Cape Town is the digitech hub of Africa and a leading location for technology start-ups and venture capital deals.
The City has also been a technology leader in the domains of mobile software, revenue management and payment processes. The value of FDI over the last 10 years in the Software & IT services is ZAR4 704 million (7.1% of total FDI into Cape Town over that period).
According to PWC (2015), of the 742 emerging tech or tech-enabled companies they surveyed as part of their 2015 study, 56% were headquartered in the Western Cape, of which the majority are based in Cape Town. Similarly, the 2015 Ventureburn Survey (2015) found that 59% of start-ups are based in the Western Cape. The concentration of these companies in Cape Town is reflected in the fact that the Western Cape hosted 75% of venture capital deals in 2015, a 40% increase from 2012 (SAVCA, 2015).
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.
Currently Cape Town based companies account for the 10 most visited e-commerce websites in the country (Effective Measure, 2014). In an industry that is strongly reliant on supply side factors like the availability of ICT skills, and the prevalence of entrepreneurship, Cape Town has been able to carve out a competitive niche despite having physical access to a much smaller market than the metros in Gauteng. So successful has Cape Town been in carving out this niche, that it is now widely considered to be a tech and e-commerce hub within Africa.
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 is better availability of venture capital in Cape Town (SAVCA, 2015).
- 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 eco-system 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.