Op-ed, Social and Economic Justice

Tanzania’s Startup Ecosystem: Building for the Long Game

Tanzania’s startup scene isn’t lagging behind—it’s building its own unique foundation, and judging it by mature-market standards is comparing apples to saplings.

Zahoro Muhaji

July 7, 2026

subscribe to our newsletter!

There is a recurring conversation happening behind closed doors in Dar es Salaam, at tech hubs, and across regional investor circles. It usually starts with a sigh over a spreadsheet: “Why aren’t we seeing the US$50 million mega-rounds like Cairo or Lagos? Is the Tanzanian startup market just fundamentally stuck?”

When critics look at our numbers, the modest venture capital inflows compared to the “Big Four” African hubs, the long timelines to scale, or the regulatory hurdles, it is easy for them to slap a pessimistic label on the country’s startup scene. But they are misreading the room.

The Tanzanian startup ecosystem isn’t a failure; it is just getting started. Looking at an early-stage market through a mature-market lens always distorts the truth, because most people compare it to other mid- and mature ecosystems without taking into consideration that those ecosystems started 10 to 15 years before us here in Africa, and even longer for ecosystems outside Africa.

Misplaced yardstick

For years, the global venture capital playbook taught us to measure ecosystem health using a simple formula: massive seed rounds, hyper-growth user acquisition, and a rapid path to a Silicon Valley-style exit.

When applied to Tanzania, that formula fails. But it doesn’t fail because our founders lack talent or ambition; it fails because our economic reality requires a completely different blueprint.

We are operating in an environment where:

Informality is the norm: The vast majority of our economy thrives in informal retail and trade.
Infrastructure is still being laid: Digital payment rails, address verification, and logistics networks are still being built out, often by the startups themselves.
Corporate balance sheets are conservative: Local mergers and acquisitions (M&A), where a larger company buys a smaller one, are rare or unheard of. They are driven by utility and immediate profitability, not speculative future value.

When you judge a market that is busy laying foundational brick-and-mortar digital regulatory infrastructure against a market that is purely optimising consumer software, you miss the entire point.

A healthier picture

If you pull back from the hyper-growth obsession and look at how local companies are actually scaling, a much healthier picture emerges. We are starting to see the first true generation of “graduates” from our ecosystem.

Companies like East Africa Fruits, bridging agro-producers and consumers through technology (raised US$10 million); Dawa Mkononi (generating a million dollars in revenue a month), with their play in the healthcare value chain; or Ramani, anchoring supply chains for local micro-distributors (Series A US$32 million round).

Our exits and growth milestones don’t look like traditional IPOs. Instead, they look like strategic partnerships, local B2B integrations, and expansion into neighbouring SADC markets, where several local startups have successfully scaled and thrived in Mozambique, the DRC, Zambia, and beyond. It’s quiet, pragmatic, and highly resilient growth.

On resilience: whilst we have seen high-profile bankruptcy closures of startups that raised big rounds elsewhere in Africa, none of the Tanzanian startups that raised US$500,000 or more have closed shop.

Sometimes people blame our founders for their slow but sure trajectory, rather than the “hyper-growth at all costs” playbook celebrated everywhere, without realising our ecosystem doesn’t yet have the deep venture pockets to allow a founder to burn cash over three years of scaling. The runway is much smaller in this market.

Reality check: A startup creating a sustainable, cash-flowing business that digitalises cash-based wholesale trade in Kariakoo is infinitely more valuable to our ecosystem right now than a heavily subsidised consumer app burning through millions in venture funding.

Playing catch-up

Perhaps if we agree we are playing catch-up, the most consequential question becomes: are we on the right path and trajectory to be where we wish to be someday? My answer is to look at the lessons of other markets, and I want to use the examples of India and Israel.

If you look at where we are right now and the characteristics of our ecosystem, we are where India and Israel were 20 to 30 years ago: small funds, small ticket sizes, B2B models, modest exits, and a limited talent pool. It took Israel its first 15 years to consistently generate startups with real traction, and 10 years more for breakout big successes for the world to notice.

India, in its first decade, raised an accumulated total of less than US$1 billion of VC/PE funding.

If we start counting from 2020 up to now, our ecosystem has collectively raised around US$400 million—putting us almost on equal footing with their first-decade growth experience. Both ecosystems had many small wins consistently, rather than a few big wins.

That is to say, many small US$100,000 to US$1 million wins build more trust than one big US$50 million win from a single startup. This is exactly what happened in India and Israel before the unicorns (US$1 billion valuations) arrived decades later, and it is exactly what is happening now in Tanzania. I will gladly take 26 startups raising US$500,000 each over a single US$13 million raise from one startup!

Patient architecture

To move from “early” to “mature,” ecosystem builders, investors, founders, and policymakers need to adjust their strategy in three specific ways:

Catalytic, Smaller Funds: We don’t need massive US$100 million mega-funds looking for immediate global scale. We are not yet ready for unicorns; let’s have more gazelles (US$10–20 million exits) and zebras (US$100 million valuations).

We need smaller, bespoke investment vehicles, like local angel networks and regional venture studios, that provide hands-on, patient capital to de-risk innovation at the pre-seed stage. I am pleased we are already starting to see investors like Warioba Ventures and Serengeti Angels putting their money and hands-on local expertise to work.

On growth capital, the Government of Tanzania has recently reached a critical stage in establishing a Venture Capital Fund of Funds to build up a much-needed risk and patient capital ecosystem.

Tanzania currently lacks this, but it follows a similar playbook to the Government of Israel with their Yozma programme, or India’s SIDBI fund of funds—effectively getting the government to put skin in the game within our ecosystem. This is something my colleagues and I at the Tanzania Startup Association (TSA) have long championed and worked on alongside the Ministry of Finance.

Corporate-Startup Bridges: Local telecom giants, banks, and commercial conglomerates need to view startups as R&D partners rather than competition. True liquidity in Tanzania will likely come from local corporate acquisitions. We have started to see NMB Bank leading the way with great collaborations with startups like iPF and Elidazer, injecting their resources behind them.

Regulatory Predictability: As countries across Africa and the world move much faster to put special policies and regulations in place to foster the growth of startup ecosystems, Tanzania cannot afford to lag behind.

The Government, through the Ministry of Information, Communication and Information Technology (MICIT) as the lead ministry, needs to finalise the Startup Policy and clear its immediate regulatory hurdles urgently.

As the TSA, we have made this our signature campaign, which has so far yielded positive results (such as Fintech and Healthtech sandboxes, one-year tax holidays for new businesses). But this work still needs to be finished within the next few months.

Addressing the limited talent issue in the Tanzanian startup ecosystem requires a shift from producing generic graduates to deliberately developing individuals with high-value technical, commercial, and leadership skills. Tax incentives to attract talent to work for startups are also essential.

The long view

Building a startup ecosystem is a multi-decade marathon, not a three-year sprint. Nairobi, Cape Town, and Lagos had a significant head start in funding, a conducive business environment, policy direction, and infrastructure.

Tanzania is charting its own course, building businesses that are forced to be capital-efficient and deeply embedded in local economic realities from day one. The foundation is being laid right now. The builders are in the room. We aren’t broken—we’re just getting started.

Get in!

Zahoro Muhaji is Chief Executive Officer of the Tanzania Startup Association (TSA) and Ward Councillor for Buguruni, Dar es Salaam. He’s available at zahoromuhaji@gmail.com or on X as @ZMuhaji. The opinions expressed here are the writer’s own and do not necessarily reflect those of The Chanzo. If you are interested in publishing in this space, please contact our editors at editor@thechanzo.com.