, as most safari marketing
companies in North America offer Zanzibar in their itineraries.
On one hand, tourism supply is growing extensively in the archipelago; evidenced by the
development of about 349 registered hotels with 7,009 rooms and 13,198 beds as Table II
summarizes (Zanzibar Commission for Tourism, 2010). But on the other, there has
particularly been a concern that many hotels and restaurants import a substantial amount of
their food requirements (Zanzibar Association for Tourism Investors-ZATI, 2009 Anderson,
2011; Steck et al., 2010). The industry is accountable for more than 51 percent of the
archipelago’s GDP (Steck et al., 2010). Although the Revolutionary Government of Zanzibar

Table I Origin of Zanzibar’s tourists by main source markets

Years Italy UK Other Europe Total Europe Other Africa North America Rest of the World Total

1985 4,392 1,952 10,027 16,371 339 2,230 428 19,368

1986 8,708 1,489 6,403 16,600 860 2,437 2,949 22,846
1987 2,362 1,762 5,247 9,371 2,890 2,523 5,227 20,011
1988 3,778 3,278 12,912 19,968 3,004 4,060 5,087 32,119
1989 3,144 4,560 16,339 24,043 3,992 4,664 5,151 37,850
1990 4,345 5,584 17,398 27,327 2,836 5,173 6,805 42,141
1991 5,174 7,790 20,929 33,893 3,797 4,998 8,139 50,827
1992 6,625 9,139 24,661 40,425 4,158 5,664 9,500 59,747
1993 13,920 6,272 24,819 45,011 6,806 6,795 9,985 68,597
1994 3,004 6,377 18,914 28,295 3,622 4,002 5,514 41,433
1995 8,922 10,391 18,882 38,195 6,680 5,173 6,367 56,415
1996 13,502 11,909 23,669 49,080 6,388 5,935 7,756 69,159
1997 19,583 14,884 26,471 60,938 8,022 7,944 9,591 86,495
1998 23,505 13,765 25,152 62,422 6,293 8,046 9,694 86,455
1999 23,279 14,141 24,939 62,359 6,367 7,112 11,080 86,918
2000 25,764 16,307 29,368 71,439 8,718 8,048 8,960 97,165
2001 14,510 13,147 25,738 53,395 7,500 6,578 8,856 76,329
2002 25,044 13,012 27,405 65,461 7,887 6,448 7,715 87,511
2003 18,586 7,945 24,610 51,141 6,866 4,334 6,024 68,365
2004 30,429 10,027 29,199 69,655 9,326 5,997 7,183 92,161
2005 49,978 12,963 32,241 95,182 14,098 7,225 8,938 125,443
2006 49,658 14,180 36,361 100,199 18,244 9,115 9,553 137,111
2007 52,046 14,204 38,897 105,147 16,033 10,905 11,198 143,283
2008 41,610 12,949 34,479 89,038 17,212 10,690 11,505 128,445
2009 45,244 13,377 38,293 96,914 17,395 10,471 10,139 134,919

Source: Zanzibar Commission for Tourism (2009)

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VOL. 68 NO. 1 2013 TOURISM REVIEW PAGE 63
 Table II Distribution of accommodation capacity in Zanzibar in 2009
Place Registered establishments Rooms Beds

Unguja
North & East Coast 91 3,167 6,219
South & East Coast 106 1,732 3,159
Stone Town & Ng’ambo 85 1,134 2,057
Suburb Town Vicinity 48 764 1,351
Pemba 19 212 412
Total 349 7,009 13,198

