Tanzania – Battling for Attention in

East Africa

An Introduction, May 2015

Contact information

dfasdf

Amatka (Pty) Ltd

www.amatka.com

info@amatka.com

+27 (0)79 618 6570

Unit 608, 6th Floor

76 Regent Road (The Point Tower)

Sea Point 8060

Cape Town, South Africa

Amatka – Insight Africa Services

Amatka (Pty) Ltd is a South African company founded and owned by Finnish entrepreneurs based in

Cape Town. Amatka provides knowledge and views of business opportunities in Africa with focus on

Southern and Eastern Africa. Insight Africa also supports networking in these countries.

Tekes – the Finnish Funding Agency for Innovation

Tekes is the main public funding organisation for research, development and innovation in Finland.

Tekes funds wide-ranging innovation activities in research communities, industry and service sectors

and especially promotes cooperative and risk-intensive projects. Tekes’ current strategy puts strong

emphasis on growth seeking SMEs.

Contents

Introduction ........................................................................................................... 2

Background ....................................................................................................... 2

Purpose ............................................................................................................. 2

Recommended Use and Liability Disclaimer ...................................................... 2

Tanzania in a Nutshell ....................................................................................... 3

Political Economic Climate: Business Point of View ............................................... 5

Trade and Investments ...................................................................................... 5

Growth: Drivers and Challenges ........................................................................ 6

Political Economy: Supporting Factors and Challenges ...................................... 7

Key Areas of Potential Growth ........................................................................... 8

Innovation Ecosystems ....................................................................................... 10

Innovation Hubs............................................................................................... 10

Research ......................................................................................................... 10

Large Companies ............................................................................................ 11

Sectors in Focus ................................................................................................. 13

Energy and Environment ................................................................................. 13

Healthcare and Wellbeing ................................................................................ 15

Education ........................................................................................................ 16

ICT, Digitalisation and Mobile Solutions ........................................................... 17

Future ................................................................................................................. 20

SWOT: Tanzania ............................................................................................. 20

Scenarios ........................................................................................................ 21

Information Sources ............................................................................................ 22

Front cover picture: Traffic on the Maktaba Street/Azikiwe Street in Dar es Salaam.

The white tower on the left belongs to the St. Alban Angican Church by Jojona

(Wikipedia)

2

Introduction

Background

This report provides, in a nutshell, facts of Tanzania and insights into future business

opportunities. The report is based on statistics, recent articles and publications, and

expert views.

The report has been prepared by an international team coordinated by Amatka (Pty)

Ltd, a private company owned by Finnish entrepreneurs, based in Cape Town, South

Africa. The report is part of Team Finland’s Future Watch Program in Africa, called

“Strategic Partners for Innovation Actives Africa Services”, and coordinated by Tekes,

the Finnish Funding Agency for Innovation.

The focus of the process is on the four most promising (defined by size, growth and

ease of doing business) Sub-Saharan African countries: Kenya, Nigeria, South Africa

and Tanzania. Sectors in focus are: ICT, mobile & digitalisation, education, health &

wellbeing, energy & environment.

Elements of Strategic Partners for Innovation Activities Africa Services are: Continent

Report Sub-Saharan Africa, Country Reports (Kenya, Nigeria, South Africa,

Tanzania), Alerts: arising signals for the future, Updates: frequent summaries of

alerts and Contact Database.

Purpose

The reports, and this service, focuses on issues, facts, signals and insights that are

likely to play a role in doing business in, for example, Tanzania’s medium term future

(2-5 years). This report DOES NOT provide sales leads or provide a picture of how to

establish operations in Tanzania.

Using present facts and information, combined with future insights, signals, and

scenarios, the report suggests possible futures and the related implications for

Finnish SMEs interested in doing business in Tanzania.

Recommended Use and Liability Disclaimer

Before reading this report, it is recommended to get familiar with the Sub-Saharan

Africa Continent report. Additionally, it is strongly recommended that the readers

always check the latest information; situations in Africa can change overnight.

Amatka has made every attempt to ensure the accuracy and reliability of the

information provided in this report. However, the information is provided "as is"

without warranty of any kind. Amatka does not accept any responsibility or liability for

the accuracy, content, completeness, or reliability of the information contained in this

report. No warranties, promises and/or representations of any kind, expressed or

implied, are given as to the nature, standard, accuracy or otherwise of the information

provided in this report nor to the suitability or otherwise of the information to any

particular circumstances. Amatka shall not be liable for any loss or damage of

whatever nature (direct, indirect, consequential, or other), which may arise as a result

the use of this report, or from use of the information in this report.

3

Tanzania in a Nutshell

Tanzania’s economy has

continued to perform strongly,

with current growth at around

7%. This is driven largely by

communications, transport,

financial intermediation,

construction, agriculture and

manufacturing. In the medium

term, growth will be supported by

the ongoing investments in

infrastructure and the projected

good weather conditions. Also,

these medium-term growth

projections are backed by

continued investments in the

recently discovered natural gas

reserves in Tanzania and the expansion in public investments, as well as the related

investments aimed at stabilising power generation in the country.

