Key Takeaways
- • The Tanzanian government plans to establish a venture capital fund structured as a "fund of funds" that will invest through professional fund managers rather than directly in startups, according to Finance Minister Amb Khamis Mussa Omar.
- • Private sector investors are expected to contribute 20 to 30 per cent of the proposed fund, with the government seeking additional capital to expand its reach.
- • Cumulative startup financing in Tanzania reached 315.8 million US dollars between 2019 and 2025, while active startups rose from 247 in 2020 to 1,037 in 2025.
- • The 2026 Finance Act introduces a one-year tax holiday for qualifying new startups, raises the presumptive tax threshold from 100m/- to 200m/-, and cuts the retained earnings tax threshold from 30 to 15 per cent of profits.
- • The startup policy, originally due in 2025, remains unfinalised, with the government given six months to complete it under a directive from the Vice-President.
Summary
The Tanzanian government plans to establish a venture capital fund to channel investment into startups through professional fund managers, aiming to expand access to finance and attract private-sector capital to emerging businesses. Finance Minister Amb Khamis Mussa Omar outlined the proposal during a stakeholder session on the Tanzania Alternative Financing and Innovation Initiative on the second day of Tanzania Startup Week 2026 in Dar es Salaam. He said the fund would operate as a "fund of funds," investing through specialised fund managers rather than directly in individual startups.
The minister said private sector investors were expected to contribute between 20 and 30 per cent of the fund, with the government seeking to mobilise additional capital. The facility is intended to address financing constraints facing startups that lack the collateral and credit history required by conventional lenders. Omar noted that banks typically lend against existing assets, whereas venture capital equity invests in potential.
Omar cited growth in the ecosystem, with cumulative startup financing reaching 315.8 million US dollars between 2019 and 2025 and active startups rising from 247 in 2020 to 1,037 in 2025. He also referenced a 1993 government venture fund that invested 7.6 million US dollars, with Tanga Fresh and Precision Air among its beneficiaries. He acknowledged that sustaining growth after initial funding remains a challenge, and identified policy reform, development of professional fund managers, enterprise readiness and the venture fund as priorities. He called for regional and international expertise in building fund-management capacity, and urged startups to strengthen financial reporting, transparent ownership and governance to build investor confidence.
On policy, Omar acknowledged that the startup policy, expected to be finalised in 2025, was not completed, and said the government had six months to finish the outstanding work following a directive from the Vice-President. Separately, the 2026 Finance Act introduces a one-year tax holiday for qualifying new startups under changes to the presumptive tax regime, raises the presumptive tax threshold from 100m/- to 200m/-, and reduces the retained earnings taxation threshold from 30 per cent to 15 per cent of profits. The government plans to work with domestic institutions, international investors and development partners on startup financing.
The minister said private sector investors were expected to contribute between 20 and 30 per cent of the fund, with the government seeking to mobilise additional capital. The facility is intended to address financing constraints facing startups that lack the collateral and credit history required by conventional lenders. Omar noted that banks typically lend against existing assets, whereas venture capital equity invests in potential.
Omar cited growth in the ecosystem, with cumulative startup financing reaching 315.8 million US dollars between 2019 and 2025 and active startups rising from 247 in 2020 to 1,037 in 2025. He also referenced a 1993 government venture fund that invested 7.6 million US dollars, with Tanga Fresh and Precision Air among its beneficiaries. He acknowledged that sustaining growth after initial funding remains a challenge, and identified policy reform, development of professional fund managers, enterprise readiness and the venture fund as priorities. He called for regional and international expertise in building fund-management capacity, and urged startups to strengthen financial reporting, transparent ownership and governance to build investor confidence.
On policy, Omar acknowledged that the startup policy, expected to be finalised in 2025, was not completed, and said the government had six months to finish the outstanding work following a directive from the Vice-President. Separately, the 2026 Finance Act introduces a one-year tax holiday for qualifying new startups under changes to the presumptive tax regime, raises the presumptive tax threshold from 100m/- to 200m/-, and reduces the retained earnings taxation threshold from 30 per cent to 15 per cent of profits. The government plans to work with domestic institutions, international investors and development partners on startup financing.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.