Source: Zanzibar Commission for Tourism (2010)

reasonably promote investments in tourism to accommodate the massive tourist inflows, one
may say, destination management has paid little attention on the Britton’s (1991) caution to
the tourism stakeholders that tourism enterprises are not in the business of community
development, but rather in the business of accumulating resources for themselves. Even in
the academia setting, the knowledge of leakages involved in the tourism systems in Zanzibar
is scarce. That is why this study is very important at this point.
Hence, the objective of the study is to estimate the leakages in the tourism systems in
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Zanzibar with major focus on the tourist resorts. More precisely, the study investigates the
sources of the daily requirements in the resort main operational sections and identifies the
triggers for leakages in tourism systems before it explores the challenges the resort
operators face when sourcing the inputs locally. Likewise, the study traces the distribution
channel of the tourists arriving in Zanzibar from generating markets. The lessons emerging
from the analysis and findings of the study are intended to be relevant and useful to shed
light on the economic value of tourism to the economy and especially how much of the
tourism cake remains at the destination. In order to achieve the defined objectives, the rest of
the paper is arranged as follows: the literature review comes before the research methods;
then follows the findings and finally the conclusion.

Literature review
The concepts of linkages and leakages
The origin of the concepts of linkages and leakages has continuously been an issue to
debate. It is believed that the concept of linkages was first introduced in the, 1950s by
Hirschman as activities-induced-activities; meaning that, the ongoing activities induce
agents to take up new activities (Drejer, 2002, 2003). According to Drejer (2003), its
inception aimed to identify the key sectors that are central for economic development
through demand-supply effects; through measuring the extent of supply-demand
interrelationships between the key sector and the rest of the economy. Since then, in the
literature, linkages have been categorized into backward and forward linkages (Zuo, 2006).
Forward linkages are associated with output utilization, which measures the relative
importance of the sector as supplier to other industries in the economy. The backward
linkages are demand oriented, which measure relative importance of a sector as demander.
Tourism industry involves more backward linkages with the economy as means to get
operational input such as capital, manpower, materials and information (Poon, 1993;
Goodwin and Bah, 2003; Mitchell and Page, 2005). Thus, linkages in tourism are effective
mechanisms through which economic development can be achieved through local
community participation (Lundgren, 1975; Belisle, 1984; Culpan, 1987; Bowen et al., 1991;
Meyer, 2006). Accommodation sector may link with local economy through recruitment and
training of locals; supporting the development of local arts, crafts, cultural products and
tourism services; also working with tourism businesses and encouraging tourists to spend in
the local economy.

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PAGE 64 TOURISM REVIEW VOL. 68 NO. 1 2013
 Naturally, expansion of local linkages at the tourism destinations connotes the decrease of
leakages; which eventually stimulates the economy as a whole and creates synergy effects
between different sectors of the economy. Leakages are defined as the part of the price of
the holiday paid by the tourists that leaves or never reaches a destination, due to the
involvement of foreign-based transactions (Mitchell and Page, 2005; Meyer, 2006).
Leakages in tourism are in three broad categories (Benavides, 2001; Meyer, 2006):
1. internal (import-coefficient leakages);
2. external (pre-leakages); and
3. invisible (foreign exchange costs associated with resource damage or deterioration).
Internal leakages occur when tourists pay locally, but that payment or a part of it, is used
to import some of the inputs used in tourism industry. This occurs where the local
economies are weakest owing to sparse factor endowment or inadequate quality of
goods and services (Benavides, 2001). In the islands for instance, internal leakages are
significantly high, due to narrow resource base for producing required goods and
services needed in tourism industry (Spinrad, 1982). According to Hemmati and Koehler
(2000), financial leakage is likely to be high in countries where there is little manufacturing
and service capacity.
External leakages are the total value added captured in tourist-generating countries, due to
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the involvement of intermediaries. That is the difference between amounts paid for in tourist
generating countries and received in host countries (Meyer, 2006; Benavides, 2001).
External leakages are considerably high in the all-inclusive tours; where packagers (usually)
based in the origin countries buy several services, assemble and resell them to visitors as a
package (Holloway, 1998). Sometimes the cash that reaches the destination is just enough
to cover the local expenses incurred by the host resorts only (Hemmati and Koehler, 2000;
Wong and Lau, 2001) while the rest of tourism spending leaks away. Invisible leakages
conversely, involve the real losses or opportunity costs related to resource damage or
deterioration, like, tax avoidance, informal currency exchange transactions, and offshore
savings and investment (Meyer, 2006).