History in Brief

Before Europeans arrived in 1498 (Vasco Da Gama), Bantu people, Persians,

Romans, Arabas and Masai people had migrated to Tanzania. During the 16th

century the Portuguese took control of the coast but in the 17th century they were

driven out by Arabs from Oman. In 1885 the Germans began taking over the region

and the British had taken control of the island of Zanzibar. After the First World War

Tanzania was handed over to the British and it was called Tanganyika.

Tanzania became independent in 1961 with Julius Nyerere as prime minister. In 1962

Tanzania became a republic and Nyerere became president. In 1967 Nyerere

adopted a policy of socialism. The cornerstone of that policy was called Ujamaa

(family hood). Nyerere planned to create huge collective farms. The people were

encouraged to move into large villages in which food and other goods would be

produced collectively for the whole community. However the policy proved disastrous

for Tanzania, agricultural production slumped and the Tanzanian economy was

wrecked. In 1985 Nyerere resigned.

He was replaced by Ali Hassan Mwinyi who privatized business and tried to purge

corruption. He also encouraged foreign investment. As a result, the economy of

Tanzania began to grow steadily. In 1992 Tanzania became a multi-party democracy

and in 1995 Benjamin Mkapa became president. In 2005 Jakaya Kikwete was

elected president of Tanzania. Tanzania is a one party dominant state with the

Chama Cha Mapinduzi (CCM) party in power.

Tanzania Today

While poverty has declined over the past 10 years, Tanzania is still a very poor

country. Approximately 40% of Tanzania’s adult population earns less than $1.25 per

day, while nine out of 10 Tanzanians earn less than $3 per day.

4

Overall, there have been improvements related to the agriculture, construction,

mining and tourism. The overall value of both exports and imports has been

increasing. An increasingly high proportion of capital inflows has been derived from

private capital, with a correspondingly lower proportion from official aid. The most

significant transformative factor on the economy is the large natural gas reserves that

were recently discovered.

The ‘Big Results, Now’ initiative (BRN) took off in 2013. The BRN initiative is inspired

by a similar Malaysian programme with the aim of facilitating the achievement of

Tanzania’s Development Vision 2025. Government is focusing their efforts’ on

accelerating the attainment of results in six priority areas, with emphasis on

leveraging private sector investment through Public Private Partnerships (PPPs).

Figure 1 provides some of the figures at a glance as well as distances between

commercial capital Dar es Salaam and some other cities.

Figure 1. Key Indicators - Tanzania

5

Political

Economic

Climate:

Business

Point of View

Trade and Investments

According to the World Bank the overall value of Tanzania’s exports increased by

9.4% in 2014. Increases in the total value of manufactured exports and service

exports compensated for the decline in the value of traditional agricultural exports.

Over the same period, the total value of imports increased at a similar rate of 9.2%, in

part driven by increases in both oil and construction-related imports.

Tanzania’s largest export partners in 2012 were South Africa, Switzerland, India,

China and Kenya.

Figure 2. Tanzania’s export destinations and import origins 2012 (source:

Observatory of Economic Complexity/United Nations COMTRADE)

Figure 3. Trade between Finland and Tanzania 2012 (source: Observatory of Economic Complexity/United Nations COMTRADE)

According to the International Monetary Fund (IMF), the slump in oil prices is

expected to further buoy Tanzania's economy in 2015 following a GDP expansion of

more than 7% in 2014.

6

Of the four focus countries (Kenya, Nigeria, South Africa and Tanzania) Tanzania is

the least developed and highly aid dependent. Official development assistance

(ODA) to Tanzania increased from $1.6 billion in 2000 to $3 billion in 2010, which

amounted to 14% of GDP. More than 40 development partners provide support to

Tanzania and aid inflows represented only 40% of total capital inflows.

Growth: Drivers and Challenges

The capital, Dar es Salaam, is rapidly becoming a hub city for businesses, with a

rapidly growing population and market place. Discoveries of significant offshore

natural gas offer huge potential rewards. Dar es Salaam’s port is relatively efficient

but feeling the strain of increased traffic. There are significant transportation and

logistics upgrades to lessen cargo waiting times, including a new port at Bagamoyo,

along with a handful of other similar investments. Infrastructure is critical for Tanzania

and its neighbours: Malawi, Zambia, Democratic Republic of Congo, Rwanda,

Uganda and Burundi. The development of the transport sector will offer new

opportunities for public-private partnerships in the region.

Future economic growth will, as in almost every African country, depend on the ability

of the government to remove existing constraints on businesses. The most significant

constraints are electrical, energy, transport, infrastructure, and economic

diversification.

What Tanzania needs is competitive labour-intensive sectors to absorb the growing

youthful labour force. Growth in employment has so far largely come from

domestically-oriented industries with the exception of tourism. There is a need to

promote competitiveness gains in labour-intensive sectors such as manufacturing

and services. The agricultural sector still contributes to approximately one quarter of

GDP and provides employment to approximately 75% of all Tanzanian workers.

CASE: FIRST TANZANIA-BASED PRIVATE EQUITY FIRM

Private equity flows into East Africa have increased significantly in the last five years.

