Tanzanian government reveals plans to enhance startup ecosystem

“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 2024/2025 fiscal year includes crucial elements such as the National Development Vision 2050 and 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 is working on merging the Tanzania Investment Centre (TIC) and the Economic Processing Zones Authority (EPZA) to become a unified investment institution.

“This yet-to-be entity will streamline the process of promoting and facilitating investments while developing economic zones in the country,” he noted.

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 in the country, the minister acknowledged that the current funding system is not tailored specifically for startups that 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.