[9]
The enabling environment is often quoted as the most significant challenge for impact ventures in Tanzania. [11]
Figure 1: Funded sectors in Tanzania’s startup ecosystem
Services
9.09%
Youth-based enterprises are adversely affected by poor business operating environments. Despite several reform measures instituted in recent years, Tanzania’s business environment remains less competitive due to government interventions. The 2019 Global Competitiveness Report ranks Tanzania at 117 out of 141 countries, well below its regional peers (including Kenya, Rwanda, Ghana, and Uganda). Despite gradual improvements in enterprise development and competitiveness, Tanzania lags behind its regional comparators. Tanzania’s scores on Doing Business and EBA (Enabling the Business of Agriculture) Agribusiness Indicators also offer some insights into its performance compared with regional competitors. Tanzania’s overall Doing Business ranking was 144 of 190 countries in 2020, the second [12][13] [14]
Deep Tech
9.09%
Energy
9.09%
Retail
9.09%
Agriculture
27.27%
Fin Tech
27.27%
0%
10%
20%
30%
The emphasis on Fintech and agriculture could increase competition and innovation within these sectors, ultimately benefiting consumers and the broader Tanzanian economy; however, only 11 known startups received funding in 2022. The Tanzanian startup ecosystem is relatively small or at an early stage of development. This gives new entrants and entrepreneurs opportunities to build innovative solutions and businesses. The limited number of startup beneficiaries suggests that access to funding may be challenging for startups in Tanzania, possibly due to a lack of local funding sources. Few funded startups may also indicate the need for more support structures, such as incubators, accelerators, and mentorship programs, to help create a significant investment pipeline.
worst in the group of countries shown. Tanzania’s composite EBA score was 57.15, ranking 43 of 101 countries. This score is lower than those of Kenya and Zambia but higher than Ethiopia, Rwanda and Uganda.
[15]
For the Doing Business Trading Cross Borders indicator, Tanzania is the worst in the group and ranked 182 in the world. Similarly, Tanzania’s EBA score for Trading Food is the lowest of a group of five East African countries and Zambia. While its composite EBA score trails only Kenya and Zambia by a small amount, Tanzania lags behind most of the other countries in the region in yields (for maize), fertilizer application rates, and public expenditure on agriculture despite its large land area, under-utilized arable land, and large population. [16]
2.1.4. Key Challenges for Youth Enterprises, MSMEs and Prospective Innovators
Challenge 1: Regulatory and business environment
A key focus for prospective innovators and entrepreneurs is leading their ventures to impact and scale more effectively and efficiently. This requires addressing challenges related to the regulatory and business environment (the business enabling environment) and the actors’ capacity to shape the enabling environment for innovation. In recent years, the perceived reliability and transparency of the early-stage business policy and regulatory framework have improved. At the same time, it is still considered bureaucratic and cumbersome for early-stage [10] ventures. Policies related to, for example, customer research, social media, or lengthy processes regarding investments may slow down the development of fast- moving impact ventures. While the number of days required to set up a business in Tanzania is comparable to other nascent innovation ecosystems, the amount of time needed to acquire credit can be 3 times longer.
Challenge 2: Access to financial services
Empirical research has shown that youth are one of the most financially excluded groups in Tanzania. Overall, youth in rural areas that are dependent on agriculture activities as remain the most excluded from formal financial services. The number of excluded rural youth aged between 16 and 25 years have increased from 33% in 2017 to 51% 2023. (Source: Fiscope Survey, 2023) . The National Financial Inclusion Framework 2018-2022 has recognized youth as a key demographic in need of increased efforts to ensure not only their financial inclusion but also to aid them in preparing for the future. Inclusive finance for rural youth carries the potential to not only increase their welfare, shock resilience and economic productivity but also contribute to leveling
9
Youth Enterprise Policy Analysis Report
Made with FlippingBook - professional solution for displaying marketing and sales documents online