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SMEs digest : Why more focus should be on tech startups

Wednesday June 16 2021
Startups pic

By Zahoro Muhaji


June in 2020, our country Tanzania woke up to news of overnight billionaire, Saniniu Laizer, a miner, aged 52 at time, just sold two rough Tanzanite gemstones, with combined weight of 15kg to the government of Tanzania, at a price of Sh7.7 billion. At that time, it was the biggest ever find of Tanzanite.

What followed was an overflow of congratulatory messages from every corner of our country, from top government officials, ministry of Minerals, and the Late President John Magufuli himself, phoned the new billionaire in town to offer his congratulations.

In a matter of days, amid frenzy media coverage, Mr Laizer turned into a sort of national hero and celebrity, as Tanzanians from all walks of life poured their emotions on social media platforms, giving out congratulations, advising on how best he could spend his newly found wealth or simply asking for piece of a pie. Mr Laizer was even invited as the Guest of Honor at the International Trade fair ‘sabasaba’ grounds, so as Tanzanians could have a chance to meet, greet and even take photos with our new billionaire. An instant success story, an instant billionaire, the country admired him.

Five months earlier in January 2020, a young Tanzanian named Andron Mendes, flew Tanzanian flag high, after he sold his innovative clean energy startup at reportedly Sh57.5 billion. His startup, Kopa Gas, seeks to revolutionise the way majority of Tanzanians choose and use cooking fuels, by simply allowing them to use clean LPG for cooking and have flexibility to pay as you go, buying LPG gas at a price little as Sh1000 making it affordable for majority of Tanzanians.

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Though this was one of the biggest success story in the country coming from a young entrepreneur, making such a fortune in only a span of six years since his business entered the market, there was no big excitement among Tanzanians, media or government officials.

Very few newspapers headlined the story, and apart from few tech, innovation and entrepreneurship enthusiastic ecosystem players in social media, saying a word or two, the story just faded away.

Startups are early stage businesses which are innovative (often, technology based) which are bringing new, unique product or service in the market.

Though there is no agreed definition of a startup, and most people tend to confuse them to SME’s, Startups tend to have a potential to grow and scale fast, apart from that they offer a unique product or service. One example is Uber. An American Taxi hailing company, founded just 12 years ago, it has scaled quickly across 69 countries on six continents, operating in 900 cities, employing over 26,900 people, with market capitalization of $92 billion, twice as Barrick Gold corporation, a mining giant with $43 billion market capitalization. That is the beauty of Startup business. Two young entrepreneurs, with laptops under their basement or college dorm can create a company more valuable than a capital intensive corporation mining gold around the world!

Startups have been new ways in countries around the world envision as an avenue to create economic growth, employment and jobs. According to Genome Global report on Startup, a global startup economy is currently worth $3 trillion. In Africa, Startup ecosystems have been on the rise, creating jobs, growing economies and also attracting investments into the continent. Despite Covid-19 challenges, last year, startups attracted an investment around $1.3 billion.

With Nigerian youngsters breaking the headlines after selling their Startup, Paystack Company, at $200 million price!

Such success stories have led different countries in Africa waking up to this potential, which can be among one of the solutions to the growing unemployment challenge within the continent. With different countries coming up with strategies, policy, laws and regulatory frameworks suitable for Startups to thrive, Tunisia and Senegal are leading the way, as the countries which have enacted ‘Startup Act,’ a specific law which governs and sets a conducive business environment for Startup enterprises. This begs a question to our country, Tanzania, with almost 800,000 young people entering job market every year and only 200000 can find any job to survive, most of them see entrepreneurship as a way to employ themselves and their peers.

Now a Startup potential is no longer a myth or a far way story after the success of a fellow young Tanzanian, Andron Mendes, who quit his job after graduating at University of Dar es Salaam (UDSM) to build his startup. How many like him are out there, what opportunities are they seeing, what challenges are they facing and what solutions they can be provided. A question I leave to all of us, stakeholders, Government, private sector, development partners, just to name a few. I have some ideas, but that is a story for another day!

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Zahoro Muhaji is chief executive officer for Tanzania Startup Association

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