Why startup ecosystem needs additional attention in Tanzania

Dar es Salaam. The rise of startups in Tanzania has prompted industry experts who now demand paying attention to the firms which have a potential to significantly contribute to the economy.

The companies are estimated to have contributed $5.4 billion to economies in Africa but they have a potential to contribute up to $2.6 trillion by 2030.

The industry players and nurturers say the companies need attention of different stakeholders in attempt to explore the potential of the growing companies.

Vodacom Tanzania managing director Philip Besiimire says large companies have a role to play in bring up the startups which are mostly driven by innovative young people across the world.

“There are big companies today whose ideas were started in the dormitories by students. I believe supporting the startups and creating opportunities for the young innovators will build the next billionaires,” he said, warning, however, that there is still low turnout of women to the industry.

Vodacom Tanzania runs a digital accelerator programme which provides facilitation to early-stage and growth-stage startups that have at least a minimum viable product and are using technology.

He said the company’s programme targets not only to accelerate businesses but also solve social problems using the innovations.

He added that Vodacom plans to support more startups in education, financial technology, health, agribusiness, cyber security and e-commerce. The sectors are easy to implement innovations and currently they are the priority areas, said one of the programme founders Yvone Maruma.

Tanzanian startups face limited access to funding, unsupportive policies, inadequate infrastructure, and a talent gap.

A recent report, "Africa: The Big Deal 2023," highlights the stark funding disparity between Tanzania and Kenya. While Kenya secured a staggering $800 million in 2023, Tanzania managed a modest $25 million, a 69 percent drop from the previous year's $80.7 million.

“It’s important to invest in human resources by imparting appropriate skills,” says Huawei Tanzania managing director Damon Zhang who was speaking during a graduation ceremony for participants of the seed for the future Tanzania programme.

According to the Africa: Big Deal 2023, fintech and energy continued to attract the most of funding in Africa last year.

University of Dodoma lecturer, Dr Mwinuka Lutengano, said there have been fading rise of incubation programmes among local universities and other centres, pushing down the startup funding inflow.

“There is a need for national push to encourage startups and connect them with the financing partners and markets for their innovations,” he said, adding that the government should take a lead position in the move.

Sahara Ventures founder Jumanne Mtambalike says the innovation firms are the future of Africa.

He said investing in startups can help to addressing the unemployment challenge which is facing many African countries.

“It’s important to create conducive environment for startups to benefit from the potentials of the startups,” said Mr Mtambalike.

The startup ecosystem in Tanzania is awaiting the industry’s policy which is expected to address the pressing challenges startups face and pave the way for their continued growth and success.

The growth of startups prompted President Samia Suluhu Hassan who promised to continue creating enabling environment.

“The government will continue to cooperate more with the startup institutions and continue to create an enabling environment for their prosperity,” said President Hassan in her New Year speech.

Deputy Minister for Industry and Trade, Mr Exaud Kigahe, said the government supports the innovators who are mostly youth.

He said there are ongoing programmes which support the innovators.

"We connect the startups with different local and international institutions for partnerships,” said Mr Kigahe.

“President Samia Suluhu Hassan has also directed financial institutions to see how they can support the startups by lowering interest rates for them to borrow,” he added.