A bold step forward for financing in Tanzania
The Daraja Impact Fund, launched in 2023 with support from the Swiss Agency for Development and Cooperation (SDC), is expanding its reach in Tanzania. Backed by 10 million Swiss francs (about $12.5 million), the fund was created to provide flexible, impact-linked financing to small and growing businesses across the country. This expansion aims to unlock capital for enterprises that deliver measurable social and environmental benefits while pursuing sustainable growth.
What is impact-linked financing and why it matters
Impact-linked financing ties funding terms to verifiable impact outcomes. For Tanzania’s entrepreneurs and SMEs, this approach can reduce the risk of capital being used for unintended purposes while rewarding progress in areas like job creation, gender inclusion, or improved agricultural yields. The Daraja Fund uses performance metrics to correlate capital access and repayment terms with social impact, enabling companies to scale responsibly and investors to see tangible progress beyond financial returns.
How the fund supports Tanzania’s diverse economy
The expansion focuses on a broad spectrum of sectors important to Tanzania’s growth—agriculture, small-scale manufacturing, and renewable energy among them. By prioritizing small and growing businesses, the fund helps bridge a common funding gap where traditional lenders may hesitate due to perceived risk or limited collateral. Flexible financing structures can include blended finance, risk-sharing mechanisms, and milestones that reward tangible improvements in productivity and livelihoods.
Strategic goals for 2025 and beyond
With the extra capital and a clear impact mandate, the Daraja Fund seeks to reach more enterprises, particularly those led by women or operating in underserved rural communities. The strategy emphasizes:
– Access to affordable capital that aligns with business cycles.
– Transparent impact monitoring to verify outcomes such as job creation, income growth, and climate resilience.
– Local partnerships to deepen reach and ensure that funding translates into sustainable business development.
What success looks like on the ground
Success for the fund means more Tanzanian jobs, increased agricultural productivity, and cleaner energy access. For many small businesses, the ability to secure financing with impact-linked terms translates into capital for equipment upgrades, expanded processing capacity, or new market entry. Investors, in turn, benefit from a structured framework that demonstrates how capital leads to measurable social and environmental improvements, helping align financial returns with broader development objectives.
Collaboration and the road ahead
The Daraja initiative underscores the importance of collaboration among international development actors, local financial institutions, and the private sector. By pooling expertise and aligning incentives, the fund can de-risk scalable ventures and build a pipeline of opportunity across Tanzania’s districts. The next phase is expected to deepen monitoring, expand geographic coverage, and refine impact metrics to reflect evolving development priorities.
