Dar es Salaam. Tanzania’s startup ecosystem is poised for significant growth in 2025, with key reforms, improved access to finance and a stronger policy framework looking set to promote innovation and entrepreneurial success.
According to the website Africa: The Big Deal, Tanzania raised an impressive $53 million in startup funding in 2024, securing its position as the seventh-largest recipient on the continent, compared to $25 million raised throughout 2023.
Notably, the country emerged third in Africa during the third quarter after raising $43 million with the majority of funding ($40 million) coming from Fintech giant, Nala, reflecting its growing appeal among investors.
Despite Tanzania’s progress, Kenya remained the undisputed leader in East Africa, attracting $638 million in 2024—88 percent of the region’s total funding.
Kenya’s dominance was fuelled by large deals in climate tech, including companies like d.light, SunCulture and Basigo making it the top investment destination in Africa.
Tanzania Startup Association (TSA) head of programs and operations Praygod Japhet outlined several factors that will shape the country’s position in the global startup arena.
A major milestone is the completion of the Startup Policy by June 2025. This policy will formalise the sector, providing the legal and regulatory framework needed to foster innovation.
“The finalisation of the Startup Policy will mark a critical turning point, clarifying startup classifications and offering incentives like access to capital, streamlined regulatory processes, and incubation programs tailored to startups,” Mr Japhet told The Citizen.
“This policy will align with Tanzania’s Vision 2025, supporting the country’s transition to a diversified economy. It aims to create a predictable environment for entrepreneurs, which is essential for attracting local and international stakeholders.”
However, access to finance was still a major challenge in 2024 for many startups in Tanzania. He pointed to the launch of the Sh100 Billion Tanzania Venture Capital Fund as a solution.
This fund, set to be operational by June 2025, will target high-potential startups and SMEs in sectors like agritech, fintech, clean energy, healthcare, and manufacturing.
“This fund will leverage both public and private investments, and its hybrid Fund of Funds model will bridge the financing gap that startups have traditionally faced,” Mr Japhet said.
He also highlighted a key regulatory initiative by the Capital Markets and Securities Authority (CMSA), allowing venture capital (VC) and private equity (PE) firms to incorporate locally.
“This regulatory shift is expected to make Tanzania a more attractive destination for investors, improving capital access for early-stage ventures.”
Mr Japhet said the government’s commitment to tax and regulatory reforms is another key factor, Mr Japhet references the reforms announced during the launch of Tanzania Startup Week in December 2024, including changes to capital gains tax rates to encourage venture capital and private equity investments.
“These changes will make the tax environment more favourable for investors, which is vital for growth and innovation.”
Additionally, a revision in the Fair Competition Act is expected to increase the threshold for reporting mergers and acquisitions, reducing administrative burdens and encouraging smoother transactions.
The introduction of Limited Liability Partnerships (LLPs) will also align Tanzania’s legal framework with global best practices, providing a suitable structure for VC and PE firms.
Public procurement opportunities for youth-, women-, and disability-led businesses will continue to be reserved under the Public Procurement Act, with 30 percent of contracts allocated to these groups. This provision will open new avenues for startups to participate in national projects, strengthening their market presence.
Infrastructure development is another essential element and Mr Japhet highlighted the government’s plan to build Startup Innovation Hubs in eight key regions, providing co-working spaces, mentorship, and access to investor networks.
“These hubs will empower startups across the country, ensuring that innovation is not confined to urban centres.”
The TSA is also launching a digital platform, Startup Tanzania, serving as a one-stop hub for entrepreneurs.
“This platform will provide critical resources like funding opportunities, policy updates, and mentorship programs,” Mr Japhet said.
For his part, Tembo Plus founder Victor Joseph said procurement opportunities for youth and women-led businesses are a good initiative that creates a more equitable playing field.
Binary Labs c-founder Catherinerose Barretto emphasised the significance of such initiatives.
“Having a centralized digital platform will enhance accessibility to resources. It will help startups connect with key partners and stakeholders seamlessly,” she said.
Entrepreneur Michael Nyamwero said, “The launch of the Tanzania Venture Capital Fund is a game-changer. It will allow us to scale our operations in sectors with significant growth potential, especially in agritech and fintech.”
Looking ahead to 2025, Mr Japhet envisioned Tanzania Startup Week as a pivotal event in driving forward the country’s startup agenda.
“The 2025 edition will be bigger and more impactful, with enhanced focus on investment, innovation, and international collaboration,” he said.
Mr Japhet anticipated greater emphasis on cross-border collaboration, positioning Tanzania as a gateway for innovation in Africa.
