EXECUTIVE SUMMARY
The Tanzanian art and culture sector plays a vital role in the country's social and economic development, fostering creativity, preserving cultural heritage, and contributing to national identity. However, one of the most significant challenges facing this sector is the lack of access to reliable and sustainable financing. Artists, many of whom are freelancers with unstable incomes and inadequate financial records, often find themselves ineligible for traditional financial support mechanisms such as loans from banks or credit unions
To address these challenges, the Tanzania Culture and Arts Fund (Mfuko wa Utamaduni na Sanaa) was established with the aim of providing a dedicated financial resource to support artistic activities and cultural projects.
Thispolicybriefexaminesthe currentstateoftheFund,its implementation,andthe effectivenessofitsfinancial supporttotheartsandculture community.Italsopresents researchfindingsfroma comprehensivemappingstudy onthestatusofartistsin TanzaniaconductedbyCulture andDevelopmentEastAfrica (CDEA),withaparticularfocus onfinancingissueswithinthe artscene.Inaddition,itoffersa transformativepolicy recommendationthat willpositiontheFundas Tanzania’s firstimpactinvestmentvehicle for theartsandculturesector.
BackgroundandObjectivesof MfukowaUtamaduninaSanaa
Mfuko wa Utamaduni na Sanaa was established in 1998 by the Government of Tanzania in collaboration with the Swedish Government, through the former Ministry of Education and Culture. The Fund ceased its activities in 2013 following the withdrawal of Swedish support for cultural activities. In 2020, the Government, through the former Ministry of Information, Culture, Arts and Sports, revived the fund and expanded its responsibilities to encompass the arts sector.
This revival aimed to implement the Culture Policy of 1997, which directs the government to establish a Culture and Arts Fund to strengthen the sector. The fund was formally established under the Trustees' Incorporation Act (CAP. 318 R.E. 2002) and registered on September 30, 2020, with registration number 1776.
The primary objective of Mfuko wa Utamaduni na Sanaa is to provide loans for viable projects by artists and culture practitioners, along with training and mentorship services.
The Fund aims to stimulate job creation by supporting the growth and sustainability of arts and culture-led enterprises. It also aims to promote active participation of artists in socio-economic development and encourages marginalized and unemployed youth with arts and culture talents to engage in sustainable income-generating projects.
Additionally, it seeks to develop competitive, growth-oriented citizenowned arts enterprises. The Fund also offers continuous business support services such as training, mentorship, and advice for developing sustainable artistled enterprises
Theloansprovidedby MfukowaUtamadunina Sanaarangefromtwo hundredthousand shillings(TZS200,000) toonehundredmillion shillings(TZS 100,000,000)forgroups, companies,orindividual applicants.
LaunchoftheFund
Mfuko wa Utamaduni na Sanaa was officially relaunched on November 22nd, 2022, by the former Minister of Culture, Arts, and Sports, Mr. Innocent Bashungwa The launch marked a significant step towards revitalizing the arts and culture sector in Tanzania
Mfuko wa Utamaduni na Sanaa benefits a wide range of stakeholders involved in cultural and artistic activities. These include individuals registered or recognized by government authorities, culture and arts groups, associations, companies, education and training centers related to culture and art, and civil organizations focused on cultural and artistic issues
In the early stages, Mfuko wa Utamaduni na Sanaa issued interest-free loans directly from the Fund through their personal accounts. However, due to lack of repayment compliance, the Fund decided to change the modalities of fund management and disbursement.
On July 10, 2023, under the leadership of Dr. Pindi Chana, the Minister of Culture, Arts, and Sports, the fund signed an agreement with CRDB Bank to provide loans to artists at a 9.0% interest rate. The partnership with CRDB Bank, which is known for its extensive branch network and expertise in handling loans, aimed to reduce loan costs and improve accessibility for artists across the country. The minister highlighted that this collaboration would enable the Fund to reach artists more effectively, no matter where they are located. Currently the loans are disbursed through two banks: CRDB and NBC FinancingArtsandCultureinTanzania
BONDREQUIREMENTS
The repayment period extends up to 24 months, with a grace period of up to 3 months, depending on the type of project
In 2022/2023 the actual expenditure for the Mfuko wa Utamaduni na Sanaa was 2,028,781,903
Nosecurityrequired
20%guarantee
30%guarantee
50%guarantee
By April 2024, the fund has been able to provide a total of 4.2Billion Shillings as loans to 216 art projects within 16 Regions in Tanzania.
