Opportunity still knocks
5 February 2020
Despite SA’s economic challenges, Cape Town has sectors that are worth watching!
It’s no secret that South Africa is currently experiencing a challenging economic situation. However, where there are challenges, there are often also opportunities. This is certainly the case for investors in Cape Town, especially those who know where to look, put in the time and research, have a reasonable appetite for risk and are prepared to be patient.
Apart from the obvious potential to pick up some good value investments, the savvy investor will almost certainly be able to find good long-term growth opportunities in almost every economic sector represented in Cape Town. But given the city’s commitment to resilience and sustainability, there are a few sectors where the potential for sound investment opportunities is especially good in the coming months and years. Below is a quick overview of just a few of them. Of course, this is by no means an exhaustive list, nor does it constitute investment advice. But when it comes to the potential for growth and development, despite South Africa’s economic difficulties, the following sectors are undoubtedly worth keeping an eye on:
Tech – It’s a very broad categorisation, but the vital role that IT and data have to play in driving the achievement of resilience in Cape Town means that the technology industry in the city could be on the cusp of significant growth. Given that there is already a strong IT talent pool here, and well-established infrastructure, the solid foundations exist to support such growth.
Embedded energy generation – Recent statements by South African President, Cyril Ramaphosa, would appear to point to the possibility of an imminent relaxation of the previously restrictive government policies around self-generation of electricity, particularly for businesses. If that’s the case, and indeed, if such relaxation extends to easing restrictions on private or household energy generation, the prospects for returns on such renewable energy investments could be significant.
Hospitality and services – Business and leisure tourism have always been a primary contributor to Cape Town’s economic sustainability, development and growth. While onerous visa requirements meant that this sector found itself slightly hamstrung in recent years, the recent relaxation of visa requirements for minors, combined with the ongoing addition of international flight routes to Cape Town means that the stage is set for the city’s tourism to return to its strong growth path. Add to these factors, the repeated recognition of the Cape Town International Convention Centre as a leading African and international convention destination and it’s clear that confidence in the city’s travel, hospitality, and services industries is unlikely to be misplaced.
Education – Government’s recognition of the vital role that equitable access to quality education plays in enabling the achievement of the goals and targets set out in the National Development Plan, means education is a sector poised for sustained growth. In particular, there is a growing acknowledgement of the need for more investment into educator training and upskilling, innovative education platforms and methodologies, and the development of more ‘fit-for-purpose’ curricula and learning materials. Cape Town has long been a leader in education in Africa, and it is highly likely that it will retain and extend this position into the future.
BPO – The Business Process Outsourcing (BPO) sector, including the provision of call centre services, is now well established as a key growth sector in South Africa, and particularly in Cape Town. Read more in this issue, here.
Waste – While some pleasing progress has been made in SA in terms of sustainable waste management, South Africa still sends a significant proportion of the waste it generates to landfills. There has been a growing focus, in recent times, on developing innovative, greener and more effective, waste management solutions. The combination of changing legislation, more onerous waste stewardship requirements for industries, and the vital role that effective waste management plays in city resilience, has created an environment in which considered investment into this evolving waste management sector, including advanced technologies, infrastructure and recycling, could potentially deliver good returns.
Water – South Africa is a water-scarce country and is ranked as the 30th driest country in the world. Recent drought conditions, including the immense challenges experience by Cape Town itself in 2018, have highlighted the urgent need for the country to rethink the way it accesses, manages, distributes, uses and protects water. This is creating numerous opportunities across the entire water supply chain, from advanced water provision, management and efficiency technologies to water reuse systems, infrastructure development, alternative water supply and industry specific water collection, storage, usage and reuse technologies.