Report shows significant change in Tanzania’s startup landscape

Dodoma. The National Investment Report 2023 highlights a significant change in the startup landscape, showing an increasing trend toward diversity in ownership.

One of the key revelations is the decline in male-dominated startups, signalling that more women and diverse groups are gaining ground in the entrepreneurial space.

The report was launched recently along with other economic development reports, with Prime Minister Kassim Majaliwa as the chief guest at the event. It was prepared under the Ministry of State in the President’s Office (Planning and Investment).

This positive trend highlights the growing involvement of women and underrepresented groups, which is beneficial for innovation and overall business resilience.

According to the report, there was a significant decrease in male-dominated startups, from 76.60 percent in 2022 to 37.65 percent in 2023.

This shift is a positive development, underscoring the increasing involvement of women and underrepresented groups in the startup ecosystem.

In Tanzania Mainland, this trend towards diversity aligns with the country's demographic makeup. The population of 59,851,347 is almost evenly split between males (49 percent) and females (51 percent).

The fact that the majority of the population is female could be a contributing factor to the growing presence of women in startups.

This shift represents progress toward a more inclusive economy, where both genders are increasingly participating in and shaping the business landscape.

The report reflects a positive development for diversity and equality in the startup ecosystem, with more women and diverse groups stepping into leadership roles.

Economic analyst Makwaya Boniface said the sharp drop in the percentage of male-owned startups indicates a transformative change in the entrepreneurial environment.

He outlined that traditionally, the startup sector has been predominantly male-driven, reflecting broader societal trends and historical barriers that have limited access and opportunities for women and other minority groups.

Mr Boniface said the decrease from 76.60 percent to 37.65 percent suggests that these traditional patterns are being disrupted, creating space for a more diverse array of entrepreneurs.

"This decline in male ownership signals a rise in the participation of women and underrepresented groups in entrepreneurship. The increased involvement of these groups is crucial for fostering a more inclusive business environment," he added.

He also noted that women and minorities bring unique perspectives and innovative ideas, which can lead to more diverse and creative solutions in the startup world.

Mr Boniface added that this inclusivity helps address long-standing disparities and promotes a more balanced representation in the entrepreneurial ecosystem.

Ms Halima Mohamed, who holds a master’s degree in economics and is a businesswoman, said that the move towards greater diversity in startup ownership has several advantages.

She explained that diverse ownership often leads to improved innovation, as varied experiences and viewpoints contribute to creative problem-solving.

Ms Mohamed said that research shows teams with diverse backgrounds are better at understanding and addressing the needs of a broader customer base, which can enhance business performance and adaptability.

She also noted that diverse leadership teams are more resilient and better equipped to handle the challenges of a competitive market.

Job creation

The report highlights the crucial role of Tanzania’s growing startup ecosystem in reducing unemployment by generating new job opportunities, fostering innovation and promoting entrepreneurship.

Startups are key to job creation, particularly in technology and digital services, providing roles for young professionals and graduates.

The report reveals a 25.26 percent increase in startups, from 673 in 2022 to 843 in 2023, driven by a rising culture of self-employment and growing investor interest.

Dar es Salaam remains the hub of startup activity, hosting 56.47 percent of the nation's startups, thanks to its infrastructure and resources.

Other cities, including Mbeya, Dodoma, Arusha, Morogoro and Mwanza, also show notable startup growth, reflecting efforts to decentralize economic opportunities.

Additionally, the ecosystem promotes innovation, diversifying the economy with advancements in fintech, agritech, healthtech and edtech sectors.

Entrepreneurship is becoming a viable career path in Tanzania, encouraged by the success of local startups.

Incubators and accelerators play a vital role in nurturing new businesses, offering resources and mentorship.

Startups also help bridge the skills gap by providing on-the-job training and professional development, equipping workers with the skills needed for modern industries.