A report commissioned by the Cape Innovation and Technology Initiative (CiTi), Wesgro and the Allan Gray Orbis Foundation – with the support of the Western Cape government – has confirmed that the greater Cape Town area, including Stellenbosch, is Africa’s tech capital.
The report, compiled by Endeavor Insight and titled ‘Evaluation & Network Analysis of the Cape Town-Stellenbosch Tech Sector’ was released on Tuesday.
“With South Africa’s current unemployment challenge, the Allan Gray Orbis Foundation believes the study was important so as to understand the tech entrepreneurial ecosystem in Cape Town, which has a great potential to accelerate meaningful job creation,” Allan Gray Orbis Foundation head of finance and operations Karen Gabriels said.
The report aimed to discover the current state of the Cape tech entrepreneur community and identify where the opportunities for growth lie.
It was based on interviews with 150 local technology entrepreneurs and research into more than 450 local tech founders and their companies in the Cape Town and Stellenbosch area.
It reveals that the Cape entrepreneurial tech sector is significantly more productive than those in other African cities, employing more than double the people Lagos and Nairobi combined employ, with between 450 and 550 entrepreneurial companies employing between 40 000 to 50 000 people.
In comparison, the Lagos and Nairobi tech sectors employ 9 000 and 7 000 people, respectively, while a promising 3% of local companies have reached scale, compared with Nairobi’s 1% and 2% in Lagos.
“The dynamism, productivity and high-impact companies of Cape Town’s tech sector make it stand out as one of the most successful models in sub-Saharan Africa. It has generated the continent’s most highly-valued tech company, as well as other software businesses that have reached scale, exited for significant sums, or grown to become leading businesses on the continent,” commented Endeavor Insight director Rhett Morris.
With the potential for greater job creation in the digital economy, a key recommendation from the report was an increased focus on investment into talent development.
Findings revealed that of the more than 500 entrepreneurial companies in the tech sector, 20% are working in e-commerce, with 15% working in fintech.
The research highlights the vibrancy of the Cape’s tech entrepreneur community and an interactive network map produced alongside the report illustrates the interconnectedness of the Cape’s entrepreneurs with regards to mentorship, investment, employment and inspiration.
“Cape Town has made a name for itself as a tech city through the hard work and innovation of its tech entrepreneurs, and investments by major international tech firms.
“Nurturing this sector and developing a wide skills base to be able to sustain this market is more important than ever before as we enter the Fourth Industrial Revolution,” Western Cape Economic Opportunities Minister Alan Winde said.