How Tanzania Can Boost Digital Investment to Drive Economic Growth

Tanzania is increasingly recognizing digital investment as a key driver for economic growth. With the world rapidly shifting towards technology-driven economies, the East African nation is seeking to leverage its digital potential to enhance business efficiency, improve public services, and create new employment opportunities.

However, while progress has been made, significant gaps remain that must be addressed to fully harness the digital economy.

1. Digital Infrastructure: Progress and Challenges

Tanzania has invested heavily in expanding internet connectivity, data centers, and fiber optic networks. Projects like Tanzania’s National ICT Broadband Backbone (NICTBB) have increased access in urban areas, connecting cities like Dar es Salaam, Arusha, and Dodoma to faster internet.

Challenges:

• Rural connectivity is still limited. Regions like Lindi and Mtwara face slow internet speeds or intermittent access.
• Power outages affect data centers and digital services, slowing adoption by businesses.

How to Improve:

• Expand rural broadband through partnerships with telecom companies like Tigo, Vodacom, and Airtel.
• Encourage renewable energy solutions to power digital infrastructure reliably.
• Provide tax incentives for investors to develop rural connectivity.

2. Policy and Regulatory Reforms: Opportunities and Gaps

The Investment Act of 2022 and the National Digital Economy Strategic Framework 2024–2034 have streamlined procedures and offered incentives for digital startups. The government also encourages foreign and local investments in fintech, e-commerce, and health tech.

Challenges:

• Bureaucracy remains high in licensing certain digital services.
• Regulations sometimes lag behind innovation, e.g., crypto, AI, and mobile lending platforms face unclear rules.

How to Improve:

• Establish a fast-track digital innovation policy unit to review new technologies rapidly.
• Introduce clearer guidelines for emerging technologies to attract foreign and local innovators.

3. Public-Private Partnerships (PPPs): Driving Digital Innovation

Partnerships between government and private players like Halotel, Vodacom Tanzania, and Microsoft Africa have supported digital education programs, mobile money expansion, and cloud services.

Challenges:

• PPPs often focus on urban areas, leaving rural populations underserved.
• Small local startups struggle to access these partnerships due to limited experience and funding.

How to Improve:

• Promote rural-focused PPPs to ensure inclusive digital growth.
• Establish mentorship and funding programs connecting startups to larger tech firms.

4. Capacity Building: Bridging the Digital Skills Gap

Tanzania has initiated training programs for youth and professionals in coding, cybersecurity, and digital marketing through institutions like DIT and Buni Hub.

Challenges:

• Digital skills programs are concentrated in major cities.
• Many graduates still lack hands-on experience needed by employers.

How to Improve:

• Expand programs to secondary cities and rural areas.
• Encourage internship programs linking training institutions with tech companies.

5. Sector-Specific Digital Initiatives

• Agriculture: Digital platforms like e-Wazalendo provide market prices and farming advice, improving smallholder farmers’ productivity.
• Healthcare: The Digital Health Investment Road Map aims to improve health data management and telemedicine services.

Challenges:

• Adoption remains slow due to low digital literacy among farmers and health workers.
• Funding and maintenance for digital tools are inconsistent.

How to Improve:

• Conduct widespread digital literacy campaigns for farmers and healthcare workers.
• Establish public-private maintenance programs to ensure technology sustainability.

Conclusion: Towards a Digital-First Tanzania

Tanzania has made commendable progress in digital investment, yet gaps in infrastructure, skills, policy, and rural inclusion continue to hinder growth.

Recommendations:

1. Expand rural connectivity and ensure reliable power supply for digital infrastructure.
2. Simplify regulatory frameworks for emerging digital technologies.
3. Promote PPPs that include local startups and rural areas.
4. Strengthen capacity-building programs with practical experience.
5. Ensure sector-specific initiatives have ongoing support and funding.

By addressing these challenges strategically, Tanzania can fully unlock the potential of its digital economy boosting business growth, creating jobs, and positioning itself as a competitive player in Africa’s digital landscape.