Tanzania’s innovation ecosystem has been growing in leaps and bounds and the financial services sector has been one of the most agile in embracing and adopting innovation and change.

The United Nations Capital Development Fund (UNCDF) curated a two-and-a-half-hour workshop session on 20 May 2021 during Tanzania Innovation Week 2021 in Dar es Salaam to launch its newly released Fintech Start-up Mapping Landscape report (2021) and evaluate with financial technology stakeholders the next steps to support innovations in this area. Based on the outcome of the discussions, UNCDF will refine and adopt suggestions from the meeting, in partnership with key stakeholders, to accelerate the growth of the Tanzanian fintech ecosystem. The event attracted over 50 attendees, of which 50 percent were women from start-ups, international organizations, NGOs, and development partners.

In line with its digital strategy ‘Leaving No One Behind in the Digital Era’, UNCDF partnered with Tanzania Information, Communication and Technology (ICT) Commission and Sahara Ventures, one of the leading innovation hubs in Tanzania, to conduct a comprehensive assessment of the Tanzanian fintech landscape. Through this report, UNCDF aims to fill a vital information gap in the market that may improve potential investors’ understanding of the sector, including the challenges and opportunities for accelerating the growth of the fintech sector to meet the financial inclusion needs of Tanzanians.

The assessment identified 33 fintech start-ups currently operating in Tanzania. A majority of fintech start-ups in Tanzania are involved in lending/financing and payments/remittances, with some branching out into other sectors, including savings, personal finance, investments, and insurance.

The participants at the launch of the report actively discussed and proposed ways that UNCDF could accelerate growth of the fintech sector in Tanzania. Participants engaged in a breakout session to discuss whether UNCDF should either support scaling of fintech start-ups or work with regulators to develop frameworks for regulating innovation in this space. While the majority favored the support to scale early stage fintech startups, many also spoke of the need for assistance in navigating the legal and regulatory environment and the general improvement in the operating environment. Specifically, participants expressed interest in UNCDF support that are summed up in the six points below:

• Partnership formation with incumbents or large corporations to enable access to infrastructure and customer base.
• Milestone-based grants for start-ups to refine product, conduct market research, iterate and deliver proof points to attract growth funding.
• Catalyzing a local investment community to build a sustainable capital source that start-ups can tap into.
• Bespoke technical assistance on business and operational issues as well as support in the interpretation of the regulations. Start-ups also expressed their interest for UNCDF to act as a bridge between them and financial sector regulators.
• Building a community of practice to facilitate networking and peer-to-peer knowledge exchange; access mentors and coaches willing to guide start-up founders.
• Linkage with regional accelerators and other fintech support programmes to expose founders to other ecosystems outside Tanzania in order to expand their network.

Tanzania’s economic and financial sector development progress provides ideal conditions for emerging innovations and a strong ecosystem for advancing digital finance. Tanzania was the first African country to introduce mobile money interoperability which has significantly widened access and competition for digital financial services. Moreover, the market is also becoming increasingly attractive to funders from Tanzania, other African countries and international investors who will benefit from the findings of the report.

UNCDF is engaging with different ecosystem facilitators to design interventions that aim to catalyze and grow Tanzania fintech start-ups to contribute to the development of a more inclusive financial sector.

Click here to find out more about the report