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Number and Employment of Startups in Tanzania Up by 15% in 2022

Number of Startups in Tanzania 2019-2020-2021

The Tanzania Startups Association (TSA) recently published its Tanzania Startup Ecosystem Status Report for 2022 which presents an in-depth analysis of the current state of startups in Tanzania.

The report highlights the major trends and developments that have shaped the industry over the past year and provides an overview of the major startup hubs around the country, including key statistics on funding, investment trends, characteristics of founders and startup activity.

It also examines the key challenges facing startups, such as access to funding, investments, talent, support, and regulatory barriers.

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Key Findings

Key findings reveal a 15% increase in the number of known startups, growing from 587 in 2021 to 673 in 2022.

This substantial growth can be attributed to several factors, such as an extended government hiring freeze that led many young professionals, including recent graduates, to explore self-employment and entrepreneurship opportunities.

Also, expanding internet access and digital technology in Tanzania have enabled more individuals to launch and scale their businesses.

Sectoral Distribution

The Professional Services and Consulting sector, including software as a service, leads with 25.9% of startups, followed by AgriTech (16.6%) and Fintech (7.2%).

Emerging sectors include E-commerce/Retail Tech (6.6%) and health tech (5.3%).

However, EduTech remains small at 0.8%, offering opportunities for innovative education solutions.

Geographical Distribution

In 2022, Dar es Salaam remained the top startup hub in Tanzania, hosting 66.56% of all startups.

Arusha secured second place with an increase from 6% in 2021 to 8.13% in 2022, while Mbeya also grew from 2.6% to 4.22%. The remaining 21.09% of startups are based in different cities nationwide.

Contribution to Jobs

The Tanzanian startup ecosystem is flourishing, contributing to the economy through job creation and innovation as startup-generated jobs rose by 14.65%, from 78,071 to 89,509, in 2021 to 2022 respectively, signalling a thriving market for entrepreneurs and promoting economic growth.

Employment in Startups in Tanzania 2019-2020-2021

Startups Gender Diversity

Findings reveal that 76.6% of startups are male-owned, 17.2% female-owned, and 6.3% co-owned.

The gender gap highlights the need for a more diverse and inclusive startup ecosystem, as diverse representation fosters innovation and fresh perspectives.

Fundraising

In 2022, Tanzanian startups collectively raised USD 80.575 million in funding, with the fintech sector claiming the lion’s share at 52.3%.

However, the Tanzanian startup ecosystem is grappling with underfunding, as evidenced by 61.25% of startups failing to secure funding in 2022.

Nonetheless, this represents a significant improvement from the 86% of underfunded startups in 2021.

You can read the full report here: https://tsa.co.tz/docs/Tanzania-Startup-Ecosystem-Status-Report.pdf

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