RESEARCHFINDINGS FROMTHEMAPPING STUDYONTHESTATUSOF THEARTIST
In 2023, CDEA through the Artistic Rights project supported by the Royal Norwegian Embassy in Tanzania, carried out a mapping study to establish the status of the artist in Tanzania, with a focus on four areas namely: training, social and labour conditions, and financial inclusion for artists.
The research recognized that the government of Tanzania had launched Mfuko wa Utamaduni na Sanaa to address the lack of access to financing in the arts sector. However, despite this good intent, access to financing is still a problem for artists in Tanzania.
To further empower artists economically, the study recommends innovative measures such as;
The use of intellectual property (IP) as collateral,
Recognizing receivables and contracts as valuable assets, and
Advocating for the acceptance of diverse payment methods, such as accommodating bullet installments.
Currently the Fund is using receivables and contracts as collateral for accessing funding, while it does not receive financing from other sources.
Thenationalbudget of2024/2025, throughthepublic expenditure estimatesand developmentvote, provided the TanzaniaCultureand ArtsFundTZS 3,000,000,000.
Challengesfacingaccessto financingintheartsector
Access to financing remains a critical challenge for artists in Tanzania, as highlighted by the Mapping report.
One standout challenge is the lack of appreciation by the Fund of the dual nature of cultural and artistic goods and services as having both economic value and cultural value. The Fund has emphasized the commercial dimension of arts and culture, and downplays the cultural dimension that cannot be commercialized.
This cultural dimension is the spirit that makes Tanzania a nation. While government institutions are funded through the consolidated fund, nonprofit organizations that are vehicles for promoting Tanzania’s cultural heritage lack government funding. They have turned to international development partners and/ or cultural centers to fund activities that promote Tanzania’s spiritual essence FinancingArtsandCultureinTanzania
From the commercial dimension, the decision for Mfuko wa Utamaduni na Sanaa to choose two commercial banks as fund managers, also introduced a new dynamic to the sector that produces both economic and cultural value. Creative businesses often deal with intangible, difficult-to-trade assets like images, traditions, music, stories, and cultural heritage. Commercial banks, therefore still need to understand how value is created and assessed in the creative sector from an economic and cultural impact point of view
For instance, one of the most profound trends in the social sector today is the emergence of a new class of entrepreneur – the creative social entrepreneur. Creative social entrepreneurs generate market demand for their goods and services while also contributing to the dynamic shift in cultural sustainability, social justice and economic development around the world.
Furthermore, the lack of innovative financial models to suit the creative sector, such as lease to own, line of credit and early-stage project development, for art and culture enterprises to become bankable.
However, the impact investing approach which aims to support businesses by not only focusing on return on investment, but has a keen focus on social and environment benefits, such as youth and women employment and circularity in creative production, has not taken root for the arts and culture sector in Tanzania.
POLICYRECOMMENDATIONSFOR IMPROVINGTHEFUND MECHANISM
To address the challenges faced by artists and cultural practitioners in accessing financing and to enhance the effectiveness of the Mfuko wa Utamaduni na Sanaa the following policy recommendations are proposed;
ImpactInvestmentStructure:
Mfuko wa Utamaduni na Sanaa, should reclaim its fund management capacity from the commercial banks and transition into being Tanzania’s first impact investment vehicle in the culture and arts sector.
