A British property developer suing Zanzibar for a land lease gone bad could taint the prospects for Mwinyi, the archipelago’s president, for 2025.
Pennyroyal Ltd has filed a case against Zanzibar at the International Centre for Settlement of Investment Disputes (ICSID) after Zanzibar terminated a land lease for the $1.6bn Blue Amber resort project in July 2023.
The opposition has been using the case to criticise the Zanzibari government of President Hussein Mwinyi over the rising cases of corruption. ACT-Wazalendo, the main opposition party in Zanzibar, has brought up the issue at most of its recent political rallies.
Mwinyi’s government terminated the investor’s 411-hectare project for allegedly trying to transfer part of the land ownership to an unnamed investor from the United Arab Emirates (UAE).
“It marks the first time Zanzibar has been sued at the international arbitration court. The case will taint the image of Zanzibar as a destination for investors in tourism. It will be a big blow to the economy of Zanzibar if we lose the case,” Ismail Jussa, an advisor to the Zanzibar main opposition party, ACT-Wazalendo, tells The Africa Report.
Rampant corruption Despite facing criticism from the opposition, the government has not yet addressed questions related to the case. During a meeting with editors in September 2022, Mwinyi briefly mentioned that the lease was terminated because the investor, who maintains the strategic investor status in Zanzibar, lost a court case over the land ownership.
In the run up to the elections in October 2020, he campaigned to boost tourism and on an anti-corruption agenda. After he was elected president, he pushed to reprimand corrupt civil servants and called out the Zanzibar Anti-Corruption and Economic Crimes Authority (Zaeca) for failing to fight corruption.
Despite Mwinyi’s commitment to fighting corruption, the Centre for Strategic Litigation said in its June 2022 report that the level of corruption in Zanzibar was intolerable and rampant.
“Zanzibar is at a rudimentary stage of formal institution-building: informality overrides formal checks and balances, allowing rent-seeking to flourish. The political elite channels consultancies, tenders and tax breaks to companies they own or to companies owned by close family members, and to the business elite,” the report says.
There has been a surge in criticism towards Mwinyi due to the prevailing perception that corruption cases have increased during his presidency. This includes comments from former members of his own party, the ruling Chama Cha Mapinduzi (CCM).
One such member is Ali Karume, the son of Zanzibar’s founding president, Abeid Karume. However, in June last year, he was dismissed from the party for consistently censuring Mwinyi.
Karume tells The Africa Report that recent disputes involving foreign investors have exacerbated concerns that terminating agreements where foreign investors were involved was done to serve the interests of those in power.
This includes the Zanzibari government decision to award exclusive rights to Dubai National Air Travel Agency (dnata) to operate the international airport that has led Danata’s competitors to file a petition to the High Court of Tanzania to challenge the decision.
“There are growing concerns among the public that the government doesn’t have a president and ministers, but businesspeople. It could be a perception, but in politics, perception is everything,” Karume says.
For Jussa, the government now faces allegations that its decision to exclusively award a contract for ground handling services at the Zanzibar Airport was in violation of the 2007 Public Procurement Act and the Fair Competition Act.
“Giving monopoly to another company or giving favouritism is a criminal offence under the Zanzibar laws. We believe that the president has a direct hand in the deal given the way he has persistently defended the awarding of the deal in public,” Jussa says.
Both Karume and Jussa agree that the economy, which primarily depended on tourism, was in bad shape and poverty had significantly increased so much that everyone was feeling the impact.
Mwinyi promised to reform the tourism sector so it could contribute significantly to poverty reduction and creating employment. However, the World Bank estimates that tourism contributes to 80% of its foreign exchange earnings and has a limited impact on poverty reduction, especially as accommodation almost entirely drove it.
The Covid-19 crisis worsened the economic situation in Zanzibar, with the GDP growth slowing to 1.3% due to the decline in tourism activity.
“While the tourism sector is the key driver of the economy, it appears unable to employ sufficient numbers of young women,” a 2022 World Bank assessment on poverty in Zanzibar said.
Government silencing critics
The firing of Karume and veteran CCM member Baraka Shamte, 83, in July 2023 and June 2022, respectively, is discussed in Zanzibar in harsh tones to scare off potential government critics.
Shamte criticised Mwinyi’s investment policies, which involved leasing Zanzibar’s nine islets to private developers. He further pleaded with the ruling party to replace Mwinyi, who is constitutionally mandated to vie for the second term, with another candidate for the 2025 presidential election.
In the subsequent days, Shamte was summoned by the police and interrogated over uttering seditious statements against Zanzibar government officials in June.
While the police investigation was still underway, Shamte was dismissed from the party. The police confirmed that he was kidnapped and tortured by an unknown assailant the week he was summoned by the police.
Former president of the Zanzibar Law Society Awadh Ali Said tells The Africa Report that the claims made by Shamte were not new as other people in Zanzibar have raised similar issues.
“The government hasn’t stopped using abduction and torture to silence critics. The attack on Shamte was a warning shot to those who intend to cross the red line; critics would not be tolerated,” says Said.
Both Karume and Mwinyi had vied for the ruling party nomination for the Zanzibar presidency in 2020. After Mwinyi was nominated and endorsed as the candidate, Karume asked his supporters to back him.
However, he claims the president has indirectly targeted him. “He is seeking […] revenge against me for fear that I will challenge him in 2025. All my supporters supported him after the nomination was over and he was nominated as the presidential candidate,” says Karume.
Questions about Mwinyi’s legitimacy
After the ruling party had nominated Mwinyi as its Zanzibar presidential candidate in August 2020, a section of the ruling party faulted his nomination on the grounds that he didn’t know Zanzibar. ACT-Wazalendo’s Jussa claims that after Mwinyi’s father, former Tanzania president Ali Hassan Mwinyi, was transferred to the mainland in 1970, the son never returned to Zanzibar as a resident until he was elected president.
“He was never raised in Zanzibar; he never went to school in Zanzibar, worked or lived there,” says Jussa.
“The problem is always with the union’s structure and, subsequently, the ruling party whereas the decision about the presidential candidates for Zanzibar is always made on the mainland,” he says. “CCM Zanzibar never welcomed him from the beginning because he was seen as imposed by the mainland.”
Karume agrees. “Both the Union constitution and the Zanzibar constitution are silent on how long a candidate should have resided in Zanzibar to qualify to run for the presidency. However, common sense should have prevailed,” he says.
Challengers eliminated
Despite Mwinyi’s challenges since he was elected president three years ago, it is almost an assured deal that CCM will nominate him as their presidential flag bearer in 2025.
With Karume expelled from the ruling party, other potential challengers have been posted outside the isles. Former minister Issa Haji Ussi Gavu was appointed as the ruling party’s organisation secretary on the mainland. Khamis Mussa Omar has been appointed the Tanzanian ambassador to China.
Karume says that a CCM nominee has a chance of winning regardless of their quality. “CCM has never won a presidential vote in Zanzibar since the first election after the reintroduction of multipartyism in 1995 because they don’t nominate candidates widely accepted in Zanzibar,” he says.
“Such candidates barely adhere to the constitution once they are voted into power.”