Changemaker: Julius Shirima
Despite a rapid increase in the number of banks in Tanzania, currently at 60 banks and over 1000 microfinance organizations and cooperative societies, most youth from academic institutions find it difficult to acquire start up or growth capital for their small businesses. Recent research shows that prevalence of high interest rate on loans i.e 20-60 percent, requirement of collateral and lack of further business support services have hindered youth from opting entrepreneurship as a career choice. In addition to the above reasons, socio-economical factors such as lack of self belief, confidence and exposure have played a major role in discouraging an entrepreneurial culture among Tanzanian youth. Darecha approach: In finding solution to the previously mentioned challenges, Darecha, a social enterprise that was founded 6 years ago as a small project under the support of Global Changemakers, has designed and executed several project that aim at engaging, enabling and empowering aspiring young entrepreneurs to start and grow their businesses.
Darecha mostly referred as " a micro-venture capital fund company" organizes a business ideas and, or business ventures competitions each year. This competition aims at inspiring youth to start small businesses and providing them with further support in implementing their business ventures. The support can range from providing connections and technical advice to offering startup capital. The startup capital that Darecha provides to young entrepreneurs is different from bank loans. Instead of entrepreneurs making interest payments plus the lump sum, they "buyback" shares from contractual agreement with Darecha. The buyback of shares will continue until the provided capital and returns have been realized but in order to maintain long term relationship with young entrepreneurs, Darecha will retain minimum percentage ownership at 10 percent.
This year, 2014, Darecha organized its 4th Youth Business Ideas/ Ventures competition. Since its founding, Darecha used to invite applications from youth with business ideas only but this year there was a different approach. For the first time, Darecha invited applications from youth who own small businesses already. The goal of inviting such youth to apply was to develop a portfolio of investable businesses for interested investors. From 1000+ applications, Darecha selected 30 finalists whereby 60 percent of them were youth who own businesses and 40 percent youth who have businesses only. All finalists participated actively in a one week business improvement and entrepreneurship training that was conducted by experts from different industries. On the final day, 11 finalists had a chance to present in front of judges and a big audience of approximately 200 stakeholders from banks, government institutions, Tanzania Investment Centre, National Economic Empowerment Fund, academic institutions and other partner organizations.