Some PE funds have sealed deals with Tanzanian companies but they mostly operate

out of Nairobi or Johannesburg. Mkoba was co-founded by a team of Tanzanian

professionals led by former World Bank vice-president Frannie Léautier and

businessman and economist Jitesh Ladwa.

“In Tanzania, and in most post-socialist countries, we are faced with a triple problem

of capital. One is that the state banks, where we used to get money, are gone

because of liberalisation of the banking sector,” says Ladwa. “Foreign banks are

primarily from South Africa and their cultural affinity is to lend money to their own

people. Third is that even European financial institutions don’t give significant

[amounts of] money to African-owned businesses.”

Ladwa explains that business people who did well in the 1970s and 80s in Tanzania

relied on “political patronage” and connections to land their first job, and then earn

enough money to grow their businesses. Mkoba wants to prove business people can

receive funding and support from a PE firm to grow their businesses, based on their

potential and not their social connections.

Although Tanzania has a group of successful family-owned businesses, Ladwa says

most of these were established decades ago and are headed by older businessmen

7

who may not be as innovative and nimble as the emerging crop of entrepreneurs in

their 20s and 30s.

However, he notes a “cultural bias against giving money to locals” is making the entry

into business of young entrepreneurs difficult. “A decade ago we wouldn’t complain

because there was not much economic opportunity in Tanzania. But today Tanzania

is booming. There are a lot of young people with ideas but they can’t get money. We

want to give money to local enterprises. We want to build African equity and African

management experience.”

The fund is focused on various sectors including agribusiness, services and

manufacturing, urban renewal, financial services and innovative ventures in

renewable energy and ICT. Ladwa says Mkoba has already shortlisted more than 20

companies for funding it hopes to start in June 2015. “Surely in a city of five million

people you can find trustworthy young Africans who are enterprising and who will look

after the money and make profits. If we make an example of 20 people whom we

fund, and they grow into something bigger, then other investors will join in and they

will give more money [to local businesses],” he says.

Source: How we made it in Africa

Political Economy: Supporting Factors and Challenges

The ‘Big Results, Now’ initiative (BRN) took off in 2013. The BRN initiative is inspired

by a similar Malaysian program with the aim of facilitating the achievement of

Tanzania’s Development Vision 2025. The government is focusing its efforts on

accelerating the attainment of results in six priority areas, with emphasis on

leveraging private sector investment through PPPs.

Priority areas named in the BNI initiative are:

Energy and Natural Gas

Agriculture

Water

Education

Transport

Mobilization of Resources

The most significant transformative factor on the economy is the large natural gas

reserves that were recently discovered. The most significant impacts of this discovery

on the local economy will not be felt for at least seven to ten years. Careful

management of the revenues derived from these natural resources will be required to

ensure the optimal use of these revenues and to achieve inclusiveness.

However, despite some positive developments, there are a number of challenges to

business that are prohibiting the Tanzanian entrepreneurial environment and activity:

Insufficient and unreliable infrastructure

Protectionist economy

Prohibitive requirements to access capital

Insufficient supply of equity capital

Income taxes perceived to be prohibitively excessive

8

Key Areas of Potential Growth

Of the four focus countries (Kenya, Nigeria, South Africa and Tanzania) Tanzania is by far the least developed. Whereas Kenya has recently gained a lot of attention as the Eastern African entry hub, Tanzania has drawn only fractions of this. For instance, Kenya has largely been conquered by foreign investors and large multinational companies. Tanzania still has some potential areas of growth. Tanzania may be a good choice for companies and investors looking for a home base for their Eastern African operations. For example, a large, underdeveloped formal sector enables small businesses to pursue new opportunities without being blocked by large, established firms. The property market in the capital, Dar es Salaam, is booming with office buildings, shopping centres and residential buildings. The increasing appetite for real estate in Tanzania is partly driven by a thriving agricultural industry and recent oil and gas discoveries that have led to an influx of expatriates into the country. Trade is also a key driver as traders from Zambia, Nigeria, Congo and Mozambique come to buy goods.

CASE: SELLING COSMETICS IN TANZANIA

In 2011, when Swedish entrepreneur Marie Englesson approached global cosmetics brands

to distribute their products in Tanzania, many indicated they were not interested in the

market. “Getting suppliers on board was much harder than I thought. They felt it was a little

too early,” she recalls.

Undaunted, she opened the first outlet of her business Atsoko in May 2012 in Dar es Salaam.

The tide is gradually changing and more international brands are now eyeing Tanzania. “One

advantage I have now is being three years ahead of everyone else,” says Englesson.

Englesson attributes the entry of more global brands to rising demand for high-quality make-

up and beauty products among urban women. She notes global brands were initially hesitant

to enter the market because there were few formal retailers. But this too is changing with the

entry of Kenyan supermarket chains Uchumi and Nakumatt, and construction of more

shopping malls. She notes that Mlimani City mall, one of the oldest in Dar es Salaam, is

being expanded, while a new facility, called Mkuki House Shopping Mall, is under

construction close to the city centre.

“Dar es Salaam is still three or maybe five years behind Nairobi, but urban Tanzanian women

are trendy and have an eye of fashion. They are a very into cosmetics.” “The average spend

per client is about US$15 to $20 per occasion for one or two products. But then we have

sometimes women who come in and buy a whole kit for $100 or even $150,” she says.

