Why Green Ventures struggles to scale in Tanzania

Dar es Salaam. Tanzania’s green enterprise ecosystem is producing a growing number of ventures across recycling, regenerative agriculture, circular economy systems, eco-processing, and climate-resilient production.

Yet despite increasing momentum around sustainability and innovation, many green ventures continue to struggle to scale due to persistent financial barriers.

The challenge comes at a time when Tanzania’s climate and green growth ambitions require significant investment.

According to Tanzania’s updated Nationally Determined Contribution submitted to the UNFCCC, the country requires approximately $19.2 billion by 2030 to implement its climate commitments, with a significant portion expected to come from international and private sector sources.

Speaking to The Citizen, the founder of Libe Green Innovation, Liberatha Kawamala, described the challenge as the “missing middle” between early-stage support and the capital required for commercial expansion.

This “missing middle” refers to the gap between early-stage financing in the form of grants, competitions, accelerators, and donor programmes, and the capital needed to scale up.

While many green ventures are able to access small grants or innovation support during their early development stages, scaling requires significantly different forms of investment, including financing for equipment, logistics, certifications, infrastructure, and operational growth.

“For companies like ours, after the idea has been validated, funding becomes the greatest bottleneck.

A recycling business may start small, but to process over 5,000 metric tonnes each year, considerable capital investment is necessary, and that is where the journey of the majority of ventures stalls,” Kawamala shared.

Her concern reflects a wider financing challenge facing Tanzanian enterprises.

According to the World Bank Enterprise Survey 2023, access to finance was cited as the biggest obstacle by 29.7 per cent of surveyed firms in Tanzania, ahead of challenges such as electricity, tax administration, transport, and business licensing.

Among firms that did not apply for loans, 16.6 per cent cited unfavourable interest rates, while 8.9 per cent cited high collateral requirements as the main reason for not seeking new loans or credit lines.

Ms Kawamala explained that at the growth stage, the funding requirements for an enterprise change dramatically.

Scaling means investing in new equipment, logistical infrastructure, certifications, and working capital, all areas not sufficiently addressed by grant funding or conventional lending schemes.

“The challenge is compounded by the structure of formal financing systems themselves.

Conventional lenders typically favour short repayment periods, strong collateral requirements, and faster return cycles, conditions that rarely align with the operational realities of nature-based enterprises.

As a result, many climate-linked ventures struggle to move beyond pilot-stage operations despite demonstrating clear market potential,” she said.

The recycling sector demonstrates the scale of the opportunity and the challenge. Tanzania’s Investment Guide on Waste Management estimates that the country generates between 12.1 million and 17.4 million tonnes of solid waste annually.

In Dar es Salaam alone, municipal solid waste generation was estimated at 1.68 million tonnes per year, while collection rates have historically remained below full coverage.

This creates major opportunities for recycling, composting, circular economy, and waste-to-value ventures, but also requires substantial investment in collection systems, processing equipment, transport, storage, and market development.

To address this financing gap, the RESOLVE–NbS framework proposes a range of de-risking approaches, including blended finance models, partial credit guarantees, concessional lending, and group guarantee systems that could improve access to capital for climate-resilient enterprises and community-based green businesses.

The Country Co-Director and Nature-based Lead at Axum, Syakaa William, stated that many nature-based enterprises face structural disadvantages because they operate within systems originally designed for conventional business models rather than long-term resilience-oriented investments.

“Many ventures emerge from community-based initiatives where environmental and social outcomes are prioritised before commercial structuring.

While this creates strong development value, it can also complicate efforts to attract scale-oriented investment capital.

The mismatch between investment expectations and business timelines further intensifies the problem,” Mr. Williams said.

He further revealed that nature-based enterprises often require longer periods before profitability is realised, while many funding systems continue to prioritise rapid returns and asset-light models.

This creates pressure on ventures operating in sectors where infrastructure, production systems, and ecosystem restoration require patience and long-term capital deployment.

According to the founder of Bantu Vegan, Sabrina Yegela, financing remains a continuous challenge throughout the growth journey of green businesses.

Combining regenerative agriculture with food production and hospitality, her enterprise requires substantial investment in farm infrastructure and processing capacity, areas where financing gaps become especially visible.

“We are currently in a phase of heavy build-up, including farm infrastructure and processing facilities, which are areas where the financing gap hits the hardest.

My venture is perceived as too commercial for grants, too physical for tech investors, too early for banks, and too strange for many impact investors.

That is a system failure, not a me problem,” she emphasised.

Although many green ventures generate public value through cleaner production systems, reduced emissions, improved waste management, sustainable land use, and employment creation, entrepreneurs argue that there are still limited policy incentives capable of improving competitiveness for climate-positive enterprises.

Proposed measures such as tax exemptions on recycling and green production equipment, VAT incentives for sustainable products, preferential procurement mechanisms, concessional credit windows, and targeted guarantee schemes are increasingly viewed as important tools that could accelerate the growth of green enterprises.

Analysts also point to a wider ecosystem imbalance where accelerators, investors, and innovation platforms remain heavily concentrated around technology ventures, leaving capital-intensive nature-based businesses comparatively underfunded.

Moving forward, stronger markets for sustainable products, simplified regulatory systems, targeted policy incentives, improved investor readiness, and greater access to long-term patient capital will be essential in building an ecosystem capable of supporting climate-resilient enterprise growth at scale.

Without this shift, Tanzania risks producing promising green ventures that remain permanently small, despite operating in sectors that are increasingly central to the country’s environmental resilience, job creation, and long-term economic transformation.