The fund can adopt a hybrid funding model combining both loan and granting mechanisms. By adopting this approach, Mfuko wa Utamaduni na Sanaa can provide more comprehensive financial support tailored to the diverse needs of artists and cultural enterprises
Loan mechanisms offer a sustainable way to finance projects that can generate revenue and allow artists to grow their businesses, while granting mechanisms provide critical funding for non-revenue-generating projects, such as community art programs and cultural heritage preservation, that have significant social, cultural and environmental impact This dual approach will not only ensure a more resilient and dynamic arts sector but will also align with the Cultural Policy of Tanzania of 1997 and broader developmental goals.
To achieve this modality the following can be done;
LoanFacility
Currently, the Fund provides term loans to artists in 3 forms that is operation loans, subsistense loans and equipment loans. Therefore, there is still room for the Fund to expand its loan modalities and adopt other modes such as lease to own and line of credit.
LEASETOOWN
Canenableartists toacquireassets suchasa production.Artists canaccessand usetheassetona pay-as-you-go basis. Afterfull payment ownershipis transferredtothe artist.
LINEOF CREDIT
Offerfinancingto artsandculture practitionersthat theycanaccessat anytimeto supportworking needs.
This new model will facilitate access to high quality resources without significant investments, but also facilitate ongoing projects without multiple loan applications.
GrantMechanism
The granting mechanism of the Fund can be designed to provide essential, non-repayable financial support to artists and cultural organizations, particularly those in their early stages of growth. This mechanism will enable artists to pursue projects with significant social, cultural, and environmental value, which may not offer immediate financial returns.
Grants play a crucial role in catalyzing creativity and building the capacity of emerging artists. They provide the freedom to experiment and develop groundbreaking ideas without the pressure of immediate financial returns. Additionally, grants support community-oriented projects that promote social justice and cultural preservation, ensuring these important initiatives have the resources they need to thrive.
For start-up artists, the granting mechanism will act as a stepping stone, offering initial financial support to launch and establish their projects. As these artists grow and gain experience, they can transition from grants to loans, becoming eligible for more sustainable financing options through the Fund. This progression helps artists build a track record of successful project management, ultimately supporting their long-term success.
Thegrant mechanismwillact asasteppingstone forstart-upartiststo launchtheirprojects, astheygrowthey cantransitionfrom grantstoloans.
The granting mechanism was once a cornerstone of Mfuko wa Utamaduni na Sanaa, designed to support artistic projects and cultural organizations with the potential to make significant social and cultural contributions. However, this mechanism eventually failed due to a lack of sustainable funding sources.
To revive this critical component of the Fund, a more strategic approach to funding must be implemented, ensuring its long-term viability and effectiveness. The following can be considered as possible sources of funding for grants by the Fund;
BlankTapeLevy
In 2022, the Tanzanian government introduced a blank tape levy, a special tax applied to the purchase of recordable media and devices that store creative works, including smartphones, flash drives, laptops, and CDs. This levy is designed to compensate creators for the potential private copying of their works without direct remuneration. By charging an additional fee on these devices, the levy creates a dedicated revenue stream to support the creative arts sector.
A contribution from the blank tape levy can serve as a significant source of grant funds for Mfuko wa Utamaduni na Sanaa. The funds collected through this levy can be earmarked specifically for supporting artists and cultural organizations, ensuring that the money generated from the sale of media devices directly benefits those whose works are most impacted by private copying. This approach not only compensates creators for the potential loss of earnings but also reinvests in the creative community, providing essential resources to nurture artistic innovation and cultural development.
By channeling a percentage of the proceeds from the blank tape levy into Mfuko wa Utamaduni na Sanaa, the government can strengthen the grant mechanism, enabling the Fund to offer more powerful financial support to emerging artists and non-profit cultural initiatives. This funding can help sustain projects that promote cultural expression, social impact, and environmental awareness, ultimately contributing to the growth and vitality of Tanzania’s arts sector.
LeviesfromSoftDrinks,Alcoholic DrinksandCosmetics.
