Investment

Investment Opportunities in Tanzania: Why the Country is a Growing Hub for Tech Startups

Tanzania, often celebrated for its rich wildlife and stunning landscapes, is increasingly making a name for itself as a rising star in Africa's tech startup ecosystem. Over the past few years, the country has experienced a surge in innovation, investment, and entrepreneurial activity, positioning itself as a compelling destination for tech investors and startups alike. In this blog post, we will explore why Tanzania is emerging as a growing hub for tech startups and the investment opportunities it presents.

 

A Thriving Startup Ecosystem

Tanzania's startup ecosystem has witnessed remarkable growth, with the number of active startups increasing by 24% in 2024, reaching over 1,000 ventures. These startups have become significant contributors to employment, creating over 138,000 jobs—a 23% rise compared to the previous year .

The country's capital, Dar es Salaam, serves as the epicenter of this entrepreneurial activity, while cities like Arusha and Mwanza are emerging as secondary hubs, particularly for sectors such as agritech, tourism tech, and renewable energy .

 

Surge in Investment

Tanzania's appeal to investors is evident in the substantial increase in funding and capital inflows. Between 2020 and 2024, the number of registered investment projects grew by 335%, from 207 to 901, and total capital investment surged from $1.1 billion to $9.3 billion—a 745% increase .

In 2024 alone, foreign direct investment (FDI) more than doubled to $53 million, with fintech attracting the lion's share at $41.4 million. Domestic investment also saw a significant rise, totaling $43.4 million, reflecting growing confidence in Tanzania's tech landscape .

 

Flourishing Fintech Sector

Fintech has emerged as a cornerstone of Tanzania's tech startup scene. With a significant portion of the population unbanked or underbanked, fintech startups are addressing critical gaps through mobile money platforms, digital wallets, and SME financing solutions.

Key players like Mpesa Tanzania and TigoPesa have expanded their reach significantly. Emerging startups such as NufaikaPay, focusing on microloans, and FasterWallet, offering cross-border remittance solutions, have gained traction. The Bank of Tanzania's Fintech Regulatory Sandbox continues to attract new players, providing a conducive environment for innovation and growth .

 

Agritech: Revolutionizing Agriculture

Agriculture remains a vital sector in Tanzania, employing over 65% of the population. Agritech startups are leveraging technology to address challenges in productivity, market access, and climate resilience.

Companies like KilimoTech, providing precision agriculture tools, and AgroConnect Tanzania, a digital marketplace linking farmers to buyers, are transforming traditional farming practices. Other notable startups include GreenHarvest Solutions, focusing on sustainable farming, and SoilSmart, offering AI-powered crop management tools .

 

Supportive Government Policies

The Tanzanian government has implemented several initiatives to foster a conducive environment for tech startups. The New Investment Act of 2022 has streamlined the investment process, reducing the minimum investment threshold to $50,000 and offering fiscal incentives lasting up to five years. Special Economic Zones (SEZs) provide additional benefits, including a ten-year income tax exemption for qualified investments .

Furthermore, the government has launched an electronic investment window (TeIW) to facilitate the processing of investment certificates and permits, enhancing efficiency and transparency .

 

Digital Infrastructure and Connectivity

Tanzania's digital infrastructure has seen significant improvements, with over 79% mobile phone penetration and a growing number of internet users. The expansion of mobile networks and internet connectivity has facilitated the growth of digital platforms and services, enabling startups to reach a broader audience.

The government's efforts to enhance digital infrastructure, coupled with the increasing adoption of mobile technology, have created a fertile ground for tech startups to thrive.

 

Opportunities for Investors

Tanzania offers a range of investment opportunities for those looking to tap into its burgeoning tech startup ecosystem:

• Fintech: With a large unbanked population and increasing mobile money adoption, fintech startups present lucrative investment prospects.
• Agritech: The agriculture sector's significance and the need for modernization create opportunities for agritech innovations.
• Healthtech: Startups focusing on improving healthcare access and delivery, especially in rural areas, are gaining traction.
• Edtech: The demand for quality education and skills development presents opportunities for educational technology solutions.
• E-commerce: The growing internet penetration and changing consumer behaviors create a conducive environment for e-commerce ventures.

 

How to Get Involved

Investors interested in exploring opportunities in Tanzania's tech startup ecosystem can consider the following steps:

1. Conduct Market Research: Understand the local market dynamics, consumer behaviors, and regulatory landscape.
2. Engage with Local Ecosystem Players: Connect with startup hubs, incubators, accelerators, and government agencies to gain insights and build networks.
3. Collaborate with Local Partners: Partnering with local entities can provide valuable market knowledge and facilitate smoother entry into the market.
4. Monitor Policy Developments: Stay informed about government policies and initiatives that may impact the startup ecosystem.
5. Consider Impact Investing: Given the social impact potential, consider aligning investments with sustainable development goals.

 

Tanzania's tech startup ecosystem is on an upward trajectory, fueled by a combination of entrepreneurial spirit, supportive government policies, and increasing investment. With sectors like fintech, agritech, healthtech, edtech, and e-commerce gaining momentum, the country presents a wealth of opportunities for investors seeking to make a positive impact while achieving financial returns.

As Tanzania continues to build its digital future, the collaboration between investors, startups, and the government will be crucial in realizing the full potential of the tech ecosystem. By engaging with this dynamic landscape, investors can be part of a transformative journey that not only drives economic growth but also contributes to the development and prosperity of Tanzania.