Value-chains and supply-chains

The concepts of linkages and leakages borrow heavily from the broad theory of
value-chains and supply-chains proliferated in the tourism studies (including Hemmati
and Koehler, 2000; Drejer, 2003; Goodwin and Bah, 2003; Torres, 2004; Feller et al., 2006;
Mitchell and Page, 2005; Meyer, 2006) when building up a case for local linkages as a
way to prevent leakages in the developing destinations. The underlying confidence is that
the final product in tourism is made up of many actors, if the entire requirements were
sourced locally, if possible, then the benefits of the industry to the local economy, would
have been immense. Tourism industry is a chain of many suppliers, leading to several
supply chains found either within a particular destination or one destination attracting
suppliers from the rest of the world.
The tourism supply-chain, as an integration of key business processes from a tourist through
original suppliers that provides tourism products, services and information that adds value
for tourists and other stakeholders, is not new. The concept describes the way through which
tourism firms accrue value from the financial resources, payment terms, and business
stability that their clients provide, while the clients derive value from the delivered tourism
products and services. As we have seen in the previous section, firms do not operate in
isolation, but rather they have a great deal of outsourcing and collaboration, the linkage
between multiple firms’ value creating processes known as ‘‘value chain.’’
The value chain model was first described and popularized by Porter (1985) as the
combination of value added activities operating within a firm – activities that work together to
provide value to customers as product or services move from conception to delivery to the
customer. He further linked up the value chains between firms to form ‘’’Value System’’,
which includes the value chains of a firm’s supplier (and their suppliers all the way back), the

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VOL. 68 NO. 1 2013 TOURISM REVIEW PAGE 65
 firm itself, the firm distribution channels, and the firm’s buyers (and presumably extended to
the buyers of their products, and so on). The primary focus in value chains is on the benefits
that accrue to customers, the interdependent processes that generate value and the
resulting demand and funds flows that are created (Feller et al., 2006). Kaplinsky et al.
(2003) considers it as the process that involves the full range of activities that are required to
bring a product or service from conception, through the different phases of production
(involving a combination of physical transformation and the input of various producer
services), delivery to final consumers, including all process that added value to the
productive process.

The ultimate aim of applying the value chains and supply chains models in understanding
the leakages in the tourism systems in this study is to broadly contextualize on how
destinations can satisfy the tourists without making the local community worse off from the
tourism operations. To this end, the next section describes the methods applied in the study.

Research methods
The specific objectives of this study are in threefold. First, was to examine the sources of the
daily requirements in the resorts main operational sections in order to establish the value
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chains and supply chains in the tourism systems in Zanzibar. Second, it explores the
challenges the operators face when sourcing the resorts inputs locally. Third, the study
traces the distribution channel of the tourists arriving Zanzibar from generating markets. To
achieve the stated objectives, the study has involved the tourism supply on the island of
Unguja, where almost 97 percent of the Zanzibar’s resorts are found. Also, the island
receives at least 90 percent of the archipelago’s annual tourist arrivals (Zanzibar
Commission of Tourism, 2009).

In view of that, a total number of 208 tourist resorts were sampled. Thereafter, various efforts
to get their managers, including phone calls and walk-ins, followed. However, after several
attempts, the successful interviews were 150 (equivalent to 72 percent of expected
respondents). Seasonality of tourism industry largely contributed to the outcome, because
during low seasons most of the resorts were closed; while during high season (which is from
June to September) most resorts operate at full capacity, and therefore claimed to be too
busy to respond to a questionnaire, which was distributed to them between March and
October 2010.
The data collecting tool required the respondents to indicate the percentages of the detailed
inputs purchased for the business operation in the previous year sourced from within and
outside Zanzibar in the main sections of food supplies; cutlery and crockery supplies;
supplies in rooms and accommodation; supplies in bars; government taxes and utilities; and
cross-cutting supplies. In addition, the respondents were required to give an overview of the
distribution channel of their customers from the origin to the destination; and the challenges
they face when sourcing the business requirements from internal suppliers.

