History, Politics, Economy and Startups in Tanzania.

Tanzania is two countries in one.
Tanzania is the result of merger of two territories: Zanzibar Archipelago (or People’s Republic of Zanzibar) and former British protectorate Tanganyika. Today the Republic unifies about 125ethic groups where at least four (Sukuma, Nyamwezi, Chagga and Haya) has one million members each.
In 1506 the present Tanzania’s territories were colonized by Portuguese, but already in 1699 they were replaced by Arabs which controlled its until German’s occupation in late XIX century. After World War II the country was designated as the British Mandate’s area according to the League of Nations Charter. After obtaining its independence under the name Tanganyika in 1961 the country was joined by neighboring Zanzibar (after the revolution ended the Arab dynasty rule there) in 1964. After that the unified country is known as the United Republic of Tanzania.
Since 1977 political life in Jamhuri ya Muungano wa Tanzania is dominated by the leftist Chama Cha Mapinduzi or CCM formed by joining together the Tanganyika African National Union or TANU and Afro-Shirazi Party or ASP (represented the island of Zanzibar). After October 2015 election CCM holds 270 seats in the unicameral, 384-members National Parliament — Bunge la Tanzania. Opposing centrist Chama cha Demokrasia na Maendeleo has 69 Parliamentarians. Another opposition party liberal Chama Cha Wananchi holds to 42 seats.
Like majority of other mono-party states in the World, the Government of Tanzania tends to regulate every aspect of country’s lives — social, political and business. As a consequence, complicated bureaucratic procedures, multiple red tapes plus the widespread corruption is common characteristics of Tanzania’s economy. Today the Republic with its per capita less than $1000 remains one of the poorest countries on earth. Agriculture provides for 25% of country’s GDP and 86% of export. Major crops are maize, cassava, sweet potatoes, beans, bananas and rice.
Today Tanzania, formally the multi-party state (according to 1992 Constitutional amendments), still maintains mostly autocratic political system.
Tanzania, predominantly agricultural country, covers more than half of its science and technology development costs from outside (mostly from international donors) with another halve received from other government budgetary sources. At the same time, contribution of corporate businesses to that is almost zero. Accordingly, there has not been real demand-base for high-tech products created on Tanzanian market.
That negatively affects the future of technological startups outside of Internet and Mobile. Such innovations as, for example, alternative energies, 3D printing or Nanotechnology would have difficult time finding firm footing in Tanzania because it requires preliminary developments in broad range of specialized industries.
On the other hand, low-income population (per-capita about $800), insignificant Internet penetration rate (under 6%), high regulatory barriers and excessive taxation (personal income tax rate is 30%) and depleted infrastructure undermine growing potential of startups in e-commerce. Added to that is a chronic deficit of seed and VC money even in Dar es Salaam with its more than 4 million population and celebrated multiculturalism.
On a positive side, rapidly expanding population, which stood at 35 million at the dawn of the century and now reached 50 million, where young people under 30 now dominate, provides huge potential market for startup founders. Growing number of young Tanzanian have started to use their mobile devices in every aspect of their private, social and business lives. That creates a positive expectations for the future of Tanzanian fledgling startup ecosystem. Political climate. Not friendly. Economic climate. Not friendly. Region to focus. Locally. Industry to focus. Contact. Major limitations. Stimulus. Opportunities. .
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: Mobile-based commerce and services, FinTech, e-Jobs;
- major limitations: poor rural population, low-tech private agricultural and big corporate mining businesses dominate the economy, excessive bureaucratic barriers, high income taxes, deficiency of local STEM education system;
- stimulus: relatively hight GDP growth rate (nearing 7%), rapidly growing youth population, low costs, increasing smartphone usage;
- opportunities: fast-benefit from growing mobile economy on a big, although low-margin, market with minimum competition.