CAPE TOWN’S ECONOMY & INFRASTRUCTURE
Cape Town's sophisticated, dynamic economy makes it an ideal destination for industry & innovation. Discover more with Invest Cape Town.
Cape Town is a sub-Saharan African business hub for industry and innovation
Cape Town has the second largest municipal economy in South Africa and is the second most important contributor to national employment, contributing 9,5% (EGS – Baseline Statistics 2019). It’s not surprising, as the Mother City really does offer all of the top qualities required for sustainable economic growth. From a world-class Central Business District (CBD) to established infrastructure across several sectors throughout the Western Cape, it truly is a bustling node of commerce and industry.
But why exactly does Cape Town offer such excellent value for investors, particularly in comparison to other international cities like New York or Singapore? What is it about this destination that attracts a diversity of locals and foreigners who want to live, work, study and play in a promising metropolis brimming with opportunity? For starters, Cape Town is incredibly inclusive. It’s a sustainable, vibrant urban environment with many global brands and local start-ups already thriving here. On average, Cape Town also has a per capita GDP that is 32% higher than the national average (EGS – Baseline Statistics 2019).
The Splendour of the Western Cape
As one of South Africa’s most lucrative provinces, the Western Cape has an abundance of natural assets, as well as established agricultural and tourism industries. It also features a broad sector base and a growing pool of young, energetic talent. This is how value, innovation and creativity have become embedded into the business culture here, making it an inspired hub for industry.
Good governance provides a stable business environment for the region as a whole and the province’s infrastructure forms the gateway to the continent. This is largely due to the second busiest container port in the country being located here, as well as the second busiest international airport. In line with worldwide trends, South Africa’s export-oriented industries tend to shift towards port cities and coastal industrial belts. This has significantly boosted the region’s marine enterprises too. The Western Cape is also home to expansive agricultural surroundings and Cape Town acts as a processing, trade and retail hub for a wide range of export-quality produce.
Current Economic Trends
Since 1980, Cape Town’s economic growth or real GGP has continued to grow at substantially higher rates than the national average. This is largely due to the competitive advantage that the destination has over the rest of the country in certain sectors and industries. These include several manufacturing sub-sectors such as electronic and electrical products, metal, steel and beverages. Some of the positive current growth prospects for Cape Town include:
- Increased share of national economy
- Continued rise in new company registrations
- Several new large investment projects
- A steadily growing digitech sector
- Rapidly expanding B2B and B2C e-Commerce
- Increased exports and improved trade balance
Future Economic Trends
Even though the population growth rate in the Western Cape is slowing down, Cape Town is a rapidly growing city in terms of infrastructure and accessibility. Until now, employment growth has been driven by business services, construction, retail, agro-processing and tourism sectors (Project Camissa Report 2019). However, non-tertiary Industries, like construction as well as food and beverage, have shown decline since 2017 while the dominance of the services industry has grown (EGS – Baseline Statistics 2019). Future sectors flagged for high growth are expected to be trade, manufacturing, transport and communications.
Continued economic momentum is further being cemented through:
- Sustainable growth in global trade partners
- National and local policy implementations
- Preservation of the natural environment
- Further investment in trade infrastructure
- Strengthening globally competitive sectors
- Evolving human resource skills development
- Growing information technologies
- Exploration of new global market opportunities
The rise of information technology, telecommunications, medical and research equipment and other hi-tech processes will further broaden the ever-growing industrial core of the province. There is a relatively strong IT talent pool in Cape Town, which is being furthered by major investments by multinationals including Amazon and Microsoft (Project Camissa Report 2019). Cape Town is also emerging as an African leader in terms of renewable energy and clean-tech industries. This can largely be attributed to the emergence of several initiatives, including the designation of the Atlantis Green Tech SEZ and the founding of a number of renewable company head offices in the city. Owing to Cape Town’s ‘green’ reputation there is also potential for the development of an industry around the manufacturing and servicing of electric vehicles (Project Camissa Report 2019) as well as the production of medical cannabis.
Africa’s Hub of Opportunity
Host to the incredible Cape Town International Convention Centre, the Mother City is experiencing a tangible shift to a service-driven economy with an established business culture and clustering of trusted financial institutions. There is immense confidence in the soundness of banks in the region, rated third in the world by the WEF.
The proximity to beautiful coastlines, national parks, orchards and vineyards has also encouraged a shift of certain activities to the more attractive working environment of the Cape. This trend includes foreign firms, and new investment groups focusing on the local investment scene. There are also four top universities and two globally recognised business schools in the region. This continues to attract a new generation of innovation and talent to the workforce and industry here. An important feeder pool of minds, these institutions have also boosted Cape Town’s status as the leader in African BPO innovation. In fact, fields like Business Process Management have been one of the leading creators of jobs in Cape Town over the past few years, reflecting major investments (Project Camissa Report 2019).
- The second busiest container port in SA and the second busiest airport in SA;
- A service-driven economy with established business culture and clustering of financial institutions;
- Strategically positioned on the west coast of Africa;
- A powerful skills pipeline; and
- The best place in Africa for hi-tech.
- Good public transport linkages in the city;
- Soundness of banks rated third in the world by the WEF;
- Scenic beauty and natural sights that attract international visitors and make the city globally recognisable;
- Three major universities in the metro region. One of these is the top-ranked university in Africa, and the second highest ranked university in South Africa is located just outside the metro boundaries in the historic and beautiful town of Stellenbosch.
- large agricultural surroundings and act as a processing centre,
- trade and retail hub of farming products.
The biggest economic sector, by value, in Cape Town in 2018 was the finance and business service sector, contributing R101 billion (35.3% of the GDP_R), while manufacturing contributed R41,2 billion (14.4%), and community services contributed R48,8 billion (17%).
Detailed sectoral breakdowns
Cape Town’s fuel, petroleum, chemical and rubber products (26%) and food, beverages and tobacco products (25%) sub-sectors were the largest contributors to the manufacturing sector.
Cape Town is the second largest contributor to South Africa’s national employment, contributing 9,5%. (IHS Markit, 2019)
% change 2013-2017/18
One of the most exciting industries in the Western Cape is film and media production. There have been several top-rated shows and movies filmed in and around Cape Town. These include the award-winning series Black Sails and the ever-popular Tomb Raider. The growth of the industry also serves to provide the city with more exposure to foreign audiences, encouraging a boost in the tourism industry over the long term (Project Camissa Report 2019). Not to mention that the Winelands found in this part of South Africa are also home to some of the world’s most highly sought-after vintages, with premium estates exporting labels to all corners of the globe.
It’s really no surprise that the Western Cape represents an immense opportunity for investors from all walks of industry. With an incredibly responsive and supportive regional government and a vibrantly innovative start-up ecosystem, Cape Town is an invigorating and rewarding destination to do business.