Of the respondent resorts, the locally owned account for only 32 percent, European (34
percent) and other countries (12 percent); while the rest are jointly owned by the Zanzibaris
and foreigners. The majority have up to 50 rooms, with less than 200 beds. As Table III
summarizes, majority of the resorts offer all-inclusive exclusively, within which the guests are
supplied with almost everything they may require during their stay at the destination. The
clients of this kind of tourism product prefer to spend their days and nights in the sterilized
environment of the tourist resorts, which apart from accommodation, also include several
services, such as swimming pools, bars and restaurants, a stretch of private beach,
landscape gardens and a variety of sporting facilities. The main channel of distribution for
this kind of tourist may include only the transport from the entry point (Zanzibar International
Airport or Ferry) to the accommodation and back to the departure point. In view of that, this
study chose to dwell on the accommodation as a center of attention. The study findings are
presented in the subsequent section.

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PAGE 66 TOURISM REVIEW VOL. 68 NO. 1 2013
 Table III Respondent characteristics
Selected hotel characteristics %

Property ownership:
Local Zanzibari 32.0
Foreign-European (Italian, Spanish, Germany, British) 34.0
Other countries 12.0
Joint venture 22.0
Total 100.0
Boarding basis:
All-inclusive (AI) exclusively 56.0
Bed, Bed & Breakfast, & AI 4.0
Bed, Bed & Breakfast, Half board & AI 5.2
Bed, Bed & Breakfast, Half board, Full board & AI 6.8
Bed, Half board & AI 8.0
Bed, Half board, Full board & AI 7.0
Half board, & AI 5.0
Half board, Full board & AI 8.0
Total 100.0
Accommodation rooms available:
10-50 67.0
51-100 22.0
. 100 11.0
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Number of places (Beds) in the hotel:

, 200 78.0
200-300 18.0
. 300 4.0
Total 100.0

Note: n=150

Findings and discussion

Leakages in the tourism systems
Tourism supply-chain in Zanzibar involves tour operators and guides, accommodation
providers, restaurants, marine and boat activities, travel agents, ferry boats, air services,
retail (curio) shops, tourist attractions and visitor centers. Figure 1 summarizes the potential
supply chain of tourist visiting Zanzibar. It specifically illustrates that tourist arrives in
Zanzibar through airport or harbor (majority of tourists visiting Zanzibar via Tanzania
Mainland use the latter). From the entry point to the accommodation that tourist may need
local transport; with several options available ranging from taxi, public transport, self-drive to
hotel shuttle. Tourists visit Zanzibar mainly for its beach tourism, conference, culture and
tradition, history and archaeology, and many more attractions. Accessing them may require
transport. Likewise, some guides and interpreters may be needed to acquire knowledge
about Zanzibar’s history and archaeology in Stone Town and other sites. Finally, this tourist
would need to return to the point of departure, which is either airport or harbor; and therefore
needs for the means of transport. Resorts were required to identify their linkages in relation to
their main sections of food supplies; cutlery and crockery supplies; supplies in rooms and
accommodation; supplies in bars; government taxes and utilities; and cross cutting
supplies.

From the aggregated resorts’ expenditure, the findings show that the main suppliers of this
sector are from outside Zanzibar. As Table IV summarizes, it is estimated that only 16.9
percent of the resort demands are sourced within local linkages; with the rest of the
requirements sourced from the global links. Sectional-wise, annual food bills take the lion’s
share in terms of import value. Explicitly, what is left in the local economy from tourism was
estimated at 8.9 percent on food, cutlery and crockery supplies; 32 percent on rooms and
accommodation; 5.6 percent on supplies in bar; 10 percent on salaries and utilities (gas and
electricity); and 21 percent on cross cutting supplies. The main expenditure (at least 90
percent) that gets in the local economy covers the laundry, utilities (i.e. water), garbage

