South Africa has well-established electronics and manufacturing sectors that are over 40 years old. This has led to a number of experienced enterprises operating from here, with South African firms offering a complete electronics value chain. This includes design, engineering, manufacturing, testing, implementation and maintenance.
Today, South Africa is home to the largest consumer electronics market in Africa, with an annual spend of US$10.5bn. At the centre of this growth is Cape Town’s strong skills base, which enables it to be a flexible, responsive and innovative hub for the country’s ever-shifting technology frontiers. The city has become the ideal location from which to take advantage of growing national and African consumer markets.
Cape Town’s Most Popular Electronics Sub-Sectors
Cape Town has developed an established, diversified manufacturing base that has shown its resilience and potential to compete in the global electronics economy. Popular sub-sectors include:
The electronics sector is an essential contributor to foreign exchange earnings through both exports and FDI. In 2018, the industry contributed R762 million in Gross Value Added (GVA) to the Cape Town economy. In fact, companies like Hisense and Panasonic are just two companies of the 19 FDI projects already invested in the city.
What Are the Key Economic Indicators in Cape Town?
Cape Town has a lot to offer to the global electronics industry, from top design engineers and world-class electronics manufacturing companies to the support of leading electronic component suppliers. The economic landscape offers some important indicators for investors:
In the past 5 years, the electronics sector recorded an average of 8.7% in export growth.
In the past 10 years, R2 563 million was invested in Cape Town’s electronics sector through FDI, representing a total of 19 projects for the period.
In 2018, the sector contributed R762 million in Gross Value Added (GVA) to the Cape Town economy and employed 3 374 people.
Cape Town’s has an export value of over R2.9 billion each year.
Growing export opportunities from Cape Town
The city is a good base from which to expand into the rest of sub-Saharan Africa. Cape Town and the Western Cape exports more to the rest of Africa than anywhere else in the world. Influential African retailers like Shoprite, with an established distribution network across the continent, are also based in Cape Town. That’s just the start. The Mother City is also home to online retailers of electronics like Takealot.com and many others.
Cape Town’s Competitive Advantages in Electronics
The innovation and growth of Cape Town’s electronics and manufacturing companies make it stand out as one of the most successful models in Sub-Saharan Africa. Competitive advantages in the Mother City’s industry includes:
Enterprises here have shown a prevalence of innovative design thinking and active systems integration.
This part of South Africa also provides good access to skilled engineers required within the sector.
There are established African export markets for electronic products and excellent infrastructural connectivity to these markets here.
It is relatively easy to export products from Cape Town. Cape Town is considered a comparatively low-cost destination for consumer electronics manufacturing.
There is better access to key clients (retailers) with head offices in Cape Town for more direct engagements.
Cape Town has a historical advantage for companies in space technology due to the national space programme facility (Houwteq) in Grabouw. This has resulted in an agglomeration of space technology skills in Somerset West.
The business environment is perceived to be safer, based on a perception of lower crime levels in Cape Town.
Major companies across a spectrum of clusters, which include Hisense, Tellumat, Panasonic and SpaceTeq, have a strong presence in Cape Town.
Why Invest in Cape Town’s Electronics Industry?
The electronics sector, although relatively small, is an important contributor to foreign exchange earnings through both exports and FDI (Project Camissa Report 2019). Many other sectors are feeding into good growth for electronics in Cape Town. For example, the growing automotive sector has had a positive leakage onto the electronic industry here.
Space technology is a particularly interesting electronics sector that will continue to play a key role in providing accurate weather predictions. With the rise of “green” electronics, which are recyclable or easy to dispose of, there are enterprises in Cape Town using renewable materials to develop electronics. This fits well with the city’s reputation as a “greener” city with several climate change initiatives based here too.
“Foreign direct investment in the renewable energy sector amounted to R5,2 billion between 2008 and 2015. This investment came predominantly through the electronics (42,2%) and sales, marketing and support (40,1%) sub-sectors. (Project Camissa Report 2019).”
The City That Keeps on Innovating
Investing in Cape Town truly means having a wealth of opportunity to consider in the metropolis and the Western Cape at large. The electronics sector in this part of South Africa is supported by many sub-sector innovations, as well as the Mother City’s world-class infrastructure. The economy has proven to be resilient and continues to grow from strength to strength.
Global investors will find exciting new business ventures just waiting for the right support to reach fruition.
Contact us to find out more about investing in Cape Town’s thriving electronics sector.