 Introduction >> Free Zones have increasingly played a crucial role in the development of national industrial capacity, economic and social development of a number of countries. In the developing economies, free zone generates foreign exchange, creates employment, attracts foreign capital and advanced technology, helps in aquiring labor management skills and creates linkages between EPZ industries and the domestic economy. Free Zone definition >> Free zones defined as a geographical area specializing in manufacturing, processing, warehosing, assembling goods or services essentially, if not wholly, for export, that offer firm free trade conditions and liberal regulatory environment. Institutional framework >> Zanzibar, which is part of the United Republic of Tanzania, re-introduced the Free Zone program in 1992, after its initial proclamation in 1892, as a part of its diversification process, which started with trade liberalization in 1984. For a long period Zanzibar economy was dependent on clove. The basic assumption was that free zones would help to diversify the economy, create and foster sustainable industrial base. The promulgation of Zanzibar Free Economic Zones Act No. 17 of 1992 gave rise to the emergence of ZAFREZA as the sole authority responsible for management, administration and operation of free zones with full powers to approve and admit projects therein. Three sites were officially designated as free economic zones. Fumba in the island of Unguja and Micheweni in the island of Pemba were declared free economic zones in 1992, while Amaan industrial park was declared as free economic zone in 1993. In 1998, the Government of Zanzibar established Zanzibar Free Port Authority as a developer, and responsible for overall management and control of Free port activities. Two sites were officially declared as free port zones (Maruhubi Free Port and Airport zone). The legislation provides for the President to declare other free zones when the need arises. In order to improve efficiency and creating supportive environment for investment and trade, the GOZ enacted a new Investment Code (The Zanzibar Investment and Protection Act No. 11 of 2004) through which the erstwhile three institutions responsible for investment were merged to establish the Zanzibar Invetment Promotion Authority (ZIPA) to act as a focal point for promotion and facilitation of investment and trade in Zanzibar.
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