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VOL. 68 NO. 1 2013 TOURISM REVIEW PAGE 67
 Figure 1 Tourism value chain in Zanzibar
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disposal, sewage treatment, landline communication, repair and maintenance and

government fee, levies and tax. The rest of the requirements were sourced outside Zanzibar.
From the restaurant section, only 14 percent of the tourism expenditure was going into the
local economy of Zanzibar, whereas on average 97 percent of the food, cutlery and crockery
supplies were imported (including food supplies/canned foods; fruits and vegetables; sea
foods/products; meat products; bread, pasta and bakeries; cheese products; milk
supplies). The main local purchases from this particular section were fish and other
seafoods (85 percent). It ought to be noted that a very low percentage (about 5.7 percent
only) of the bar section’s input are sourced locally. This may be attributed, though to the
nature of Zanzibar as a place with a strong religious culture, which prohibits the use of
alcohol. Likewise, the high leakages can be explained by the characteristics of the tourists
who buy such kind of tours, as well as the origin of resort employees. For instance, according
to Torres (2002) and Pattulo (1996), the nationality of hotel owner and manager influences the
hotel’s acceptance of local products and the hotel managed by a local and local chef is more
likely to demand locally produced food items than the hotel with expatriate or internationally
trained chefs. Pattulo (1996) also found that expatriate chefs prefer foods that they are
familiar with in their preparation. Usually, package tourists prefer to minimize exposure to the
unfamiliar environment and avoid risks of unforeseen events; hence, increases the
propensity to consume products originating from their own countries. For instance, the
Italians live their Italian life in Zanzibar, and likewise for the Spaniards and Germans, etc.
Moreover, around 34 percent of the annual procurements for external services including
marketing, promotions, consultancies and research and development (R&D), are sourced
locally. With the highest share going to the local economy comes from the maintenance and
repairs, the highest leakages occurred in consultancies, security, marketing and
promotions. One of the possible reasons for the high leakages is the fact that the target
markets for the tourism are international tourists, thus most marketing communications are

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PAGE 68 TOURISM REVIEW VOL. 68 NO. 1 2013
 Table IV Resort input schedule on the sources of the input used during 2009
Local Imports Total
Items (%) (%) (%)

Foods: 14.8 85.2 100

Cereals 5 95.0 100
Meat (beef, pork, lamb, goat, etc.) 5 95.0 100
Poultry (chicken, turkey, eggs, etc) 10 90.0 100
Fish and other sea foods 85 15.0 100
Vegetables 15 85.0 100
Fruits 5 95.0 100
Dairy (milk, cheese, etc.) 2 98.0 100
Bakery and pastries 4 96.0 100
Culinary (soups, etc) 2 98.0 100
Beverages: 5.7 94.3 100
Soft drinks (juices and sodas) 17 83.0 100
Beers and lagers 0 100.0 100
Spirits and wines 0 100.0 100
Rooms/accommodation: 17.3 82.7 100
Bed linen 27 73.0 100
Furniture 15 85.0 100
Toiletries (soap, shampoo, toilet paper, etc) 10 90.0 100
Cutlery and crockery (spoons, plates, forks,
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utensils, etc): 3 97.0 100

Cross-cutting supplies: 18.9 81.1 100
Cleaning materials 2 98.0 100
Uniforms, table clothes, curtains 5 95.0 100
Decorations (flowers, pictures, etc) 15 85.0 100
Stationeries 27 73.0 100
Office machinery and computers 0 100.0 100
Road transport services of passengers 30 70.0 100
Road transport services of freight 62 38.0 100
Telecommunication services 10 90.0 100
External services: 33.9 66.1 100
Security 10 90.0 100
Laundry 70 30.0 100
Entertainment, recreational, cultural and
sporting services 55 45.0 100
Maintenance and repairs (electrical, masonry,
plumbing, etc.) 80 20.0 100
Tour guiding 15 85.0 100
Marketing (promotions, advertising, R&D, etc) 12 88.0 100
Auditing 21 79.0 100
Consultancies 8 92.0 100
Compensation of employees: 24.7 75.3 100
Wages and salaries 12 88.0 100
Social contributions/gratuities 60 40.0 100
Bonus 2 98.0 100
Average 16.9 83.1 100