Englesson attributes the success of Atsoko to the fact that its products are sold at the same

prices as offered in Europe. The stores also have make-up artists who advise and help

clients pick the right products. In fact, one of the critical roles for Atsoko staff is educating

customers. “There is not much knowledge on cosmetics and make-up, so we need to

educate customers on what’s a genuine or a fake product. We have to teach them the

benefits of buying real brands and not going to the Kariakoo [informal] market to buy

something they don’t know what its origins are.”

But, she adds, it’s hard to find staff who have the necessary experience because the formal

retail sector is undeveloped. And another challenge is registering new products with the

Tanzania Food and Drugs Authority (TFDA) – a process that can take six to nine months.

9

Englesson was inspired to start the business after working for telecommunications company

Tigo in Tanzania and Rwanda. “I had a number of female colleagues at Tigo and whenever I

went to Europe they’d ask me to bring them products they couldn’t get hold off,” she recalls.

But she notes that it would probably have been easier to start a business in Sweden because

she knew how things work there compared with Tanzania, and as a result progress has

taken much longer than she expected. “You need to consider five to 10 years before you

have a steady stable business. I am in my third, and only now am seeing things fall to place.

In the first two years we had to formulate the business model and one needs to understand it

takes time to find the right concept.

“The one thing I can say for sure: it is never boring.”

Source: How we made it in Africa

10

Innovation

Ecosystems

Innovation has the potential to be the catalyst to change economic development in

Tanzania. There is a need to increase the quality of services and the quality of

outcomes in order for Tanzania to reduce poverty and further its development.

Compared to the other focus countries in Sub-Saharan Africa, the Tanzanian

ecosystem is lacks private actors and is heavily government and donor managed.

Thus, the innovation ecosystem framework used for the Sub-Saharan Africa

continent and other focus countries cannot be applied to Tanzania as many

framework actors are completely missing. Examples of missing actors include:

private investors including multinational corporations, philanthropists and large scale

events and competitions.

Innovation Hubs

According to IST-Africa (2014) Tanzania’s innovation hubs are:

Dar Teknohama Business Incubator (DTBi), established in 2011 as a Publi,

Private Partnership between InfoDev and COSTECH.

Buni Hub (previously known as Innovation Space), established at COSTECH

in October 2011 within the TANZICT, bilateral project between the Finnish

government and Tanzanian government.

KINU, established in July 2012 as “a Social Enterprise with the mission of

concentrating, growing and accelerating the Tanzanian tech and social

landscape”, founded by individuals (funded by Google and The Indigo Trust)

who started Tanzania’s tech community with events such as BarcampDar,

Hackathon and Apps4Africa.

University of Dar es Salaam ICT Incubator (UDICTI).

Research

Tanzania has 11 Public Universities, 17 private universities and 26 private institutions

of Higher Education. The list of TOP 10 Tanzanian Universities is presented in

Figure 4.

11

Figure 4. List of TOP 10 Universities in Tanzania (source: Webometrics

Ranking of World Universities)

Large Companies

As of November 2014 there were twenty-two listed companies in the Dar es Salaam

Stock Exchange.

Among notable companies in Tanzania, according to Wikipedia (2015), are:

Air Tanzania, airline

MIC Tanzania Limited (Tigo), telecommunications

Mwananchi Communications, media

Precision Air, airline

Quality Group Limited, conglomerate

Tanga Cement, cement

Tanzania China Friendship Textile Company, originally founded as

Friendship Textile Mills Limited

Tanzania Electric Supply Company Limited (TANESCO), electricity supply

utility

Tanzania Railways Corporation, state-owned enterprise

Tanzania Telecommunications Company Limited, telecommunications

Tanzanian and Italian Petroleum Refining Company Limited, refinery

Vodacom Tanzania, mobile

Additionally there are several large, family-run, conglomerates in Tanzania:

MeTL (self-declared annual turnover: $1bn): Trading in 200-plus items,

manufacturing of a wide range of goods including bicycles and textiles,

agriculture, insurance, transport and logistics, mobile telephony,

infrastructure and distribution.

12

Bakhresa Group (self-declared annual turnover: more than $600m):

manufacturing and distributing dozens of products, from ice-cream and

biscuits to fizzy drinks and flour, trading agricultural commodities, ferrying

passengers, and fuel distribution.

Sumaria Group (self-declared annual turnover: $130m): At least 25

companies since 1975, in plastics manufacturing, cotton ginning, drinks

bottling, food processing, pharmaceuticals, soaps, cement, flour and, more

recently real estate, biogas and finance.

MAC Group: growing and processing tea and sisal; manufacturing cosmetics,

toiletries, electrodes, detergents, slippers, pharmaceuticals and more;

shipping, mining and insurance. It is expanding in east and southern Africa.

MM Integrated Steel Mills, Motisun Holdings Industrial manufacture of steel

sheeting and pipes, rubber, paint, fizzy drinks and hotel operator.