Levies on soft drinks, alcoholic drinks and cosmetics represent a strategic opportunity to generate additional revenue for Mfuko wa Utamaduni na Sanaa, recognizing the symbiotic relationship between these industries and the arts and culture sector. These businesses often thrive in environments enriched by artistic expression, whether through music, fashion, visual arts, or cultural events that attract and engage consumers. Given this interdependence, it is both fitting and timely to establish a funding mechanism that allows artists to benefit from the commercial success of these industries.
A percentage of these levies could be allocated directly to Mfuko wa Utamaduni na Sanaa, providing much-needed grant funding for artists and cultural organizations. This funding would enable the Fund to support projects that foster artistic innovation, community engagement, and cultural preservation, thereby enriching the cultural landscape and enhancing the appeal of businesses that rely on vibrant artistic environments.
Channeling a portion of these levies to Mfuko wa Utamaduni na Sanaa not only supports the arts but also strengthens the relationship between artists and the industries that benefit from their work. This approach acknowledges the role of art in driving consumer interest and business growth, while ensuring that artists receive financial support to sustain their creative endeavors.
InstitutionalFunding
This is a strategic opportunity to secure financial support and resources from established organizations, both locally and internationally. To implement this type of funding, the Fund can begin by building strategic partnerships with cultural institutions, international arts councils, NGOs, and foundations that share similar goals.
By identifying and engaging with these partners, the Fund can develop collaborative proposals for funding specific projects, allowing for the pooling of resources and expertise to increase the chances of success.
In addition to financial contributions, institutional partners bring valuable expertise and networks that can enhance the effectiveness and reach of funded projects The Fund can leverage these resources to build capacity and improve project implementation, accessing shared resources such as training programs, research, and technology.
LegacyFundraising
This fundraising mechanism involves securing bequests and other planned gifts from patrons of the arts, supporters, and philanthropists who wish to contribute to the sustainability of the arts and culture sector in Tanzania
The Africa Wealth Report 2022 indicates that Tanzania has 2,400 individuals with a net worth of over $1 million. By cultivating relationships with these high-net-worth individual, the Fund can raise awareness about the importance and impact of legacy giving and can establish a reliable financial foundation to support artists and cultural projects for generations to come.
In addition, the Fund can implement a targeted outreach and education campaign to inform individuals about the benefits and opportunities associated with planned giving. This can include personalized communication, workshops, and events that engage potential donors and highlight the significant difference their contributions can make in preserving and promoting Tanzania’s cultural heritage.
Furthermore, the Fund can establish a dedicated legacy society to honor and recognize individuals who have included the Fund in their estate plans This society can serve as a platform for fostering a community of like-minded patrons committed to the arts, providing them with exclusive opportunities to engage with the Fund's initiatives and witness the impact of their contributions firsthand.
InternationalDonations
The Fund can secure substantial financial resources and expertise from global philanthropists, arts foundations, and international donors dedicated to cultural development and artistic innovation To effectively leverage this funding source, the Fund should actively identify and engage with potential donors whose priorities align with its mission. Building strong relationships through personalized communication, invitations to cultural events, and regular updates on the impact of contributions is crucial.
By collaborating with international donors, the Fund can access not only financial support but also valuable expertise, networks, and resources that enhance project implementation. Leveraging these resources will allow the Fund to introduce new ideas and innovative approaches to local projects, increasing their effectiveness and sustainability.
Conclusion
In conclusion, by implementing a diverse range of funding mechanisms, including blank tape levies, levies on soft drinks, alcohol, and cosmetics, institutional funding, legacy fundraising, and international donations, Mfuko wa Utamaduni na Sanaa, can significantly enhance its capacity to support artistic and cultural innovation. These efforts will provide essential resources for artists and cultural organizations to thrive, contributing to the cultural, social, and economic vitality of Tanzania’s artand cultural scene.
Additionally, the Fund should consider hosting networking events and workshops with other government funds on the African continent to exchange insights and best practices. These interactions can foster collaboration and innovation, enabling the Fund to adopt effective strategies and mechanisms that align with its goals.
