Small businesses are crucial for Tanzania, employing over 20% of the workforce. However they face barriers around financing, infrastructure, regulations and technology adoption.
Access to credit is one of the biggest hurdles for Tanzanian MSMEs looking to grow and expand. High collateral requirements, interest rates and lack of credit history exclude many. Fintech innovations around alternative data, digital lending platforms and credit-scoring models can transform SME financing.
Many small businesses have limited exposure to digital technologies for inventory management, online payments, social media marketing etc. Wider adoption of digital tools can enhance efficiency, reach new customers and boost revenues.
Cumbersome regulatory and licensing processes pose another challenge. Efforts are being made to ease business regulations and compliance burdens for MSMEs through policies like the Blueprint for Regulatory Reforms to Improve the Business Environment.
On the opportunity side, small companies can leverage Tanzania’s young, tech-savvy population for talent and growth. They can also benefit from rising consumer purchasing power, increasing mobile/internet penetration and government programs like SME development funds.
While risks exist, targeted policies and increased technology adoption can unlock the potential of Tanzanian small businesses.
While lack of collateral is an issue, alternative lending models rely on cashflow based financing from fintech lenders, crowdfunding platforms etc. These use predictive algorithms and new data sources to evaluate credit risk for small business funding needs. Such innovative financing platforms can provide the growth capital and working capital to accelerate the expansion of SMEs across sectors.