UNDERSTANDING THE ZANZIBAR INVESTMENT ACT, 2023: AN OVERVIEW AND IMPLICATIONS

Introduction:

0n 1st February, 2024, The Zanzibar Investment Act, 2023, repealed the Zanzibar Investment Promotion and Protection Authority Act, No. 14 of 2018, with the aim of fostering a conducive investment legal framework in Zanzibar. This legal article seeks to provide a comprehensive understanding of the provisions outlined in the Act, exploring its implications on investment activities within the Islands.

Preliminary Provisions:

The Investment Act, unlike the Zanzibar Investment Promotion and Protection Authority Act, No. 14 of 2018, delineates its scope of application, excluding certain investment categories such as;

• Oil and Gas Up-streams: The Zanzibar Petroleum Regulatory authority is now regulating all matters related to oil and gas in Zanzibar 

• Public-Private Partnerships: These include joint ventures with the government, investment agreements with the government. The department of public – private partnerships is now regulating all matters concerning PPP. The department falls under the ministry in the president office labour, economic affairs and investment 

• Investments involving hazardous materials.

Definitions and Interpretations:

Central to understanding the Act are the definitions provided for various terms. For instance, ‘Abandoned Investment’ refers to inactive investments for three consecutive years, while ‘Approved Investment’ signifies investments sanctioned under the Act. Moreover, terms like ‘Investor,’ ‘Foreign Investor,’ and ‘Local Investor’ are elucidated, defining the scope of eligible entities under the Act. For instance ‘Foreign Investor,’ and ‘Local Investor’ are defined as follows;

• Foreign Investors: are individuals, institutions, or entities from one country that invest capital into businesses, real estate, or financial markets in another country.

• Local Investors: are individuals or entities that invest their capital within their own country rather than seeking opportunities abroad.

Establishment of the Authority:

Like its predecessor, the Act establishes the Zanzibar Investment Promotion Authority, hereafter referred to as the ‘Authority,’ tasked with overseeing investment activities. The Authority, governed by a Board of Directors, will play a pivotal role in issuing Certificates of Investment and ensuring compliance with the Act’s provisions.

Functions of the Authority:

The Authority’s functions encompass facilitating investment, promoting investment opportunities, and providing necessary support to investors. Additionally, it is entrusted with establishing a One-Stop Centre, streamlining administrative procedures for investors’ convenience.

Investment Criteria and Categories:

The Act outlines criteria for investments to qualify for approval, emphasising factors such as;

• Project viability, and adherence to regulatory requirements:  This means checking if a project is practical and likely to succeed. It involves looking at whether the project can be done with the available resources, if it will be profitable, and if it makes sense overall. This also means following all the laws and rules that apply to the project. It involves making sure the project complies with local, national, and industry-specific regulations to avoid legal problems.

• capital: To be eligible for consideration of a Certificate of Investment, the ownership and capital investment criteria are as follows:

Strategic Investments 

Meeting specific criteria outlined in the Act, are afforded special considerations, reflecting the government’s commitment to fostering key sectors. 

To qualify for Strategic Investment status, investments in Unguja and Pemba must meet specific criteria:

Unguja

Pemba:

Special Economic Zones and Land Utilisation:

The Act introduces provisions for Special Economic Zones, delineating areas designated for investment activities. Furthermore, it addresses land utilisation through the establishment of the Land Bank for Investment, aimed at facilitating land allocation for investment purposes, including the small islands.

Regulatory Framework and Compliance:

In line with promoting transparency and accountability, the Act outlines regulatory frameworks for investment activities. Investors are required to;

• Adhere to stipulated guidelines.

• Obtain Certificates of Investment, and;

• Comply with reporting requirements above to ensure regulatory compliance.

Conclusion:

The Zanzibar Investment Act, 2023, represents a significant milestone in enhancing the investment landscape in Zanzibar. By providing a robust regulatory framework, promoting transparency, and streamlining administrative procedures, the Act aims to attract domestic and foreign investments, thereby fostering economic growth and development within the region. As stakeholders navigate the intricacies of the Act, adherence to its provisions will be instrumental in realising its objectives and unlocking the full potential of investment opportunities in Zanzibar