Tanzania charts urgent startup comeback after 2025 slowdown

According to TSA Head of Programmes and Operations, Praygod Japhet, 2025 had been anticipated to be a major turning point because key instruments were expected to be in place by June: the Startup Policy, the Sh100 billion Tanzania Venture Capital Fund and regulatory changes allowing venture capital firms to incorporate locally.

TSA believed these reforms would solve historical challenges including lack of capital access, policy ambiguity and absence of structured incubation and mentoring support.

Mr Japhet said earlier that finalising the Startup Policy would bring clarity on startup classification, streamline regulatory processes, and open doors for capital access, incubation programmes and incentives.

He further explained that the Tanzania Venture Capital Fund would target high-potential sectors such as agritech, fintech, healthcare, manufacturing and clean energy and would operate under a hybrid public–private model to unlock funding gaps that startups have traditionally faced.

He noted previously that with these reforms, Tanzania could finally shift from being an ecosystem driven by hope to one driven by structure.

“These are not just documents. They are instruments that finally put Tanzania on the global map for startup investment,” he said earlier.

Optimism meets harsh reality

That optimism, however, has met a harsh reality. Data from Africa: The Big Deal shows that as of now, Tanzanian startups have not crossed the $15 million fundraising mark for 2025.

The contrast to last year is stark. In 2024, startups in Tanzania raised a total of $53 million, more than $40 million of which was raised during the third quarter alone, placing Tanzania as the third highest recipient in Africa for that quarter.

Across the continent, African startups collectively raised over $2.2 billion by October this year, signalling that Tanzania’s decline is not part of a continental downturn but a local ecosystem setback.

The slowdown is prompting a shift in conversation: not about what went wrong, but what Tanzania must do to stage a strong comeback in 2026.

While the government had already expressed its commitment to improving the investment environment, the remarks by the Minister for Planning and Investment, Prof Kitila Mkumbo, were not fresh statements but part of earlier official explanations about ongoing reforms.

Prof Mkumbo said previously that the government is prioritising a conducive investment climate through legal restructuring, policy harmonisation, formation of a national investment fund, and creating smoother processes for investors.

“Our goal is to ensure that Tanzania becomes the easiest place for investors to operate,” he said earlier, noting that investment inflows thrive where processes are predictable and transparent.

He also referenced the merger of the Tanzania Investment Centre (TIC) and the Export Processing Zones Authority (EPZA) into the new entity Tanzania Investment and Special Economic Zones Authority (TISEZA) as part of that effort.

“We are simplifying the system, one doorway, one authority, one decision path,” Prof Mkumbo said in his earlier remarks.

Prof Mkumbo explained that the Investment Act of 2022 would form a basis for investor-friendly engagement and that the planned National Investment Fund would support strategic investments, including startups.

He reiterated that Tanzania’s future growth will depend on changing the mindset of how the country responds to enterprise risk.

“We must build a culture that supports innovation, that tolerates intelligent failure, and encourages entrepreneurs to try again,” he said at the time.

He also cited infrastructure improvements such as the Standard Gauge Railway (SGR) and transportation networks as part of the country’s broader plan to attract investors.

“Infrastructure opens markets. When you build strong logistics, you reduce costs for investors,” he emphasised.

These government commitments form part of the foundation on which Tanzania must now build its startup comeback plan.

Beyond policy, those in the ecosystem argue that for Tanzania to recover from this funding dip, structural —not symbolic — changes must be made.

CEO of Sahara Ventures, Jumanne Mtambalike told The Citizen that Tanzania’s decline is a reminder that ecosystems do not grow on hope or vision statements, they grow on execution.

“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 believes Tanzania must stop depending on a few large deals to elevate its fundraising figures and instead build a consistent pipeline of investment-ready startups.

“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 co-founder of Plate AI, Janeth-Kareen Kilonzo, Tanzania’s comeback depends on what she calls ‘investment accessibility infrastructure.’

“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 explained.

Other founders point to sector prioritisation. The co-founder of Kilimo Fresh Foods Africa Ltd, Baraka Chijenga, said Tanzania must stop chasing trending sectors and instead focus on areas where the country holds a competitive edge.

“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 noted.

Startup mentor and entrepreneur Michael Nyamwero said that regulatory predictability will determine investor confidence more than incentives ever will.

“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 said.