13

Sectors in

Focus

Energy and Environment

Tanzania has a wide variety of energy resources, which include natural gas,

biomass, hydropower, geothermal, coal, solar and wind power. Much of this energy

potential remains unexploited. The vast majority of people do not have access to

electricity. The rural population is nearly completely excluded from this source of

modern energy: 2% of rural people and 39% of urban people have access to

electricity while 94% of the rural population use biomass. Only 10% of households

have access to the national grid, and only 1% is able to use electricity for cooking.

According to the United Nations Development Programme (UNDP), petroleum,

hydropower, and coal are the major sources of commercial energy in the country.

Electricity generation, transmission and distribution in Tanzania have been through

the Tanzania Electric Supply Company (TANESCO). The company is wholly

Government-owned and is responsible for 98% of the country's electricity supply.

Two-thirds (381 MW) of Tanzania's installed capacity is hydro-powered.

Blackouts and power rationing as a result of low water levels in the hydro dams have

forced TANESCO to rely on gas-powered generators and to look increasingly at

thermal and gas projects for future capacity increases. Hence, the government is

encouraging investment to expand generating capacity, distribution systems and

developing indigenous sources of energy. The electricity generation system contains

two private independent power projects (IPPs), which are connected to the

TANESCO grid: Independent Power Tanzania Ltd (IPTL) and Songo Gas

(SONGAS).

Opportunities in the energy sector include:

1. Wind energy. This is used to pump water for irrigation and to meet domestic

and livestock water needs. There are two project developers planning to

establish 50 MW and 200 MW projects in Makambako and Singida areas

respectively.

2. Solar energy. This is a proven technology and various actors have been

trying to commercialize the technology in rural areas. Solar photovoltaic (PV)

systems have been used for telecommunication, lighting, refrigeration, water

pumping and powering electronic equipment at individual residences,

schools and health centres/rural dispensaries.

3. Biomass. The country has considerable resources from forest and

agricultural residues with an economic possibility of establishing CDM project

activities, by producing electricity for industrial and cooking for domestic

purposes.

4. Micro/mini hydro. Tanzania has an estimated 3,800 MW of economic hydro

potential capacity. Only 15% of installed capacity has been developed. The

country's hydro potential is estimated at 4,500 MW of which only around 563

MW is developed. It is estimated that 100 GWh/yr could be produced from

micro/mini systems. Currently only around 32 GWh/yr is produced from these

smaller systems, many of which are private schemes run by religious

missionaries.

14

5. Solid Waste. Urban waste is a fast growing problem driven by rapid urban

population growth. This is generally at least twice rate of national population

growth. This is evidenced by the increasing illegal dumpsites, irregular

collection of garbage, and rising garbage piles and dumps in city alleys,

streets and residential areas. Most cities and municipalities have failed to

cope with the increasing growth of waste production.

In early 2015, the Tanzanian national government announced, "One Million Solar

Homes," an energy commitment to ensure that a million Tanzanian homes have

access to solar electricity by the end of 2017. This project is expected to provide

solar electricity for 10% of the nation's population and generate over 15,000 solar

jobs. Currently, 86% of Tanzanians depend on kerosene and candles for light, which

are known to be inefficient, dangerous and polluting. The plan sets a model for other

nations working towards the Power Africa initiative announced by President Obama

in 2013. This Initiative aims to double the number of people with access to electricity

in sub-Saharan Africa. The One Million Solar Homes initiative will be implemented by

Off Grid Electric Ltd., a rapidly growing solar company in the developing world.

Known in Tanzania as "M-POWER," Off Grid is leveraging the leasing model of their

equity investor, and the largest US solar provider, SolarCity, is bringing families in the

developing world solar at radically affordable costs. Monthly payments are as little as

twenty cents per day.

CASE: SOLAR PIONEER ON ADAPTING ENERGY MODELS TO MEET RURAL NEEDS

In 2014 Tanzanian solar solutions company Rex Energy launched a solar powered charger

for mobile phones to address the needs of people living off the grid.

Depending on the package, the solar chargers can cost between US$15 and $50, but Rex

Energy believes the way forward is to allow flexible payment plans. “We know capital is

always a challenge for rural villages, but if we give them renting charges where a person

can pay a few cents of a dollar a day, or even say $1 a week, then they can afford it

because we spread the cost over a length of time.”

The system is portable and can also charge laptops and other appliances in remote areas

not linked to the national grid. “We have a number of solutions, including for fishermen who

can use a solar powered system instead of kerosene lanterns. We have a solar lantern that

even attracts fishes to the nets… which besides cutting fuel costs also helps them catch

more fish, and at the same time helps reduce carbon emissions.”

The company also has a mini-grid, pay-as-you go energy solution where a solar system is

installed in a community. Households can pre-set a time to access electricity and thus only

pay for the electricity they use.

“We actually learnt about this from what is happening in Bangladesh. There they have quite

good models and we are working with them to see how we can bring it to Africa, in

particular Tanzania. Instead of people having to buy big solar panels, they only pay for

electricity… at a very affordable cost.”

Source: How we made it in Africa

15

Healthcare and Wellbeing

Tanzania’s health system can be described “complex and pluralistic”. It’s

comprised of public, private, and donor stakeholders, operating at several different

levels including national, regional, district and community levels. According to the

latest National Health Accounts report, 8.2% of the GDP is invested in health care

and 6.5 % of government expenditure is spent on health. Donor dependency for

health care financing typifies Tanzania’s health system.