left to foreign experts. Likewise, most of the security institutions in Zanzibar are owned and
managed by foreigners (mainly from Kenya). The same viewpoint may explain the high
percent of leakages captured in the consultancy services, which accounted for almost 92
percent of the estimated expenditure that leaks away to global linkages. The fact that most of
the businesses were owned and operated by foreigners, it was not much surprising to
realize the fact that most consultants were sourced from outside Zanzibar. This phenomenon
conforms to the Mbaiwa (2005) findings that the domination of management positions by
foreign expatriates and lower salaries for citizen workers in the tourism was contributing to
serious leakages in Botswana.

The jobs created in tourism businesses are the most extreme linkage mechanisms through
which local people can directly be involved in sharing the benefits from tourism operations at
the destination. It is estimated that a total of 7,591 jobs are found in the tourism in Zanzibar;

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VOL. 68 NO. 1 2013 TOURISM REVIEW PAGE 69
 40 percent of which are full-time positions or permanent contracts. The top management
positions are usually occupied by compatriots of property owners, mainly Italians
(43 percent), South Africans (18 percent) and Spaniards (7 percent) and Tanzanians
(including Zanzibaris) (32 percent). Of the jobs created, more often than not, Zanzibaris,
mainland Tanzanians and other foreign employees occupy 42 percent, 15 percent and
43 percent respectively. With more than 50 percent of the job positions occupied by
outsiders, Zanzibar is one of the places where culture, particularly religion, plays a
significant role in shaping the community’s perception on jobs in tourism and hospitality
industry. Thus, it was not very surprising to find out the majority of jobs were occupied by
foreigners, due to the passive nature of the people on tourism.
However, the wage distribution gap is evident, as foreign employees earn almost 75 percent of
the total annual salaries, whilst the mainland Tanzanians (18 percent) and the Zanzibaris take
home the remaining proportion. The non-local upper wage earner gets almost ten times more
than the local average earner, working at the same resort. For example, the average annual net
salary of the latter in 2009 was US$1,286[1], while that of a non-citizen at supervisory level was
almost US$12,850. In addition, the staff on permanent employment contracts pay 5 percent of
their monthly salaries, plus the respective employer’s contribution of 5 percent to the Zanzibar
Social Security Fund. Again, Pay As You Earn (PAYE) ranges between 10 and 30 percent.
Bonus paid to locals claimed only 2 percent of the total bonuses.
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Of course, the money for most utilities, including water and electricity, as well as government
licensing fee, levies and tax and bills remain local. It was not exceptional for Zanzibar,
therefore, as the mentioned items were 100 percent, locally procured or paid. Admittedly, the
resorts were paying a considerable number of taxes and levies including VAT (20 percent),
Corporate income tax (30 percent), Rate of duty (15 percent), hotel levy ($5 per person
per night), license fees (20 percent of gross receipt), Skills Development Levy (6 percent),
City service levy (0.3 percent), pay as you go tax (2.5 percent) and Zanzibar Social Security
Fund (15 percent per employee), among others.

