Despite having a long history of physical planning, Zanzibar has been experiencing increasing problems associated with the informal settlements (IS). According to a recent study, over 70 per cent of urban residents live in informal settlements (GoZ 2005). A vast majority of the dwellers live in extremely poor conditions. A rapid increase in the urban population and the limited capacity of the government to meet the high demand for building plots has led to mushrooming of the informal settlements (Scholz 2006). Urbanization is one of the root causes for the spread of informal settlements on the fringe of Zanzibar town. The land administration and planning policies, which have often been seen as rigid and inadequate to meet ever increasing demand for housing by the poor majority, have also been associated with the mushrooming of the IS. The growth of the IS has resulted in many, and complex socio-economic and environmental consequences. These include pollution, deforestation, flooding, waste of agricultural lands and the like.