Catalysing and Scaling Innovation In Tanzania

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CATALYSING AND SCALING Innovation in Tanzania: A review of approaches • Where is support needed?2.1.1 Innovation pipeline in TanzaniaIn Figure 4, we present the main stages of the innovation pipeline and ouranalysis of the specific situation and challenges in Tanzania for each stage.Figure 4 Innovation pipeline in TanzaniaIdeaPILOTDefinitionNew ideas are created, assessed, and further refined.Of the large number of initial ideas, only a few goforwards along the pipeline.First versions of the innovation are tested withreal users. Their experiences are analysed andused for further iteration of the design. Morefunding or other forms of support are sourced.SupportExamplesof activeplayersHackathons, trainings, and competitions to promoteideation and skills development. Prize money incompetitions and small grants for start-ups.Range: US$5,000 to US$100,000.IncubatorsHubsData skills programmeBilateral donorsEarly stagechallenge fundsInnovation labsEcosystem buildingprogrammesCorporate philanthropicfoundationFoundationsEarly stage funding gapCapacity building, technical assistance, support forestablishing connections and receiving approvalfrom national and local government, validation, andresearch support. Competitive grants and challengefund grants.Range: US$100 000 to US$200 000 and up toUS$500,000, respectively.Challenge fundsIncubatorsDonorsStageAnalysisIdeation activities are popular with young people andentrepreneurs: they are easy to organise, high profile,and light touch, and do not require deep technologyor technical skills to deliver. This is a crowded spacewith many donor-funded initiatives and hubsoperating, and duplication of effort is likely. The focusis on skills development: most ideas do not progressto implementation.Pilot tests generate the first concrete outcomes,real results, or proof of concept. This phase isdelivered by a smaller group of internationaldonors in the form of challenge funds andaccelerators that deliver capacity building andtechnical assistance to innovators. It is resourceand time intensive: professional experience isneeded, and only some of the hubs are able tosupport this stage. Real impact and sustainabilityare both still far away.EcosystemsupportSome innovation funders support ecosystem-building activities; this includes supporting hubs and catalysinginnovation ecosystem, but they also need both financial and capacity-building support. Currently, most hubs lackThere is little consistent capacity support for the hubs, despite the critical need for it. Universities and research14
CATALYSING AND SCALING Innovation in Tanzania: A review of approaches • Where is support needed?GrowthSCALEThe organisation and number of users and clients usingthe innovation grow. Robust systems and processes –including for finance, legal issues, HR, logistics, etc. – areput in place and properly managed.National coverage and international growth throughprivate investment or government adoption increases.Different user groups, and number of users/beneficiariesgrow rapidly. Localised versions, subcontracting, and newpartnerships are developed.THE Missing MiddleTechnical assistance, mentoring, capacity building,support for connections to other donors/funders,corporates, and the government. Competitive grants andchallenge fund grants.Range: US$100,000 to US$1.5 million.Challenge fundsAcceleratorsAngel investor networkTechnical assistance, coaching, and connectionsto international organisations, venture capitalists,international and national corporate companies, and/orgovernments. Grants, loans, and equity investments.Range: US$10 million upwards.InvestorsChallenge fundsBanksThe first concrete evidence of impact emerges atthe growth stage. Few funders are operating in thisspace; the investment needs are larger and deliveringsupport is resource intensive. The biggest changes areorganisational with a focus on legal aspects, finance, HR,logistics, and other systems and processes. The fundingis still predominantly in the form of grants, but there is aneed for a broader spectrum of financial instruments andpatient capital including repayable loans, public–privatepartnerships, and social impact bonds.Through scaling, significant impact can be achieved andreal change at national and international scale becomespossible. In order to scale an innovation, the organisationmanaging it – public or private – needs to be large enoughto handle the necessary investment, and mature enoughto have the necessary financial, monitoring, and reportingsystems in place. Fewer innovators reach this level ofmaturity and many funders targeting scale operate inmultiple countries. The mix of funders is more diverse atthis stage with some investors and corporates presentalongside donors. Typically, the level of investment availableis still too high for many innovators to absorb; hence, thereis a need for more financial instruments to support scale.connections between ecosystem players. Hubs and other ecosystem enablers are important in supporting and growing thethe skills needed to support innovations at the growth and scale stages. Linkages with industry and government are also weak.organisations could also benefit from more support in building skills and expanding their curriculum in relation to innovation.Innovation pipeline continues over page15
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Catalysing and Scaling Innovation In Tanzania

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