Triggers for high leakages in tourism systems in Zanzibar

In order for the tourism sector to play a bigger role in poverty reduction in a destination
country, it ought to be developed in a manner that enables its effective integration into the
local economy. It thus serves as a development medium for other local activities, particularly
the agricultural sector. However, in many developing destinations, developing tourism in this
manner has not been easy. Studies (including Torres, 2002; Torres and Skillicorn, 2004) have
listed a number of challenges that should nevertheless be overcome in order to avoid more
leakages. The challenges highlighted by the resorts have been grouped into demand,
supply, institutional and legal-related challenges, as Table V summarizes.
More specifically, when asked why they prefer importation as opposed to local sourcing,
most resorts (86 percent) responded that finding the right local supplier, who is reliable,
consistent, and can supply quality products, was a major challenge. Likewise, the high price
of goods from local suppliers (57 percent), unavailability of products being sought from local
market (62 percent), and poor time management and inadequate marketing skills and
techniques by local suppliers (75 percent), were listed. The time required between
supplying goods and payments for deliveries creates conflicts between the suppliers and
the resorts. Whereas suppliers expect the shortest possible time to pocket the cash, the
resorts ask for time extensions before making payments. On the other hand, the time that
resorts expect the goods to be delivered was not adhered to by the local suppliers.
In summary, the major challenges in dealing with local suppliers were highlighted as: limited
quantity and poor quality of supplies, delays in delivery due to poor transport by local
suppliers, high price of goods from local suppliers, inconsistency in supplying, market
prices are not constant, most suppliers need money after two weeks, cannot supply on
monthly basis (low capital), poor packaging and quality which cannot meet hotel standards,
poor time management and that some products cannot be obtained 100 percent locally.
Resorts, therefore, have to seek immediate solutions by buying from supermarkets (most of
the products in the local supermarkets or malls are imported, mainly from South Africa and

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PAGE 70 TOURISM REVIEW VOL. 68 NO. 1 2013
 Table V Triggers for high leakages according to the resorts in Zanzibar
S/N Demand-related challenges Supply-related challenges Institutional & legal-related challenges

1. Local suppliers can’t supply high
quality products to meet the
requirements of highly selective
customers
2. Inadequate promotion of local foods
leading to unawareness of their
existence
3. The consumer concerns over food
safety and health
4. Lack of training to national employees
leads to foreign recruitment; which
eventually results to foreign product
preferences
5. Types of tourists and tourism
determines types of product
requirements
6. The maturity of the tourism industry
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Inadequate marketing skills and
techniques by local suppliers
Conflicting terms of payments between
buyers & sellers
High asked prices of local products
Mistrust and the lack of communication
between buying and selling parties
Inadequate information on the quantity,
quality, variety and usage of goods in
demand
Low level of technological innovation
and scale of production
Adherence to the agreed terms and
conditions in the contracts
Inability to supply the agreed quantity
and at the right time
Inability of small local suppliers to meet
the industry needs-quality standards
Institutional development of policies,
regulations and strategies that can
ensure conformity to healthy and safety
regulations
Lack of institutional focus, weak market
links and failure to promote local
products
Formation of cooperatives or alliances
which guarantee the acceptable quality
of the commodities supplied

7. Seasonality of tourism The inability of a particular supplier to Provision of training and information on
meet the specific needs of the hotels in the various aspects of product quality
terms of quality, quantity, consistence, by public institutions
price of local products
8. Informal nature of smallholder suppliers Inaccessibility of local supplies
at the destination
9. Unhygienic and unhealthy post Crude and poor local production
slaughter handling of local butcheries systems

Source: Constructed in this study

Kenya) or importing. As it has been mentioned earlier, the selling price is among the reasons
for making the buying decision from local or abroad. This has also been reported by Abdool
and Carey (2004) whose work found the hoteliers in Tobago would prefer to deal directly with
local suppliers and would support initiatives if the price of local supplies is reduced. Like in
Tobago, small-scale producers in Zanzibar do not enjoy the economies of scale as they
generally incur high production and marketing costs (producing in small quantities may
never yield the economies of scale). Therefore, their selling price could definitely also be
high. As a result, the cheap imports from Kenya, Brazil and South Africa substitute the local
supplies in Zanzibar.

