Interested in doing business in Tanzania? Tanzania is without a doubt currently one of the best countries in Africa to invest in or start a business. The country has a population of almost 50 Million with a fast growing middle class (exceeding the population of neighboring power house Kenya), it has ample natural resources, boasts a long history of peace and political stability, and its government is committed to fiscal discipline.
Having said that, the country is less promoted throughout media and except for some major offshore gas deposits that were recently found suggesting related large-scale investment opportunities a lot of people know relatively little about doing business in Tanzania.
So, I thought it is time for us Africa Business Jumpstarters to dive into Tanzania a little deeper!
Well, Tanzania’s top sectors for doing business or investing are agriculture (in particular cotton, tea, flowers, spices, and grains), energy & mining, tourism, transport, property, ICT, finance, and business services. Having said that, I am always keen to provide some tangible and actionable insights – the kind of stuff that remains less visible and that allows you to understand dynamics better when you are just getting started. So below, I am looking at a few visible trends that I became aware of, and please note that my selection below does not cover all industries.
1. Boom together with everything related to property….and think across the road!
Tanzania’s property sector is booming, so much so, that many apartments are being sold like fresh, hot bread, before the dough has reached the oven. And these are very valuable market news! Mustafa Suleiman, Managing DIrector of Lamudi recently gave an interview to Howwemadeitinafrica.com summing it up this way:
“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 […]“There is a developer I met when we first started Lamudi, and back then he only had two buildings. We got him on board and now he has 18. And all his apartments are sold before he breaks ground,” Suleimanji notes.
Other Africans are taking notice. Suleimanji explains that African traders come from as far as Zambia, Nigeria, Congo and Mozambique to trade goods, but also to put their hands on some hot property: “These [traders] are making a lot of money that they don’t want to put in banks. They are putting it in to real estate.”
Canadian project manager Sandra Macdonald-Mulokozi owns a local coffee shop brand called ‘Black Tomato’, she points out: “Property developers have now learnt that to attract clients, they must have amenities such as cafés and banks. People don’t want to walk even a few blocks to go to a café because of the heat here.”
So don’t just think of property development or investment opportunities, but also about the amenities, products, and services people would pay for in the neighborhood.
Related business ideas for you: Online property market platforms, plumbing franchising, interior design, furniture and home decor retail, fast food home delivery, food trucker, local kindergarten and child care services, children leisure and spare time options, local fitness or personal training, air conditioning retail.
2.There is something else hot in Dar Es Salaam: E-commerce is fast gaining traction
Over the last weeks and months, this is news that we can see coming repeatedly out of Tanzania. So, dear ICT and E-commerce lovers (I am talking to myself here, too), you have to consider Tanzania as a strategically smart location. Don’t forget that Tanzania’s large population of almost 50 Million and a fast growing middle class will make sure this upcoming trends will continue to grow.
Important is that you understand that the upper classes were the key drivers of E-commerce in Tanzania so far (also think e-commerce offering luxurious services and items!), but that there has been a very visible increase in the middle class engaging in e-commerce. New e-commerce platforms, such as kaymu.co.tz have seen incredible growth in the last few months and a very positive attitude among users towards E-commerce is reported. That’s a great sign!
However, be weary when offering your e-commerce products and services to businesses: 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. This area certainly has potential, too, but it may be growing much slower for you.
Another tip: Think of providing logistics for E-commerce businesses – be it in form of online solutions or the transportation of goods locally.
3. Tanzania not only produces a lot of gas…it also produces a lot of millionaires.
Tanzania has seen some of the fastest increase of local millionaires, following Mozambique, Zambia, and Cote d’Ivoire on fourth place (apparently outdoing Ethiopia in 2014, which was the top country of producing new millionaires in Africa prior to that).
