UNCDF programme powers Tanzania’s rise as a digital finance hub

DAR ES SALAAM: THE United Nations Capital Development Fund (UNCDF) backed PesaTech programme mobilised over 18 million US dollars (over 47bn/-) for Tanzanian fintech firms from 2022 to 2025 strengthening Tanzania’s position as a rising digital finance and financial inclusion hub.

In a recent statement, UNCDF’s Programme Coordinator, Ms Tian Zhang said the programme has delivered strong commercial results by helping innovative fintech firms attract institutional investment while expanding access to financial services for millions of underserved micro, small and medium-sized enterprises (MSMEs).

Across its first two cohorts, PesaTech has supported 22 post-revenue fintech companies operating in digital lending, payments, agritech, healthtech, enterprise software and digital infrastructure.

With catalytic funding of about 397,000 US dollars (over 1bn/-), the companies have collectively attracted more than 47bn/- in follow-on investment a capital multiplier of more than 45 times.

The firms now serve over 2.3 million active users, generate approximately 19.2 million US dollars (over 50bn/-) in annual revenue and have facilitated more than 126 billion US dollars (over 300tri/-) in digital transactions.

“These outcomes demonstrate that Tanzania’s fintech ecosystem is evolving from experimentation to commercial scale,” Ms Zhang said adding that the sector is increasingly attracting venture capital, strategic partnerships and commercial financing.

As the country marks World FinTech Day in August 1 this year, she said PesaTech has built one of East Africa’s strongest pipelines of investment-ready fintech companies, demonstrating how catalytic finance, strategic partnerships and local ownership can unlock private investment, strengthen financial ecosystems and create economic opportunities for millions of entrepreneurs who have long remained outside the formal financial system

She noted that growing mergers, acquisitions and investment discussions also reflect rising investor confidence in Tanzania’s fintech industry.

Ms Zhang said Tanzania’s rapidly expanding digital economy, widespread mobile money adoption and vibrant entrepreneurial ecosystem have created one of Africa’s most promising environments for fintech-led financial inclusion.

Despite this progress, she said many MSMEs still struggle to access financing because they operate informally, lack conventional collateral and have limited financial records.

“For many MSMEs, the challenge is not simply a lack of capital, it is a lack of visibility within the formal financial system,” she said.

To bridge this gap, Ms Zhang said fintech companies are converting everyday business transactions into trusted digital records that financial institutions can use to assess borrowers more accurately.

Data generated through agriculture, healthcare, transport, retail, education and enterprise management platforms is enabling lenders to develop alternative credit scoring models, embedded finance solutions and working capital products based on actual business performance rather than traditional collateral.

“As a result, Tanzanian fintechs are increasingly becoming the infrastructure through which banks and investors can sustainably serve underserved MSMEs,” Ms Zhang said.

UNCDF established PesaTech to bridge that gap by reducing investment risks for promising post-revenue fintech companies while strengthening Tanzania’s broader fintech ecosystem.

She said rather than functioning as a traditional accelerator or grant programme, PesaTech provides catalytic investment grants, business development and technology advisory services, investor-readiness support, regulatory engagement and partnership facilitation with financial institutions and private investors.

The programme also works to strengthen the wider innovation ecosystem needed for sustainable fintech growth.

Ms Zhang said one of PesaTech’s key achievements has been helping fintech firms evolve from providers of digital financial services into trusted digital infrastructure partners.

Many portfolio companies now generate verified operational and transaction data from sectors such as agriculture, healthcare, transport and commerce, helping reduce information gaps between lenders and borrowers.

This enables financial institutions to evaluate businesses using real-time cash flow data rather than relying solely on physical collateral, opening opportunities for embedded finance, alternative credit scoring, insurance products and working capital financing tailored to MSMEs.

“In doing so, fintechs become strategic partners for banks rather than competitors, extending the reach of formal finance into previously underserved markets,” Ms Zhang said.

She added that the programme demonstrates how catalytic public financing can reduce early-stage investment risks, strengthen enterprise readiness and crowd in private capital rather than replace it.

PesaTech is expected to enter a new phase in December 2026, when its long-term management is transferred to NMB Bank.

Ms Zhang said the transition marks a shift from donor-supported innovation to locally owned market infrastructure, reflecting efforts to build sustainable institutions capable of expanding financial inclusion beyond the lifespan of development programmes.