Tourist channel of distribution

The tourism market is revolving around the beach product (flights – transport –
accommodation – food – beverage – excursions – shopping –transport-flight); whereby
the charter inclusive tourists are now dictating the tourism business at the archipelago. The
inflows at the destination include the independent arrivals in-country from mainland Tanzania
or Kenya. The results reveal that almost 49 percent of the tourists visiting Zanzibar use
foreign tour agents in their origin to make local travel arrangements. The remaining
51 percent are independent travelers who make their own travel and destination
arrangements. Again package tours which are most popular among tourists from the Italy,
Germany, UK, US and Spain accounts for over 74 percent of arrivals.
Their channels levels from the origin to Zanzibar are various ranging from direct to transfers
and land or water ways as Figure 2 illustrates. One is direct from the origin, usually using
direct charter flights from respective home countries. Charter flights from Europe, especially
Italy and Spain fly into Zanzibar almost daily. However, there are no direct flights from the
USA. But KLM, Kenya Airways, and North West Airlines offer flight services to Zanzibar
through Nairobi or Amsterdam, then Dar-es-Salaam. The principal carriers to Zanzibar

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VOL. 68 NO. 1 2013 TOURISM REVIEW PAGE 71
 Figure 2 Distribution channel for tourist visiting Zanzibar
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include KLM, Qatar Airline (changing planes at Doha), and Ethiopian Airlines (stopping in
Addis Ababa). Numerous airlines including British Airways, Swiss Air and KLM fly to
Dar-es-Salaam, from where tourists catch a ferry or local airlines to Zanzibar.
To most resorts, it was tour operators who determine the offer and the components of the
package. The tour operators design the package on behalf of the resorts, with the nature of the
package depending on the prevailing market competitions. Basically, negotiating with the tour
operators begins over a year before the tourist season, with the two types of contracts, namely,
the allocation/sale and return contract or the fixed/guaranteed contract. In the first contract, tour
operators only pay the resort for the beds they use, while in the latter contract, the operators pay
for a fixed number of beds throughout the season, irrespective of how many are sold. Most of the
deals (70 percent) were based on the allocation contract, whereby resorts were contracting
several packagers from tourist generating countries. In total, 20 percent of the identified
packagers (mainly packagers from Italy and Spain) supplying tourism, had fixed or guaranteed
contracts with respective resorts, while only 7 percent had situational contracts, i.e. negotiable
contracts, with most contracts having the duration of from two to five years.

Conclusion
This study lays out the case for the need for more local linkages in the supply chain by
revealing the extent to which the accommodation sector depends upon imported as
opposed to local goods and services in Zanzibar. Generally, tourism development in
Zanzibar has led to an economy dependent on global capital and non-local labour at the
expense of the empowerment and enrichment of the local people. In addition, only an
insignificant part of the resort requirements are sourced within Zanzibar. Investors are mostly
from abroad, and tour operators, travel agents, airlines and hotel chains, are often run by
foreigners. Even basic items such as foodstuffs, equipment and furniture are often
purchased from overseas. The income leakage reaches, and frequently exceeds, 80 percent
of the prices of the tourist package.
From the resort responses, leakages are highly attributed to the supply side constraints
including the unreliability and inconsistency of local suppliers, poor quality of deliverables,

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PAGE 72 TOURISM REVIEW VOL. 68 NO. 1 2013
 high price of goods from local suppliers, unavailability of products being sought from local
market, and poor time management.
Therefore, there is a need to build the capacity of local entrepreneurs to be able to supply
quality products and services timely, through calculated policy formulation, training and an
affirmative action giving priority to local suppliers. Moreover, destination stakeholders
should have a strong determination to develop tourism into an economic sector, which is
geared to foreign exchange earnings, creates employment opportunities, stimulates the
local economy and, at the same time, diversifies it. To end with, this study focused on the
resorts only; thus future studies should explore factors that limit the local linkages from local
suppliers’ perspective, and give appropriate strategies and policies to link up the local
suppliers with the tourism industry.

Note
1. The average exchange rate in 2009 was Tanzania Shillings 1,400 for One US$

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About the author

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Dr Wineaster Anderson is Senior Lecturer at the Department of Marketing, University of Dar

es Salaam. She holds a PhD in Economics of Tourism and Environment (University of
Balearic Islands). Her research areas include tourism marketing and economics; global
value chain analysis in tourism; sustainable tourism and ecotourism networks. Wineaster
Anderson can be contacted at: wineaster@udbs.udsm.ac.tz

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