Tanzania continues to emerge as East Africa’s next startup powerhouse

While countries like Kenya and Nigeria often dominate headlines, Tanzania is quietly emerging as a vibrant and increasingly attractive destination for startups in Africa.

According to Africa: The Big Deal, Tanzania has raised nearly $300 million for startups since 2019 and emerged as one of the top 10 investment destinations on the continent. This shows the level of startup and funding activity happening in a somewhat overlooked market.

Tanzania startup funding totalled $53 million in 2024, and it became the seventh largest recipient on the continent, compared to $25 million raised throughout 2023. Its startup landscape is also rapidly expanding, as it surges past a total of 1,000 enterprises, signifying a 24% growth from 2024. The total number of startups grew from 842 in 2023 to 1041 in 2024. According to StartupBlink, Tanzania‘s startup ecosystem ranks 6th in Eastern Africa and 116th globally, falling below Rwanda, which is ranked 3rd in Eastern Africa and 96th globally.

The Kenya Innovation Outlook 2024 reported that Kenya attracted over $634 million in startup funding this year, accounting for 29% of all capital raised across the continent. Nigeria followed with $400 million, while Rwanda secured $45 million, according to Africa: The Big Deal and CNBC Africa, respectively. As East Africa continues to attract significant investor interest, Tanzania is also emerging as a key player. With over 86% of its population connected via mobile networks and a national push toward a cashless economy, the country is laying critical infrastructure for digital growth.

Read also: Fincra expands to Tanzania, deepening East African footprints

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This growth is attributed to supportive government initiatives, investment-friendly policies, and a growing tech-driven entrepreneurial ecosystem. Tanzania has just begun preparations for its first Startup Act late in 2024. According to the Tanzania Startup Ecosystem Report 2024, Investment into the ecosystem has also surged. Foreign direct investment (FDI) more than doubled, reaching $ 53 million (a 112% increase, while domestic direct investment (DDI) grew by 85.5%, totalling $43.4 million.

A  few wins have been recorded fintech emerged as the leading sector, attracting $41.4 million, which accounts for 78.3% of the total FDI, with agrictech also maintaining a strong presence. To add, female-led startups increased to 16%, showing positive developments in gender inclusivity.

“This report reflects our continued commitment to supporting Tanzania’s entrepreneurial journey,” said Zahoro Muhaji, CEO of the Tanzanian Startup Association. “We hope the findings will assist all those working to support and promote the growth of Tanzania’s startup ecosystem, and we look forward to strengthening these efforts in the years ahead.”

Tanzania’s startup ecosystem benefits from a growing number of incubators and accelerators that provide support and resources for early-stage companies such as PESATECH, DeveloPPP Ventures, AMCET Hub, Buni Hub, Amua Accelerator, and CEED Tanzania. The telcos and banks are backing innovation as their total market potential presents vast opportunities for fintechs.

As the East African nation continues its silent rise in the continent’s startup ecosystem. The governmental institutions continue to work tirelessly to solve issues like talent exodus to Nairobi and South Africa, regulatory bottlenecks, lack of local venture capital presence, and infrastructural gaps by gaining foreign partnerships, like a recent deal signed with Japan, establishing startup hubs, and organising youth training programs.