Four Attributes for Building a Vibrant Innovation Ecosystem in Tanzania

  • June 02, 2021

  • Dar es Salaam, Tanzania

Emile Ndayambaje

Knowledge Management and Communications

Written by

UNCDF Tanzania

Inclusive Digital Economies Team


On 20th May 2021, UNCDF unveiled the Tanzania fintech mapping report containing the findings from a comprehensive assessment of the Tanzanian fintech landscape that was conducted, last year, in partnership with Tanzania’s Information, Communication and Technology (ICT) Commission and Sahara Ventures in line with UNCDF’s strategy ‘Leaving No One Behind in the Digital Era’.

The report was launched at this year’s edition of the Tanzania Innovation Week which brought together innovators, policy makers, funders, researchers, and other players in Tanzania’s innovation ecosystem to explore strategies for a resilient innovation ecosystem and how to build an inclusive digital economy in Tanzania.

The presentation of the report findings at the Innovation week was an opportunity for key stakeholders in Tanzania’s digital innovation ecosystem to discuss the enablers and inhibitors of the fintech ecosystem growth in the country and renew commitments to improve the sector based on the recommendations provided by the report.

An innovation ecosystem consists of multiple interdependent and interconnected stakeholders, including end-consumers, innovators, investors, regulators and educational institutions. In Tanzania, UNCDF has been working with stakeholders to support the development of a vibrant and resilient fintech innovation ecosystem as part of its digital strategy.

Tanzania has already proven its readiness for fintech and digital innovations. As of 2019, Tanzania demonstrated high mobile phone penetration (82.2 percent), the growing number of active mobile money accounts (24 million) and the value of digital financial transactions equated to 50 percent of total GDP. The Government is also committed to building an export-led economy under FYDP (Five-Year Development Plan) III accelerated by digital interventions. With the expected launch of the Tanzania Instant Payment System and various e-government public services already running, the rails of a digital economy are being established. They need to be promoted through the strengthening of fintech start-ups and e-commerce players that will in turn catalyze a wider participation in the Tanzanian digital economy.

Despite these developments, there is still a need to understand the current landscape comprising of talent, demand, capital and policy and regulation, in order to build a resilient national innovation ecosystem around fintech in Tanzania” said Ivana Damjanov, UNCDF Regional Programme Specialist for Inclusive Digital Economies during the unveiling of the report.

Our analysis of the current landscape highlights some enablers and inhibitors as well as recommendations on what needs to be done to build a vibrant and resilient fintech innovation ecosystem. These are not limited to the fintech industry only, the lessons could be applied to other ecosystems,” Damjanov added.

The key findings and recommendations of the report discussed at the unveiling session, are categorized by the four fintech ecosystem attributes:


Having relevant skills is the most important ingredient in building an innovation ecosystem. There is limited availability of affordable, skilled local talent in the Tanzanian fintech sector. Fintech start-up founders want mentors with practical start-up experience to guide them, which are not readily available locally. To address this, Tanzania needs to integrate itself into the global think tank to address the shortage of skills at the intersection of technology and finance. An ecosystem needs to facilitate the exchange of knowledge and skills either by making the country attractive for Tanzanians in the diaspora to want to return or for foreign talent to invest either financial or human capital and develop intellectual property to address the shortages.


Funding is necessary for an innovation ecosystem to flourish – innovators need to access early-stage patient capital to develop, test and scale up their solutions. Similar to other African markets; funding for fintech start-ups in Tanzania is limited. The role of angel investors, venture capitalists and initial public offerings, which is prominent in mature ecosystems, is quite faint, given the lack of funders in Tanzania. Potential foreign investors are not knowledgeable about the Tanzanian fintech sector, partly due to the fragmented and limited availability of information on the sector, which makes it difficult for them to interpret risks on the ground and make investment decisions. Initiatives such as this fintech landscape assessment lay the groundwork for creating an up-to-date and easily accessible database of fintech start-ups, to identify funding gaps and opportunities.


It takes time for start-ups to build trust with their customers and elicit latent demand for their innovation. In mature ecosystems, evidence has shown the potential for partnership between fintech start-ups and large institutions to accelerate customer acquisition. In such instances, fintech start-ups have been able to leverage partner resources to test and refine their products to ensure product-market fit. Consequently, launching products with the right market fit has proven to be a win–win strategy for both the start-ups and their partners, leading to increased demand and customer acquisition. However, the lack of openness between fintech start-ups and large corporates, for fear that innovative ideas could be co-opted, has limited the number of partnerships in the sector and the speed at which these partnerships gain traction. Work needs to be done to facilitate increased linkages between fintechs and large institutions, including financial service providers.

Policy and Regulation

An enabling policy and regulatory environment goes a long way in facilitating innovation. With a clear legal and regulatory framework, innovators and investors operate under certainty and feel comfortable to dedicate their scarce resource towards innovative solutions. In instances where an innovative solution is under the existing regulatory purview, regulator and policymaker openness and willingness to engage with innovators sends the right signal to the market. In Tanzania, while the regulatory environment is enabling for established solutions, there is limited direct engagement between fintech start-ups and relevant regulators. Innovators have expressed a desire for a forum that facilitates strategic dialogues between fintech start-ups and the regulators to ensure that the needs of start-ups are adequately considered as regulation around innovation in Tanzania evolves.

These are the areas that UNCDF Tanzania plans to focus on in the coming years together with other ecosystem facilitators in order to build a vibrant and resilient fintech innovation ecosystem that can steer the country to an inclusive digital economy.

To see full report, click here

A summary of the report is also available here