This is a great indicator that ample opportunity exists in Tanzania right now allowing you to strive towards financial success and independence. Surely, these are great news for any business start-up, so make sure you do not just open any business, but that you tap into a dynamic growth industry with the right business concept in hand. But noting a significant increase in the number of Tanzanian millionaires also means something else for you: It means that there is a new population segment of millionaires who want to be served with high-end products and services. Providing luxury may just be the right strategy for you to become a millionaire yourself! I will be honest with you, I am lacking knowledge in the field of what Tanzanian millionaires are looking for, but I hope I gave you a hint. The ideas below may be of interest to your target group:
Related business ideas for you: Excellent business services and solutions for their businesses, high end clothing and fashion including international brands, luxurious skin care and makeup, delicious party food, wine and spirits, chauffeur and limousine services, Tanzania and African stock exchange consultancy, home decor, cleaning & home maids agency, child & nanny care, fast iPod fixing services, wellness & spa, private jet services/ agency, luxurious weddings and personalized accessories, stylists, PR agents.
4. Set up shop…I mean literally – Formal retail is experiencing a clear sudden increase
Many Africans love the idea of setting up a shop, and Tanzania seems to provide a great market context for that, especially in metropolitan up-market areas and in the proximity of new housing developments.
Retail stores, such as Choppies or the Kenyan Nakumatt have recently opened in Tanzania and have experienced great success rates. As Nakumatt, director put it: “The opportunity in Tanzania is significant as the country represents a vast untapped retail market just like Kenya, Uganda, or Rwanda. Our experience in Tanzania so far has been very encouraging. The reception by all our stakeholders from the shoppers to staff, government and suppliers has been overwhelming. I have no doubt our Tanzania operations will represent a new growth momentum.”
And there is also a steady sudden growth that can be witnessed in the food and drinks business in the country. International brands, such as US fast food chains KFC and Subway and South African franchises Rhapsody’s and News Café, have opened in Dar es Salaam. Just another indicator that we as Africa Business Jumpstarters need to have that sense of urgency not to be left out, but eat from our African cake, too!
But here is another point you may find useful: It is always helpful to look at the wider context of such developments! It does not only mean that you will have an enabling environment for your own retail outlet plans, it also means that you will have ample opportunities to go into simple manufacturing of agricultural produce or fast moving consumer products and target these upcoming retail stores. In fact, manufacturing in Tanzania has seen a steady rise and this is a great time for you to come in, as these dynamics are just taking off. Or think of growing high-quality produce such as tomatoes and lettuce, or rearing some chicken to sell to those fast food and supermarket chains.
5. Tanzania Stock Exchange….changing its ways
For those of you who have their money rather work for them around the year (especially considering the heat in Tanzania’s capital 🙂 ), the Tanzania Stock Exchange is gaining in popularity. Its dynamics had been hindered so far, as for many years, the government restricted levels of each stock’s foreign ownership to a total of 60% in an effort to protect and promote Tanzanians’ participation in the market. It did not work and that regulation has been lifted at the end of 2014 in an effort to revive the sleepy exchange.
Tanzania’s stock exchange offers new exciting opening with great potential. Among them Swissport Tanzania (SWISSPORT), Tanga Cement (SIMBA), Tanzania Breweries (TBL), and Tanzania Portland Cement (TWIGA)
More Tanzania Business tips
What else can I add that comes to my mind? – Well according to the World Bank, Tanzania has made access to credit easier for the second year in the row, the Tanzania Commission for Science and Technology (COSTECH) for example is giving funding to local tech start-ups. Having said that, access to credit or funding remains a challenge.
You should also be aware that most speak Swaheli in Tanzania, so much so, that I learned from others that it can be a problem doing business if you only speak English – frankly, you may need to hire a translator. Ahh, right there another business idea for Tanzanians: Swahili- English translation services for foreign business people and investors!
Also, the Ministry of Tourism is looking for investors to step up the number of luxury buses and vehicles in Tanzania’s tourism industry.
And one more tip (having worked with African nomads for over a decade it will remain one of my favorites!): There is milk and dairy production shortage in Tanzania! This is great news for Rwanda who have invested big time in their dairy industry making a lot of money serving Tanzanians and for everyone, who thinks of building a local dairy production business!
Wonderful! What can I say, it all is so wonderfully challenging and exciting, isn’t it?! Now step up to the game and come up with a business concepts tat works! All the best! Please let us hear your thoughts or experiences regarding doing business in Tanzania, we hope to hear in particular from our Tanzanian brothers and sisters!
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