Zanzibar backs cryptocurrency ‘cyber city’ to lure digital nomads under new Digital Free Zone
Wednesday January 14, 2026
- Advertisement -
ZANZIBAR CITY, Tanzania (AX) — Zanzibar has approved plans for a cryptocurrency-focused “cyber city” on its western coast, endorsing a private-sector project that aims to attract digital nomads and pilot blockchain-based administration under special economic rules.
The proposed city, slated for a 71-hectare site near the Fumba Peninsula, would blend residential housing with a digital residency program that allows remote workers to register companies and manage taxes without living on the islands full time, according to people involved in the initiative. Developers say the model is designed for globally mobile technology workers who want streamlined, online-first governance and predictable tax treatment.
The project is being led by private entrepreneurs in partnership with Zanzibar government ICT bodies, including the Zanzibar Information and Communication Technology Authority, and was formalized last November when the government approved a partnership agreement with Zanzibar Communication Corporation (ZICTIA). The plan follows the passage of Digital Free Zone legislation earlier in 2024, which allows alternative systems for payments, taxation, and business registration within a designated zone. Criminal and civil matters would remain under Zanzibar’s existing legal framework.
Project founders Florian Fournier and Kristof De Spiegeleer said the city is designed to serve “digital people, not physical ones,” signaling a bet on borderless work and financial infrastructure built around crypto and other digital rails. The developers said around 100 digital residents and 30 businesses have registered so far, while the underlying land—leased for 30 years—is valued at roughly $70 million.
Tax incentives anchor the pitch
At the heart of the proposal is a tiered tax regime meant to entice remote professionals and startups. Under the plan disclosed by the developers, digital residents would pay a 5% income tax, while people living inside the city would be taxed at 15%. Companies operating in the zone would receive a 10-year tax holiday, with no capital gains or wealth taxes.
Those incentives, paired with digital-first incorporation and administration, mirror approaches in private innovation zones and virtual residency programs elsewhere. The difference here, backers say, is the combination of physical real estate with a remote-first administrative framework enabled by the Digital Free Zone law.
Key details at a glance
- Location: 71-hectare site near Fumba Peninsula on Zanzibar’s west coast
- Status: Government partnership approved in November 2024; operating framework enabled by earlier 2024 Digital Free Zone legislation
- Focus: Digital residency, crypto-enabled payments and business services under special economic rules
- Taxation: 5% income tax for digital residents; 15% for city residents; 10-year corporate tax exemption; no capital gains or wealth taxes
- Early uptake: About 100 digital residents and 30 businesses registered, developers say
- Land: 30-year lease; developers estimate value at roughly $70 million
- Governance: Civil and criminal matters remain under Zanzibar’s existing legal framework
A test case for “network state” ideas
The initiative echoes concepts associated with “network states,” a vision popularized by entrepreneur Balaji Srinivasan in which communities coalesce digitally and then negotiate for physical territory and special rules. While similar experiments have drawn intense interest across the crypto world, outcomes to date have been uneven, with questions lingering about sustainability, regulation and real-world service delivery.
Zanzibar’s approach attempts to thread that needle by situating experimental payment and registration systems inside a legal perimeter created by the Digital Free Zone law, while keeping core civil and criminal jurisdiction intact. In theory, that gives the project room to iterate on digital services without putting foundational legal obligations at risk.
Promise and pressure points
For Zanzibar, part of the United Republic of Tanzania, the bet aligns with a broader push to diversify an economy long reliant on tourism. A functioning digital residency and incorporation hub could broaden the tax base, create service-sector jobs, and attract investment in high-speed connectivity and fintech infrastructure.
But the model will be tested on basic execution. The project’s promise hinges on how seamlessly the digital residency process works, whether crypto-linked payments can be reconciled with anti-money laundering and consumer-protection standards, and how tax collection is administered for residents who may never set foot in the zone. Clarity on dispute resolution between zone-based commercial rules and national law will also be essential, particularly if cross-border businesses seek to domicile there.
Housing and land use are another pressure point: anchoring a virtual-first economy in a physical district can strain local infrastructure and real estate markets if not planned carefully. The developers have emphasized that the cyber city targets remote professionals rather than mass migration, but strong guardrails and transparent governance will be needed to maintain public support.
What to watch next
As the partnership with government ICT entities moves from approval to implementation, several milestones will signal whether the cyber city gains traction:
- Operational rules: Publication of detailed regulations under the Digital Free Zone law for payments, taxation and corporate registration
- Onboarding systems: Launch of secure digital residency and business portals with robust identity verification
- Compliance frameworks: Clear standards for anti-money laundering, reporting and dispute resolution that align with national law
- Infrastructure build-out: Timelines for broadband, power and municipal services tied to the 71-hectare site
- Market uptake: Growth beyond the initial 100 digital residents and 30 businesses and the types of firms choosing to domicile in the zone
Globally, the race to attract remote workers and crypto capital has moved from rhetoric to regulatory detail. Jurisdictions that combine competitive tax packages with predictable rules and serviceable infrastructure are setting the pace. Zanzibar’s cyber city now joins that contest with a framework that is ambitious by regional standards and a message targeted squarely at digital nomads and crypto-native entrepreneurs.
Whether it can convert early registrations into a durable economy will depend less on the novelty of blockchain and more on the boring fundamentals of governance: coherent rules, competent administration and credible enforcement. If those pieces fall into place, the project could give Zanzibar a distinctive role in East Africa’s digital landscape. If they don’t, it risks becoming another experiment that struggled to bridge the gap between online promise and offline reality.
By Ali Musa
Axadle Times international–Monitoring.