Tanzania mainland has approximately 237 public and private hospitals, of these, 57

are district hospitals owned by the government and 35 are designated district

hospitals, owned by faith based organisations.

Statistics show that qualified health workers in the health sector fill only 35% of

positions. This leaves the country with a severe human resources crisis. This crisis,

together with other challenges facing the sector, has led to formulation and

implementation of an eHealth strategy as a way of supporting progress. As a result,

in 2013 Tanzania launched an eHealth Strategy (2013-2018). There are many

eHealth and mHealth projects in Tanzania, most of them under the umbrella of Public

Private Partnership (PPP).

The country's health sector is characterised by a fragmented landscape of ICT pilot

projects and numerous data and health information system silos. There are

significant barriers to the effective sharing of information between healthcare

participants.

The challenges with eHealth adoption include:

low ICT budgets

poor infrastructure to support health services

unreliable electricity supply

lack of ICT skills

CASE: WAZAZI NIPENDENI (parents, love me): AN SMS SERVICE PROVIDING

INFORMATION FOR PROSPECTIVE PARENTS

Through the innovation, more than 125,000 pregnant mothers have had access throughout

the country. “More than five million messages have been sent under the initiative, which

began in 2012,”

“Messages include time sensitive reminders for such events as antenatal clinic visits and

taking of malaria prevention medication. The system also sends health tips when the

information is relevant to the subscriber,” The text messages incorporate a broad range of

complementary topics, including prevention of Mother to Child Transmission of HIV/Aids,

antenatal care; family planning, malaria prevention and nutrition.

A new mother says the text messages she kept receiving from her mobile phone were her

lifeline during the entire pregnancy. “I enrolled to the service (when I was one month

pregnant after hearing it advertised on the radio”. “I only sent a message titled, mtoto, (child)

to the number 15001 as per the advert instructions and after giving details on my pregnancy,

I started getting short messages first on a daily basis and later at least four times a week on

my pregnancy status and advice on nutrition, when to go for my antenatal clinic visits, when

16

to take my malaria prevention drugs, and general health care.”

Juanita Ferentinos, Partnership Director mHealth Tanzania Partnership CDC Foundation

says that providing high quality antenatal care information during pregnancy to keeping

mothers and babies healthy has had a tremendous impact on reducing maternal and new

born mortality rates in Tanzania.

Source: The East African, 2014

Education

According to UNICEF, USAID and Borgen Project, Tanzania has seen tremendous

growth and progress in the education sector over the last decade. However, despite

rapid expansion in primary and secondary school enrolment, the country’s education

system continues to struggle to deliver quality education and to keep its children in

school.

Below are some facts about education in Tanzania:

Growth in Education. According to a census report, 94% of children aged 7 to

13 were enrolled in primary school in 2011. Only 59% of children were

enrolled in primary school in 2000.

No Fees. This jump in enrolment is due in part to Tanzania’s abolition of

primary school fees in 2001.

Class Size. Due to rapid enrolment numbers, Tanzania faces extreme

overcrowding within its classrooms. The average government primary school

classroom holds 66 pupils. In some areas of the country, there can be as

many as 200 pupils in a single classroom.

Student: Teacher Ratio. While the number of enrolled students continues to

grow, a corresponding increase in qualified teachers does not.

Student: Latrine Ratio. The pupil to latrine ratio is an even larger culprit when

it comes to factors that hinder Tanzanian children’s education, for girls,

especially.

Drop Out Rates. In 2010, 68,000 children dropped out of primary school.

Pregnancy. In 2010, 7000 girls dropped out of primary and secondary

schools due to pregnancy.

Exams. Only 53% of students passed the primary school’s leaving

examination in 2010; the majority of children who passed the examination

were boys.

Though the statistics that reflect the enrolment growth are impressive, the system

supporting education in Tanzania is decrepit, if not dysfunctional.

CASE: HOW TANZANIA’S UBONGO MEDIA BUILT A BUSINESS BY MAKING MATHS

COOL

A Tanzania social enterprise is changing perceptions by helping children in East Africa

improve their understanding of the subject through an interactive educational cartoon show

that combines mathematical concepts with fun animated and catchy songs.

Established mid-2013, Ubongo Media produces a 30-minute cartoon series called Ubongo

17

Kids which uses stories to help learners understand basic maths concepts as opposed to

memorising the methodology.

The series is based on three kids who attempt to solve problems in their community using

their maths skills. The three get help from talking, and singing, animal friends. The edu-

cartoon series airs every weekend on the national TV station TBC, and across the region via

Chinese Pay TV company, Star Times.

“Maths is seen by many children as a boring, hard subject. This attitude has a lot to do with

how teachers teach maths. We wanted to make it cool and easier to understand,” says

Cleng’a Ng’atigwa, co-founder of Ubongo Media.

The Tanzanian artist started working on the concept a few years ago after studying animation

at a local college. He partnered with a maths teacher to produce one animated story that was

viewed by children in his community. When he met Thai-American documentary filmmaker,

Nisha Ligon, they decided to set up Ubongo and scale their reach to a wider audience.

