Zanzibar’s white-sand beaches and surging tourism economy make it an incredibly attractive hub for foreign capital. However, the concept of “land purchase” for non-citizens in Zanzibar operates under a specific legal framework governed primarily by the Land Tenure Act of 1992. Foreign investors cannot acquire freehold ownership; instead, they secure their interests through a secure, long-term Government Lease.
This distinction is crucial, and the process of obtaining this lease is complex, involving a mandatory integration with the Zanzibar Investment Promotion Authority (ZIPA) for major projects like hotel and real estate development.
1. The Legal Foundation: Leasehold vs. Freehold
A. The Restriction on Outright Ownership
Under the Zanzibari Constitution and the Land Tenure Act, all land—occupied or unoccupied—is public property vested in the President for the benefit of the people.
- Freehold Ownership: This is not permitted for non-citizens (including Mainland Tanzanians) and is generally reserved for Zanzibari citizens via a Right of Occupancy.
- Investor Right: Foreign entities, such as international development companies, acquire a Derivative Right or Government Lease (Leasehold) to use the land for their approved investment purposes.
B. Security of Tenure
The leasehold system provides comprehensive long-term security. Leases are typically granted for periods of 33, 66, or up to 99 years, often in renewable blocks. This grants the investor extensive rights over the property, including the right to develop, sell the remaining lease term, or mortgage the interest, provided it aligns with the approved investment plan.
2. The Integrated Acquisition Process: A Multi-Stakeholder Journey
The process of securing the land right is deeply interwoven with the project’s overall regulatory approval, especially through ZIPA.
A. Strategic Investment Approval (ZIPA)
- Company and Capital Compliance: The foreign investing company must first be registered and must meet the minimum investment threshold, which for Hotel and Real Estate is currently US$2.5 million for fully foreign-owned ventures.
- Investment Certificate: The company submits its business plan and proof of capital to ZIPA. Upon approval, ZIPA issues the Certificate of Investment, which acts as the government’s official endorsement of the project and is mandatory for the land lease application.
B. Due Diligence and Transfer (The Purchase)
- Identification and Valuation: The investor identifies a suitable land parcel, often by purchasing the existing interest (the Right of Occupancy) from a Zanzibari citizen.
- Official Search (Uhakikisha): Legal counsel conducts an indispensable official search with the Commission for Lands to verify the seller’s true identity, confirm clear title, and check for any outstanding debts, liens, or legal disputes (encumbrances).
- Surveying: If the land is unregistered or boundaries are unclear, a mandatory survey is conducted by the relevant authority to define the plot and fix beacons.
- Transfer Approval: The signed Sale/Purchase Agreement (for the transfer of interest) must be submitted to the Land Transfer Board for review and approval. No long-term transfer to a non-citizen is valid without this board’s formal consent.
C. Lease Finalization and Registration
- Lease Application: With the Land Transfer Board’s approval and the ZIPA Certificate, the investor applies to the Commission for Lands for the Government Lease.
- Drafting and Signing: The Commission drafts the Lease Agreement, stipulating the 99-year term, annual rent, and development conditions. This document is signed by the government representative and the investor (or authorized signatory).
- Tax and Fee Payments: The investor must settle all government-mandated taxes and fees, including:
- Stamp Duty: Typically around 1% of the property value.
- Transfer/Registration Tax: Varies by local jurisdiction (approx. 1% to 5%).
- Lease Preparation Fee and Annual Land Rent.
- Note: Payments are made directly to the government via control numbers.
- Final Registration: The final, signed Lease Agreement and payment receipts are lodged with the Zanzibar Land Registry. This official registration formalizes the investor’s legal right, providing the highest level of legal protection for the 99-year leasehold.
3. Post-Acquisition Compliance and Benefits
The leasehold right comes with associated obligations and rewards for the investor:
A. Development Obligations
The lease typically requires the investor to adhere to the approved project plan and begin development within a stipulated timeframe. Failure to develop the land can result in the lease being revoked. Investors must also secure Building Permits from the Development Control Unit (DCU) and Environmental Clearance from ZEMA before breaking ground.
B. Enhanced Investor Benefits
- Security and Transferability: The registered 99-year lease is inheritable and can be sold or transferred to another approved investor.
- Tax Incentives: ZIPA-approved projects qualify for various fiscal incentives, including potential exemptions on import duties for capital goods and relief from certain taxes, reducing the overall cost of development.
- Residency: An investment (including the property itself) above a minimum threshold (typically US$100,000 on a single ZIPA-endorsed property) allows the investor to apply for a Residence Permit for themselves and their immediate dependents.
The land acquisition process in Zanzibar is a structured, regulated, and secure pathway designed to attract sustainable investment while maintaining public control over the land resource. Success hinges on obtaining expert legal guidance to navigate the intricate approvals and ensure long-term tenure security.
Disclaimer
The content of this update is intended for general informational purposes only and does not constitute legal advice. It should not be relied upon without seeking specific legal counsel on any particular matter.
Author Details
The author is Sunday Ndamugoba , Partner, RIVE&Co he can be reached at sunday@rive.co.tz