Why Tanzania is now a magnet for startup funding
What you need to know:
- While funding for Tanzanian startups was once scarce, the last few years have seen a shift in investor interest. More African and international venture capital firms are looking at Tanzania as a viable market, and local investors are also stepping in.
Dar es Salaam. Over the last few years, Tanzania has experienced a significant shift in its startup ecosystem, marked by an encouraging rise in funding and an influx of innovative entrepreneurs.
According to Africa: The Big Deal, Tanzanian startups have raised nearly $300 million since 2019, making the country one of the top ten startup investment destinations in Africa. The shift didn’t happen overnight.
Experts and entrepreneurs revealed that it has been driven by a combination of regulatory improvements, increased investor confidence, and a new generation of tech-driven entrepreneurs reshaping industries.
However, Kenya has been East Africa’s dominant force in startup funding, attracting $3.3 billion since 2019—over 80 percent of the region’s total. Tanzania, while trailing its neighbour, has quietly built momentum.
Fintech, energy, and e-commerce startups have led the way, with companies like Nala and Zola Electric securing significant investments.
Speaking to The Citizen, Tembo Plus Victor Joseph recalled a time when raising funds for a startup in Tanzania felt nearly impossible.
“Before, investors overlooked Tanzania because the market was seen as too slow, too risky. But we’ve proven that there is real potential here,” he said.
In the last five years, Tanzania’s startup ecosystem remained in the shadows of Kenya’s Silicon Savannah and Nigeria’s Lagos-based tech hubs, Mr Joseph added.
“Investors often cited challenges such as bureaucratic bottlenecks, lack of clear regulations, and limited access to local venture capital as reasons for their hesitation. The country has taken significant steps to improve its startup environment. One major factor behind the shift has been government attention.
“The future is bright as the government has moved to establish clearer regulations for startups, including the development of a national Startup Policy. This, coupled with efforts to digitize business registration and streamline tax procedures, has made Tanzania more attractive to investors.”
For her part, Binary Labs co-founder Catherinerose Barretto said she believes that local startups have also become more competitive.
“We’re seeing better business models, stronger teams, and more innovative solutions. Investors are taking notice,” she noted.
At the same time, Tanzanian startups have gained access to more funding opportunities. Beyond international venture capital, local initiatives such as the Tanzania Venture Capital Fund to launch in 2025—are set to inject new capital into promising businesses, Ms Barretto said.
Like in other parts of Africa, fintech has been a major driver of Tanzania’s startup boom. Companies like Nala, a digital payments platform, have raised millions by offering seamless money transfers for the diaspora.
Similarly, alternative energy startups have attracted investment, with Zola Electric securing funds to expand its solar energy solutions.
Horizon Digital Tanzania founder and CEO Furaha Mohamed pointed out that investors are particularly drawn to startups solving real problems.
“Tanzania’s fintech scene has exploded because of the demand for financial inclusion. Investors see the potential, and they’re backing companies that can scale,” he said.
The rise of mobile money and digital payment solutions has also played a crucial role in the country’s startup growth, Mr Mohammed added.
“Mobile penetration in Tanzania has increased significantly over the years, making digital transactions more accessible and opening doors for financial technology startups.”
Also read: Report shows significant change in Tanzania’s startup landscape
While funding for Tanzanian startups was once scarce, the last few years have seen a shift in investor interest. More African and international venture capital firms are looking at Tanzania as a viable market, and local investors are also stepping in.
Kiasi App founder Emansi Kiula noted that Tanzanian entrepreneurs are becoming more adept at securing investment.
“The landscape has changed. We now have better access to accelerators, pitch competitions, and even so soon we will have government-backed funds,” he said.
“We’re just getting started. If we keep this momentum, Tanzania could be one of Africa’s biggest startup hubs in the next decade.”
Despite the progress, Tanzania’s startup ecosystem still faces hurdles. One of the biggest challenges is the regulatory environment. While efforts are being made to introduce startup-friendly policies, some entrepreneurs feel that there is still too much bureaucracy.
On the other hand, a research analyst at Shikana Group, Mr Isai Mathias, warns that sustaining investor confidence will require more than just policy reforms.
“The ecosystem needs stronger local venture capital networks, mentorship programmes and better integration with regional markets,” he explained.
Another key issue is the talent gap. While Tanzania has a growing pool of young, tech-savvy entrepreneurs, there is still a shortage of experienced startup founders who have successfully scaled businesses.
“This makes investors hesitant to commit large amounts of capital,” he said.