Every Saturday about 600,000 watch the show in Tanzania. “Our research shows there is a

4% improvement in maths among kids who watch compared with those who don’t,” says

Doreen Kessy, chief operations officer at Ubongo Media.

The company makes revenues from corporate sponsorships, licensing to broadcasters and

SMS interaction with kids. “We also realise the potential in licensing characters’ rights. For

instance, Mama Ndege is very popular. We could make money by giving licences to

companies that would want to use those characters,” says Kessy.

Kessy says Ubongo receives positive feedback from children and parents with demands for

longer episodes. However, doing business in Tanzania is “not easy,” she adds. “There is a lot

of corruption and bureaucracy. For example, children have been asking for Ubongo Kids

DVDs. So we manufactured DVDs in Thailand because it was more affordable. We shipped

10,000 copies and they arrived at the port last August. “They were released six months later,

because of bureaucracy. Obviously we will never do that again. It has been a time-

consuming process with people asking for bribes every step of the way.”

Ubongo Media sees growth potential for its cartoon series across the continent. “We now

have Ubongo Kids in Swahili and English available to viewers in East Africa. And we intend

taking the English version across the continent. There are 440 million children in Africa and

we are bringing them a fun new way to learn. And that opens the door to a future of digital

learning,” says Kessy.

The company is also developing a new edutainment show targeted at learners aged seven

and below. It will focus on teaching English as a second language.

Source: How we made it in Africa

ICT, Digitalisation and Mobile Solutions

Tanzania recognises the importance of ICT and Innovation to support socio-

economic development as part of the realisation of Development Vision 2025. Two of

the three main policies supporting innovation and entrepreneurship are currently

(2015) under revision: the updated Science Technology and Innovation (STI) Policy

will incorporate Entrepreneurship and the National ICT Policy of 2003 is under review

as part of the development of a new implementation strategy.

18

The digital infrastructure in Tanzania has improved with the fibre-optic network,

investment in local Internet Exchange Points, migration to IPv6, and construction of

the National ICT Backbone (NICTBB). The eGovernment Strategy was put in place in

September 2012.

National Priorities (source: IST-Africa 2014) include:

eInfrastructures

Cloud Computing/ High Performance Computing

Cyber Security

Mobile Computing

ICT for Creativity and Learning

eHealth

eAgriculture

CASE: PROVIDING SOFTWARE SOLUTIONS IN TANZANIA

Fayaz Valli, 25, is the founder of Tanzania-based software development company GetCore

Group. The business provides solutions such as web designing, mobile applications,

software development and graphic designing.

Valli started his business while studying software engineering at a Tanzanian college. Initially

he developed mobile apps for businesses, government agencies and NGOs. In 2013

GetCore formally began operations.

Elevator pitch

Our goal is to enable businesses to trade efficiently using technology. We have built a web-

based point of sale product called GetPOS, after conducting research in areas like Dar es

Salaam’s bustling central market Kariakoo, where thousands of businesses operate. The

system is simple to use and affordable compared to software which comes with a hardware

terminal. We have a lot of power outages in Dar es Salaam, and when they occur terminals

don’t work. So most traders now use my software as back-up since it’s accessible, even on

their phones.

Finance

I saved money from small jobs I did while still in college. Last year I got US$14,000 funding

from Tanzania Commission for Science and Technology (COSTECH). Looking for investors

here can be tough. It is difficult to convince them to invest in a start-up. Any investor would

ask you to show them your three year financials. Now, where would I get that?

Risks

The biggest risk is that Tanzania is not tech-savvy yet. Most business owners prefer face-to-

face trading and will need a while to get used to e-commerce. Although smartphone usage is

increasing, people’s knowledge in technology is still low.

Most successful form of marketing

I tried using flyers but it just did not work. From my experience what’s best is when I

demonstrate to a potential client how the service works. I joined the global business

networking organisation BNI through which I have met many other businesses who are now

our clients. I also attend many networking sessions where I meet potential clients.

Most exciting entrepreneurial moment

19

I get excited when I face new challenges. I like to build software that solves a particular

problem then move on to the next challenge. I have found this journey in entrepreneurship

very inspiring. I am a very technical person but am now looking to invest in businesses

outside the IT industry. I recently went into agribusiness. I have a 10 acre farm in Morogoro

where I am growing oil seeds, and am looking to go large-scale with additional crops such as

sisal and cashew nuts.

Biggest mistake, and key learnings

When I started the business I trained three junior developers with the hope they’d improve

their skills and eventually work with the company for a couple of years. But they all gave up

at some point and I’d spent a lot of time training them. Human resources is challenging here,

but I have learned how to operate within the environment. When I get large projects now I

sub-contract to people in both India and China who have better expertise and good work

ethics.

Source: How we made it in Africa

20

Future SWOT: Tanzania

The services sector is likely to continue to be a major driver of Tanzania’s economic

expansion, and communications and banking are expected to do particularly well.

Further, the completion of the pipeline transporting gas from Mtwara to Dar es

Salaam should ease electricity constraints.

