The European Union (EU) has solidified its commitment to promoting entrepreneurship and enhancing economic inclusion in Tanzania by signing an agreement with the Financial Sector Deepening Trust (FSDT). This partnership will see the EU issuing a grant worth €4 million (11.23 billion Tsh) aimed at supporting women and youth-led Small and Medium Enterprises (SMEs) in the country.
The funds provided under the FSDT will specifically target SMEs involved in the blue economy and green sustainable projects. These include ventures focused on clean cooking, fishing, and other eco-friendly businesses. The initiative is part of a broader strategy to empower entrepreneurs with the resources and guidance needed to thrive in sustainable sectors.
The signing ceremony, which took place during an information session organized by the EU in Dar es Salaam, underscored the EU's dedication to fostering financial inclusivity. Head of Cooperation for the EU Delegation to Tanzania, Cedric Merel, emphasized the importance of enabling youth and women to participate in sustainable projects. These projects are not only crucial for mitigating the effects of climate change but also for creating jobs and boosting the economy.
“A conducive business environment is essential for businesses to thrive, and finance is their lifeblood. By supporting SMEs, we target the main job providers, specifically supporting green activities that are socially and environmentally sustainable,” said Mr. Merel.
The EU has been taking a comprehensive approach to investments in Tanzania. This includes enhancing domestic resource mobilization, strengthening capital markets, and promoting green and alternative finance. Following the Tanzania-EU Business Forum, the EU issued a credit line worth approximately $400 million (over 1 trillion TZS). This credit line is distributed through commercial banks such as CRDB, NMB, and KCB, which in turn finance SMEs and the broader private sector.
Edward Claessen, Head of the Regional Hub for East Africa at the European Investment Bank (EIB), highlighted Tanzania’s significant receipt of EIB support in 2024. The country secured Tsh.758 billion in new investments to support businesses through partnerships with local banks like CRDB, NMB, and KCB-Tanzania.
Kennedy Komba, the Director of Financial Deepening and Inclusion at the Bank of Tanzania (BoT), noted that SMEs constitute 90% of businesses in the country, contributing 5% to the Gross Domestic Product (GDP) and employing five million people. However, many SMEs struggle to survive beyond their initial years due to a lack of financial management skills among entrepreneurs.