Tanzania's government plans to establish a venture capital fund designed to channel investment into startups through professional fund managers, according to the Finance Minister. Speaking during Tanzania Startup Week 2026 in Dar es Salaam, Amb Khamis Mussa Omar said the proposed facility would operate as a 'fund of funds', meaning it would invest through specialised managers rather than directly into individual businesses. Private sector investors are expected to contribute between 20 and 30 per cent of the fund, with the government seeking to mobilise additional capital to expand its reach.
The initiative aims to address financing constraints facing startups that lack the collateral and credit history required by conventional lenders. The Finance Minister explained that traditional banks lend based on existing assets and track record, whereas venture capital equity invests in potential. The proposed fund is expected to tackle this gap and attract private-sector capital to emerging businesses. According to the Finance Minister, Tanzania's startup ecosystem has expanded significantly, with cumulative startup financing reaching 315.8 million US dollars between 2019 and 2025. The number of active startups rose from 247 in 2020 to 1,037 in 2025.
The Finance Minister identified sustaining business growth after the initial establishment phase as a key challenge. He noted that simply providing startups with capital is insufficient, emphasising that government support must extend beyond financing. The government has also faced delays in finalising startup policy, which was initially expected to be completed in 2025. Following a directive from the Vice-President, the government has been given six months to complete outstanding work on the policy framework.
To support the initiative, the government introduced tax measures under the 2026 Finance Act. These include a one-year tax holiday for qualifying new startups under changes to the presumptive tax regime, an increase in the presumptive taxation threshold from 100 million Tanzanian shillings to 200 million shillings, and a reduction in the retained earnings taxation threshold from 30 per cent to 15 per cent of profits. The Finance Minister called on startups to strengthen financial reporting, ensure transparent ownership and establish credible governance systems to build investor confidence, saying investors would require reliable reporting before committing capital. He emphasised that the government would work with domestic institutions, international investors and development partners to strengthen startup financing and promote private-sector development.
For savers and investors in Tanzania, the venture capital fund structure and tax incentives are intended to create new investment channels in the startup sector while reducing barriers for emerging businesses to access capital.