Tanzania’s economic policy is centred on its Poverty Reduction Strategies, namely

MKUKUTA II in Mainland and MKUZA II in Zanzibar. The broad goal of the 2025

Development Vision is to become a middle-income country by the end of this period.

The MKUKUTA document is highly ambitious and has a wide range of objectives.

However actual implementation has been disappointing. Partly in response to this,

the ‘Big Results Now’ initiative was launched in 2013, modelled on the Malaysian

development model.

Tanzania is in many ways lagging behind Kenya, which is in the same region.

However prices (e.g. property) have skyrocketed in Nairobi (Kenya). Dar es Salaam

(Tanzania) – has become one of the fastest growing cities in the world – and could

reasonably be an alternative point-of-entry for newcomers in the Eastern African

region.

This SWOT matrix below provides an investors’ viewpoint of Tanzania.

Strengths Weaknesses

Strong economic growth performance over the past decade, and good prospects for future growth.

Relatively cheap (in a regional context) to start and do business.

Healthy levels of foreign direct investment (FDI) and a continued good outlook for this indicator, capital market is gradually being liberalised.

Rich in minerals, significant amount of natural gas reserves.

Political risk is relatively low in an African context.

One of the top tourist destinations in Africa.

The level of socio-economic development is very low.

Very small middle class.

Development very aid-dependent.

Struggles with the basic infrastructure related challenges (schools, healthcare etc.) that are necessity for economic growth.

Small-scale agriculture prevailing – to large degree substance farming.

Government’s national development plans are (too) ambitious and execution can be described as disappointing.

Opportunities Threats

Tourism sector has significant room for expansion, especially if tourism infrastructure is improved.

Benefiting from the concerns about terror attacks in Kenya.

“Big Results Now” initiative, or parts of it, become reality.

Niche industries: as small economy is able focus and attract investments.

Finds synergies with the regional “powerhouse” Kenya and is able to benefit from Kenya’s success.

Poor governance, red tape and corruption hinder development and keep private investors away.

Ease of doing business remains weak.

No improvement in education.

Dar es Salaam is one of the fastest growing cities on earth yet infrastructure to support this growth is poor.

Gas turns into curse.

21

Scenarios

Figure 5 provides four potential scenarios for Tanzania 2020. These are based on various sources of information and signals and information available. The two main components of the scenarios are:

1. Level of economic diversification 2. Openness of the economy

Any of the scenarios, or combinations of the scenarios, could come true. Much depends on local government policies and actions of international players, and other uncontrollable factors.

Figure 5. Scenario framework

The scenarios for Tanzania in more detail are described in Figure 6.

22

Figure 6. Four Scenarios for Tanzania 2020

23

Information

Sources

Publications:

African Development Bank: Tracking Africa’s Progress in Figure 2014

African Development Bank, Development Centre of the Organisation for Economic Co-

Operation and Development, United Nations Development Programme: African Economic

Outlook 2014, Global Value Chains and Africa’s Industrialisation

The Economist: Africa is the horizon 2015 African Business Outlook Survey

KPGM: Tanzania Snapshot 2014

International Energy Association: Africa Energy Outlook, 2014

World Bank: World Development Report 2015

Internet:

http://www.worldbank.org/en/country/tanzania

http://www.afdb.org/en/countries/east-africa/tanzania/tanzania-economic-outlook/

http://www.tekes.fi/en/programmes-and-services/grow-and-go-global/team-finland-future-

watch/

https://atlas.media.mit.edu/en/

http://www.theafricareport.com/East-Horn-Africa/tanzanias-2015-economic-growth-to-exceed-

last-years-7-per-cent.html

http://blogs.worldbank.org/africacan/is-tanzania-s-economic-growth-an-urban-phenomenon

http://www.howwemadeitinafrica.com/making-sense-of-africas-middle-class/43318/

http://www.howwemadeitinafrica.com/private-equity-firm-wants-to-propel-tanzanian-businesses-to-greater-heights/47230/

http://www.ist-africa.org/home/files/IST-

Africa_ICTInitiatives_ResearchCapacity_v1_281114.pdf

http://www.webometrics.info/en/Africa/Tanzania%2C%20United%20Republic%20of?page=0

http://en.wikipedia.org/wiki/List_of_companies_of_Tanzania

http://www.ft.com/cms/s/0/7d166be4-1ebe-11e3-b80b-00144feab7de.html

http://www.undp.org/content/undp/en/home/ourwork/environmentandenergy/strategic_themes/

climate_change/carbon_finance/CDM/tanzania.html

http://www.howwemadeitinafrica.com/tanzanian-solar-pioneer-on-adapting-energy-models-to-

meet-rural-needs/42750/

http://allafrica.com/stories/201310010076.html

http://www.theeastafrican.co.ke/news/Tanzania-best-in-e-health-uptake-/-/2558/2246082/-

/2eqj91/-/index.html

http://borgenproject.org/education-tanzania-10-important-facts/

http://www.tdcf.org.uk/education-in-tanzania-facts.html

http://www.howwemadeitinafrica.com/how-tanzanias-ubongo-media-built-a-business-by-

making-maths-cool/46814/

http://tanzict.or.tz/