Charles Mkoka
Dar es Salaam - Tanzania’s startup ecosystem has expanded rapidly in recent years, driven by a young population, rising digital adoption, and growing interest in entrepreneurship. Yet despite a steady flow of new ideas, relatively few startups survive long enough to scale into sustainable businesses.
Founders, policymakers, and ecosystem builders increasingly agree that the problem is not innovation itself, but a combination of policy lag, limited access to patient capital, and weak commercial foundations.
According to Kusiluka, who coordinates millennial technology innovators Founders Tz Forum, working also with early-stage startups, one structural challenge lies in how regulation evolves.
“Policy is largely reactive,” he said. “Startups are disruptive by nature, and regulation tends to follow innovation rather than lead it. This happens even in advanced markets such as the UK and the US.”
The difference, he argues, lies in survival mechanisms. In mature ecosystems, startups often have access to grants, venture funding or state-backed support that allows them to operate while regulatory frameworks catch up. In Tanzania, many founders rely on personal savings and informal networks to stay afloat.
Other founders contend that the biggest obstacle is not policy, but execution.
“Any business will fail if it does not get customers,” said Mikhael, an entrepreneur involved in multiple startups. “Revenue matters more than capital in the early stages. If you cannot sell, nothing else works.”
That view is echoed by Solomon, another founder, who says cash flow remains the most critical survival factor.
“Customers bring cash, and cash flow is king,” he said. “Product–market fit is where most startups struggle.”
Since independence, Tanzania’s government has launched multiple initiatives aimed at supporting private-sector development, often targeting youth through funds, training programmes, and partnerships with development organisations.
Some founders, however, question whether these efforts have translated into measurable outcomes.
“Large sums of money have been channelled through institutions in the name of youth empowerment,” said Liann Sambu, a founder and entrepreneur. “The impact on sustainable businesses remains unclear.”
Under President Samia Suluhu Hassan, youth empowerment has gained renewed political focus, including stronger institutional oversight through a dedicated ministry.
“If government engages founders in a structured, transparent and accountable way, the results could be significant,” she said.
Members of the Founders Tz Forum, a network bringing together thousands of business owners and startup founders, say one of the ecosystem’s biggest gaps is the lack of a clear pathway from idea to investment.
“Many founders have viable concepts capable of creating jobs and competing internationally,” one member said. “What is missing is visibility and alignment with national economic priorities.”
Another challenge is the absence of inherited capital and established production systems, common in more developed economies.
“In countries where the factors of production are already in place, building wealth is easier,” said Gerald Nyaisa. “Local founders often start with none of that.”
He pointed to long-established Tanzanian conglomerates such as Bakhresa Group (Azam) as examples of businesses built through long-term investment rather than short-term returns.
Technology startups face additional barriers, particularly in accessing finance. Founders say lending systems tend to favour businesses with physical collateral, sidelining software-based ventures.
Nyaisa recalled a 2023 attempt, along with a colleague, to secure funding for a mobile application designed to register pregnant women and connect them to community health initiatives.
“It took nearly an hour to explain what a mobile app is,” he said, describing the meeting with a local youth officer. “That reflects a broader institutional gap.”
According to the founder of Lesire Academy Music, Laison Laiser, who works on inclusive entrepreneurship models, the founder mindset also plays a role.
“The ecosystem improves when entrepreneurs commit to long-term value creation rather than quick exits,” Laison Laiser said.
Others argue that expectations placed on startups are often unrealistic.
“Startups are framed as needing to be transformative tech giants,” said Simon Mnyele, a forum member. “But such ventures require patient capital over five to ten years, which remains scarce in Tanzania.”
Several founders have proposed more structured coordination within the ecosystem, including regular forums to share data, align priorities, and engage policymakers.
Common challenges cited include: Loan conditions that do not reflect startup realities, limited mentorship after funding, delays in youth-focused financing, weak links between innovation, investment, and markets, and plenty more
For Viana Mulokozi, director of Vaye Company, the next step is evidence-based engagement.
“If these issues are consolidated into a clear policy brief, they can be formally presented to decision-makers,” she said. “That is how reform becomes possible.”