The Financial Sector Deepening Trust (FSDT) has issued a call for proposals seeking advisory services for the establishment of a venture capital and private equity fund in Tanzania. The deadline for submission is 5 PM, Wednesday, 3rd March 2025.
Terms of Reference
Background
FSDT has received funding from the European Union to implement the “Inclusive Finance for Growth of MSMEs, Women and Youth” program, focusing on developing innovative financial products and services tailored to underserved women and youth entrepreneurs in mainland Tanzania and Zanzibar. One of the key outputs of this program is the establishment of a venture capital fund, which will provide seed and growth-stage capital to youth and women entrepreneurs launching or scaling innovative, high-growth businesses in Tanzania.
The Assignment
FSDT is seeking to hire a consultant to collaborate with the Capital Markets & Securities Authority (CMSA), Ministry of Finance (MoF), financial service providers, and other stakeholders to conduct a detailed feasibility study and provide follow-up technical assistance for establishing a venture capital fund in Tanzania. The study will assess market conditions, identify potential challenges and opportunities, and evaluate the fund’s economic, technical, financial, legal, and operational feasibility. The objective is to determine the most effective approach and recommend an optimal operational and institutional structure for the venture capital fund, leveraging private and public institutional investors within and outside Tanzania.
Scope of Work
A. Market Analysis and Demand Assessment
- Analyze start-up and growth-stage youth and women-led enterprises’ business landscape and entrepreneurial activities.
- Conduct a gap analysis to assess current access to venture capital funding and highlight youth and women entrepreneurs’ unmet long-term funding needs, limitations of existing long-term financing instruments, and potential market opportunities for venture capital funds in Tanzania.
- Map investors and other key participants in the venture capital and private equity ecosystem in Tanzania.
- Conduct a comparative analysis of venture capital funds targeting youth and women enterprises in Tanzania and similar markets, such as East Africa, Africa, Asia, or Latin America.
- Provide recommendations, including policy, legal, regulatory initiatives, and support services, to enhance access to long-term financing instruments for start-up and growth-stage youth and women-led enterprises.
B. Legal and Regulatory Analysis
- Conduct a review of the existing policy, legal, and operational environment with the level of support they provide to the development of new seed, early-stage finance, venture capital, and private equity financing ecosystem.
- Engage with legal and regulatory stakeholders to validate findings during the analysis phase.
C. Venture Capital Fund Design and Structure
- Prepare a risk assessment matrix highlighting opportunities, potential challenges, or limitations to establish and operate a venture capital fund in Tanzania and recommend measures to mitigate or lower these challenges, including market, legal, political, macroeconomic, and socio-cultural risks.
- Provide three to four options for the venture capital fund design, highlighting the benefits and challenges of each option. Each option shall include the fund’s legal institutional set-up, governance structure, fund sources, target market and sectors, fund delivery models, direct or indirect financial instruments, investors’ protection models, and monitoring framework.
- Propose or recommend an appropriate venture capital fund structure to be established.
- Prepare an implementation roadmap that includes detailed activities, timelines, and budgets.
D. Stakeholder Engagement and Validation
- Conduct sessions with the FSDT, CMSA, MoF, and other relevant stakeholders to present findings from the market assessment and the proposed venture capital fund structure.
E. Fund Manager Tender Documentation
- Develop comprehensive tender documentation for the solicitation of fund management services.
- Develop terms of reference that define in detail the services required to be delivered by the fund manager to establish and manage the venture capital fund.
- Using established private equity industry practices and relevant legal frameworks, conduct the following activities:
a) Develop terms of reference for the panel to review fund managers’ proposals.
b) Participate in the assessment and appointment of the panel that will select the fund manager and carry out the due diligence of the fund manager.
Proposal Submission Deadline
The deadline for submission of proposals is 5 PM, Wednesday, 3rd March 2025.
For the detailed terms of reference of this consultancy opportunity, including the background of the assignment, scope of work, deliverables, selection criteria, and other contents of the bid proposal, visit the current opportunities page via: www.fsdt.or.tz/work-with-us
About FSDT
The Financial Sector Deepening Trust (FSDT) is a market development initiative aimed at fostering financial inclusion and promoting a more inclusive financial sector in Tanzania. It collaborates with public and private sector partners to support innovative financial solutions, focusing on women, youth, MSMEs, and rural communities to drive economic growth and development.
