Why Tanzania needs to feed startups to end unemployment
Dar es Salaam. Tanzanians are increasingly engaging in entrepreneurial activities seeking to improve their financial fortunes and thereby build the country’s economy.
However, most young entrepreneurs say they often face barriers, especially when it comes to supporting government through policies, expertise, and how to access low-interest loans. interest in capital.
Those looking for venture capital or “angel” financing for the first time face a darker landscape, one of the main challenges small businesses face today.
Entrepreneurs who spoke to The Citizen revealed that there is no one-size-fits-all solution to tackling the many challenges that start-ups face.
Access to investment
The startup community believes there is a need for the government to put in place the right policies and environment for domestic and foreign investors to inject funds into promising startups.
Mr. Shilton Ulomi, Founder and CEO of MyHI (My Health Insurance), said other countries have created a good environment to recognize startups and facilitate fundraising by inviting interested investors.
“The government should be a link between startups and investors by providing a secure link and facilitating the business environment,” he said.
Mr Ulomi felt that having an investor backing an innovation, especially in the tech sector he operates, is crucial in terms of connection and network creation, access to training and mentorship.
“Running a startup is different from running a normal business. Founders therefore need ongoing training and coaching on how to successfully run the business, ”he said.
Adam Duma, co-founder of the online tutoring platform ‘SmartClass’, expressed concern that even politics are affecting start-ups in Tanzania because at some point investors are reluctant to provide funds in due to the political environment surrounding the business sector.
“Before injecting their money, most investors analyze the political situation in the country and if there are no favorable policies, then it becomes difficult to support startups in this particular country”, he said. he declares.
He said that proper investment policies are important to attract investment and facilitate the growth of startups.
“In Kenya and other African countries like Nigeria, startups attract a lot of money. But here in Tanzania there are few or none, ”he said.
Mr Duma added that there was also a lack of angel investors and venture capitalists or domestic companies that were ready to support the startup ecosystem.
Mr Ulomi, of whom MyHI was one of three winners in last year’s Vodacom Digital Accelerator program, said another challenge entrepreneurs face is in the initial business registration process where he there is a burden of costs and a heavy bureaucracy.
He said the government should formulate a policy or rather relax the process by exempting startups from costs such as registration and legal fees.
“There are several entrepreneurs who have failed to start their activities because they did not meet the requirements to open the business and this is due to the costs,” he said.
“If it was possible to loan young people who join higher education, the government may even allocate funds to lend ideas to run businesses given the unemployment rate in the country,” Ulomi added.
Mr Duma said the country also lacks committed and promising incubators or hubs to nurture talented entrepreneurs.
“Most entrepreneurs build their businesses from scratch. So they need a mentoring platform that would guide them through the problems their innovation will solve, the size of the market and how to approach it, ”he said. According to him, existing hubs in the country are not beneficial for entrepreneurs, as no successful entrepreneur comes from training or supporting existing hubs.
“These centers have so far provided theoretical contributions that most entrepreneurs have learned in schools,” he said.
“They don’t teach future entrepreneurs the challenges of starting or running a business. Despite the number of incubators that have failed to produce successful entrepreneurs, there are a lot of lies and politics that are not really helpful, ”he said.
Mr Duma said the lack of knowledge and skills among start-up entrepreneurs can also be one of the limits to growth.
“No real content. A huge problem exists with founders who lack the knowledge to seek out and pursue growth opportunities, whether with investment firms or commercial banks, ”he said.
According to him, this gives the opportunity to local organizations or institutions to launch support programs for start-ups that align with their course of activity.
He said, for example, that last year Vodacom Tanzania launched the accelerator program of which the Smart Class became the winner, helping it grow its margin into a successful business.
The government reacts
Deputy Minister of Industry and Commerce Exaud Kigahe told the Citizen that while their impact on the startup ecosystem was still minimal, efforts were being made by the government through existing institutions.
He mentioned the initiatives of the Tanzania Commission for Science and Technology (Costech) and the Small Industries Development Organization (Sido).
“At least we have something in place to support start-ups, micro, small and medium-sized businesses across the country. We also advocated for commercial banks in the country to facilitate lending to small businesses, ”he said.
The deputy minister said the government has also launched programs to support women, the disabled and young people.
“What we recommend is that they should have an association or a group that will facilitate their dialogue with the government and voice their grievances,” he said.