What must Tanzania do to ensure consistent startup fundraising

This year, however, the picture is very different. According to Africa: The Big Deal, Tanzanian startups have so far not crossed the $10 million mark in 2025, while across the continent, startups collectively raised over $1.4 billion in the first half of the year.

Recently, however, the government has been making significant strides to address funding hurdles, regulatory challenges, and ecosystem development in a bid to improve the environment for startups, the Minister for Planning and Investment, Prof Kitila Mkumbo, has revealed.

Prof Mkumbo outlined the government’s vision for fostering a more conducive environment for startups.

“We are committed to improving the local ecosystem and attracting both local and foreign investors. We aim to create an environment where startups can thrive and compete on a global scale,” he said.

He explained that the recent reorganisation of the ministry, bringing it closer to the President's office, marks a critical shift towards prioritising investment and startup development. Prof Mkumbo highlighted that the ministry’s budget for the financial year includes crucial elements such as the finalisation of a new investment policy.

He went on to reveal that one of the key areas of focus is the overhaul of Tanzania’s legal framework to better support startups.

“The government has merged the Tanzania Investment Centre (TIC) and the Export Processing Zones Authority (EPZA) into a single institution, the Tanzania Investment and Special Economic Zones Authority (TISEZA).

This entity streamlines the process of promoting and facilitating investments while developing economic zones in the country,” he noted. NBC Additionally, he said the Investment Act of 2022 represents a significant step forward.

“This new legislation aims to address the specific needs of startups, which were previously overlooked in general investment policies.

The government is also in the process of establishing a National Investment Fund, which will provide financial support for strategic investments, including startups,” he explained.

Prof Mkumbo emphasised that beyond legal reforms, fostering a culture of innovation is essential.

He pointed out the need for a cultural shift towards embracing entrepreneurship and innovation. This includes developing a tolerance for failure, cultivating a high threshold of dissatisfaction and encouraging constructive disagreement.

“Cultural change is crucial for nurturing a startup ecosystem,” he said, and continued: “We must accept intelligent failures as an essential part of innovation and foster a culture where individuals are not easily content and are prepared to question and push against the established norms.”

As funding remains a significant barrier for startups, the minister acknowledged that the current funding system is not tailored specifically for startups, which often struggle to secure venture capital.

“The government is addressing this issue by creating a more supportive financial environment and encouraging private sector involvement in funding,” he said.

He noted that regulatory challenges, including legal ambiguities and excessive approvals, have also been a concern.

The government is working to address these real-time challenges through aftercare programmes by engaging directly with investors facing difficulties.

“This approach aims to resolve specific issues and improve the overall investment climate,” he asserted.

Aside from regulatory and cultural changes, the minister said the government is investing heavily in infrastructure.

“This includes enhancing fiscal infrastructure, such as roadways and waterways, to facilitate easier transportation of goods. The ongoing development of the Standard Gauge Railway (SGR) is a key part of this effort,” he revealed.

Further, he revealed that Tanzania is focusing on improving its macroeconomic fundamentals, including maintaining a stable inflation rate and ensuring political stability and security, which are critical factors for attracting investors.

Despite the challenges, Prof Mkumbo expressed optimism about Tanzania’s progress.

“We are catching up rapidly and are moving in the right direction; our goal is to create a robust startup ecosystem that attracts both local and foreign investment,” he stated.

Commenting on the challenges, CEO of Sahara Ventures and tech entrepreneur, Mr Jumanne Mtambalike, said Tanzania’s fundraising story is shaped by both local and global factors.

“Global capital flows, shifting investor appetite, and concentration in a few African markets are realities we can’t fully escape.

But on our side, the work is clear: we need stronger policies and regulatory clarity, more local investors to complement foreign ones, and better investor readiness among our startups,” he said.

He added that short-term measures such as fast-tracking the Startup Policy, improving governance, and creating more deal showcases can give momentum. In the long term, mobilising local capital, encouraging corporate investment, and developing ventures in sectors like fintech, agritech, and climate-tech are essential.

“The $53 million we raised last year showed what’s possible. The dip this year is a reminder that consistency won’t come by chance — it will come when we build structures that make Tanzania a permanent stop for investors, not an occasional spike,” he said.

For the co-founder of health-tech startup Plate AI, Janeth Kareen Kilonzo, building structured investor platforms is key to consistency.

“Many investors are interested in Tanzanian innovation, but there is a lack of organised systems connecting them to the right startups. Greater transparency and compliance will help maintain long-term investor confidence,” she said.

While, CEO and co-founder of Kilimo Fresh Foods Africa Ltd, Mr Baraka Chijenga, said the country should focus on sectors with strong potential.

“Agriculture, health-tech, and logistics have huge opportunities, but funding often goes to hype-driven sectors. Tanzania must showcase its comparative advantages, especially in agribusiness, to attract steady inflows,” he said.

On top of that, entrepreneur and startup mentor Michael Nyamwero pointed to policy and regulatory gaps as a barrier.

“Startups face unpredictable regulations that discourage investors from committing long-term. Government reforms, including tax incentives and easier cross-border payments, are necessary to ensure consistency,” he explained.