Think big, Tanzanians urged

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Think big, Tanzanians urged

  TPSF wants more of them in large scale investments
  Focuses on venture capital, private equity financing

Minister of State in the Prime Minister's Office Investment and Empowerment Dr Mary Nagu opens a seminar on Expansion of Venture Capital and Private Equity Investment.

In a bid to promote more rapid and inclusive economic growth, Tanzania’s private sector is being urged to focus on non-bank investment financing strategies.

A consultative seminar on venture capital and private equity financing organised by the Tanzania Private Sector Foundation (TPSF) and TMS Consultants attended by 170 participants from Tanzania and outside the country opened in Dar es Salaam yesterday.

Running under the theme: “Expansion of venture capital and private equity investment financing industry in Tanzania: Opportunity for Accessing Non-Bank Investment Financing,” it seeks to explore financing opportunities outside traditional bank borrowing.

Venture capital is a certain amount of investment required by startup companies with potential to grow, usually is obtained from wealthy investors.

The investments in common are risky as they are illiquid, but are capable of giving impressive returns if invested in the right venture. The returns to the venture capitalists depend upon the growth of the company.

Opening the seminar, Dr Mary Nagu, Minister of State Prime Minister’s Office, Investment and Empowerment told participants: “We all need development. The major constraint is access to finance.”

She noted that given the numerous investment opportunities emerging in various sectors of the economy, the country also requires experts in venture capital and private equity.

The minister reaffirmed the government’s commitment to undertake regulatory reforms in support of the private sector development in propelling economic growth in the country.

“As opposed to spectators, members of the private sector and business community should be active players in the country’s economic growth,” she said.

According to the minister Tanzania ability to respond against the growing poverty needs a 10 percent economic growth rate; but this currently stands at 6 percent.

TPSF Board of Directors Chairperson Dr Reginald Mengi said it is high time Tanzanian businesspersons and ordinary people dared to think big and participate in large scale investments.
“For decades, Tanzanians have been investing in small scale enterprises but through capital venture strategy, it’s clear that the country could soon have thousands of ballooners,” he said.

Dr Mengi noted that under the strategy: “Partners don’t make money from each other, but make money for each other.”

The TPSF chairman noted that, there are no financial institutions in the country or worldwide that can give loans at reasonable rates and allow beneficiaries to take long in repaying loans.

“We need to get finance outside the common route of bank institutions,” he added.
Addressing the delegates, TPSF Executive Director Godfrey Simbeye said it is difficult to access bank loans in Tanzania.

He said several developing and developed countries (South Africa, Ghana, Nigeria and Kenya) are now using venture capital, with numerous bank institutions operating by heavily relying on venture capital.

“What we all need are good business projects. We’re now moving as private sector to invest in Liquefied Natural Gas (LNG),” he noted adding that the plan is to ensure the government development vision is attained.

Salum Shamte, TPSF Board of Directors Vice Chairperson in his note said the question of investment financing is critical to development of the country.

“Most banks charge 25 percent interest while micro finance institutions charge 5 percent monthly, equivalent to 60 percent annually … the only way that we can develop under this policy is to grow cocaine and of course we don’t want that,” he explained.