Cape Town is the Digitech hub of Africa and a leading location for technology start-ups and venture capital deals.
The City is home to about 550 entrepreneurial companies working in software development, e-commerce, or technology sector. And also the headquarters of internet giant Naspers, Africa’s highest-valued tech company, and a massive tech investor on a global scale into companies like Tencent and others.
Cape Town has fewer software companies to Nairobi and Lagos but companies in the city generate an objectively higher level of productivity than its African counterparts combined. The city employs over 40,000 compared to over 12,000 in Lagos and 7,000 in Nairobi.
While only 1 percent of companies founded in the past decade have reached 100 employees or more in Lagos, and less than 1 percent in Nairobi and Johannesburg11, 3 percent of the companies founded in the past decade have reached this level of scale in Cape Town. This is a critical indicator of the dynamism of the sector, (Endeavor 2019).
Competitive advantages of Cape Town as an IT location
The industry is largely supply driven and the availability of ICT skills and, the prevalence of an entrepreneurial culture, are key aspects in this regard.
There are benefits of agglomeration. Cape Town has established itself as a key technology hub in South Africa with a number of major companies launching their head offices in the city. This is, in turn, attracting other tech companies.
In a highly mobile sector, Cape Town’s natural beauty which allows for a better working environment and lifestyle is a strong pull factor to skilled employees.
The diverse ecosystem of companies across the value chain and, a strong presence of supporting institutions, provide for ease of business operations.
The perception that software developers are more progressive attracts other business operations as it provides the impression of there being greater opportunities to innovate.
“Roughly one-third of the companies in [Cape Town] have received some form of angel investment or venture funding. This number is higher on average than the rates in comparable cities like Lagos, Nairobi, and Johannesburg,” Endeavor:2019.
Big Tech companies are investing here
The International Data Corporation says spending by businesses on public cloud services in South Africa will nearly triple from R4.29bn in 2017 to R11.53bn by 2022. Significantly, the adoption of cloud services will generate 112,000 new jobs creating an ecosystem and market for cloud-based services and companies.
Microsoft’s Azure opened its cloud data centres in Cape Town during March this year, while Amazon Web Services (AWS) said it planned to open its three data centres in the city early 2020.
Between 2003 and 2018 attracted 59 foreign direct investment (FDI) projects in the industry. This investment represents 17,2% of 344 FDI projects in the city, according to FDI Intelligence 2019.
Cape Town is the ideal launchpad into the South African and continent’s growing tech industry. According to research by the International Data Corporation, spending by businesses on public cloud services in South Africa will nearly triple from R4.29bn in 2017 to R11.53bn by 2022. The adoption of cloud services will generate 112 000 new jobs.
The ongoing advancement of Information Technology infrastructure and innovative software developments has allowed the e-commerce industry to grow at a rapid pace within the city.
A selection of prominent Cape Town-based companies active in the sector