Tanzania’s startup ecosystem is still in its infancy, but it is rapidly growing and has the potential to become a hub for innovation and entrepreneurship in East Africa.
On that backdrop, Tanzanian government has made significant efforts in recent years to support the growth and development of startups in the country with the establishment of a $100 million venture capital fund, which is aimed at providing funding to startups and small businesses, being one of the crucial strides.
But the Government doesn’t have a muscle-bound capability to make things happen alone – it needs strong and committed partners on the way such as Tanzania.
Tanzania Startups Association (TSA) and Dutch Embassy onboard. Policy Officer Economic Affairs at the Embassy of the Kingdom of the Netherlands, Nina van Tok shares with the Citizen newspaper on the embassy’s role in escalating startups growth plus its solid ties with the Government and TSA as major partners.
TSA and Netherland Embassy have signed an agreement focused on strengthening startups of Tanzania.
What is the rationale of this ties? What to expect from this tie? Has there been any kind of ties before this?
Tanzania and the Netherlands have had economic relationships for several decades. The Netherlands is one of Tanzania’s major trading partners and foreign investors.
The two countries have had formal economic ties since the 1960s. In 1961, the Netherlands established an embassy in Dar es Salaam. Since then, the economic relationship between the two countries has grown, with Dutch companies investing in Tanzania’s agriculture, tourism, and energy logistics, among others. In recent years, the Netherlands has been focusing on startups, and fintech, sustainable development and women and youth in business.
As mentioned above, TSA and the Embassy of the Kingdom of the Netherlands have worked together on a comparative baseline study on startup acts that was launched in April 2022.
The study focused on presenting critical challenges influencing the business environment in Tanzania for startups and clear and feasible recommendations for policy and legislative reform.
The comparative baseline study looked at other countries as well. Countries that have already enacted a startup act are Kenya, Mali, Senegal and Tunisia.
The key takeaway of this research was that indeed Tanzania needs a startup policy to have a flourishing startup environment.
This was the first step in the process of establishing a startup policy in Tanzania. The startup policy is a tool that governs startup activities at all levels, focusing on providing a conducive business environment for the startups to grow and scale.
Now that the comparative baseline study is done, we are working on the next steps. The process of setting up the startup policy has started. The Embassy signed a new MoU with TSA on the 12th of April 2023 that is focused on working together to set up a startup policy.
This MoU is a sign of cooperation between the Embassy and TSA, meaning we commit to continue working for a better startup environment in Tanzania together. The government will form and announce a steering committee to spearhead the policy process.
What are benefits that Tanzania would obtain if we have many startups?
Startups can contribute to accelerate sustainable economic growth. Startups are rooted in innovation and focus on addressing the deficiencies of existing products, processes, and services or creating entirely new categories, thereby using disrupting entrenched ways of thinking and doing business.
Startups generally focus their entrepreneurial effort on solutions to wicked problems that are difficult or impossible to solve because of incomplete, contradictory and changing requirements.
As such, startups are largely knowledge- driven enterprises. Overall, startups can bring many benefits to an economy, including job creation, innovation, stimulating entrepreneurship and attracting investment. As such, they are often seen as a key driver of economic growth and development.
This is exactly the reason why we, as the Netherlands, like to contribute to this. We believe that the impact on Tanzanians economy will be great.
How does the Netherland Embassy support startup ecosystem in Tanzania which is devoid of clear policy?
As stated in the answer above, the Embassy of the Netherlands is supporting the Tanzanian ecosystem right now by supporting the startup policy process.
A big step in this was the comparative baseline study that was finished in April 2022. Right now the focus lies on the formulation of the startup policy. This is a complex process in which it is important to keep in dialogue with TSA, the Tanzanian Government and other stakeholders in the field.
The Embassy of the Netherlands is looking forward to the results and the impact it will have on the Tanzanian startup environment. The signing of the MOU on the 12th of April with TSA we commit to continue our partnership.
The MOU is a framework for future collaboration. The message of signing a Memorandum of Understanding (MOU) between two partners is to formalize their mutual understanding and commitment to work together towards a common goal or project.
Is there formal dialogues between the Embassy, TSA and Government of Tanzania aimed at lifting local startups in any way? If not what are measures?
Yes there are. These dialogues between the Embassy, TSA, the Tanzanian Government and other stakeholders are very important. Creating a new policy is a complex process that needs all the stakeholders to be on the same page.
The government has been very cooperative throughout this whole process. We hope that the formulation of a startup policy in Tanzania will give a big boost to the startup environment.
What are future projections of Netherland Embassy for Tanzanian startups?
The reason that the Embassy of the Netherlands is working on this project is because we believe that a better startup environment can bring many good things to Tanzania. As mentioned, startups bring many economic benefits to a country. And the amount of startups is growing in Tanzania. In December 2021 Tanzania had 587 known startups, signaling a 258% increase in just one year.
Besides that, Tanzania is one of the fastest-growing economies in Africa, with a GDP growth rate of 4.7 percent according to the World Bank in 2021.
Factors such as political stability ensure that there is a high potential for Tanzania when it comes to doing business. The Embassy of the Netherlands sees high potential in the now developing startup sector. By contributing to a better startup environment through a startup policy, we think this sector can definitely continue to grow even faster and the Tanzanian startups will have more tools to succeed in their new businesses