South Africa’s ‘tech hub’ draws billions in investment

 ·12 Aug 2022

The Western Cape has received R103 billion in Foreign Direct Investment (FDI) in its technology sector, according to the Democratic Alliance, solidifying its place as the ‘tech hub’ of South Africa.

Cayla Murray, a spokesperson for the opposition party, said that between 2011 and 2021, the Western Cape has seen billions of foreign investments flow in. According to the Department of Economic Development and Tourism (DEDAT), total FDI has been split across the following sectors:

  • Communications – R55 billion, making it one of the largest contributions to the Western Cape;
  • Renewable energy – R18 billion, approximately 13.36% of total FDI, which is promising news for the country’s energy crisis;
  • Business services – R16 billion, and;
  • Software and ICT services – R13 billion, which has been funnelled into 61 projects across the province.

The Western Cape has sought such funding through campaigns run and involved in by the DEDAT as well as Wesgro, the province’s official tourism, trade and investment promotion agency.

In a 2021 report from fDi Intelligence, a data division of the Financial Times group, Cape Town was revealed to be one of the world’s fastest-growing regions for foreign direct investment.

On top of investment, the province has become a hotbed for startups, with the Cape Town – Stellenbosch corridor containing 450 tech firms employing more than 40,000 people, according to Wesgro.

This makes the tech ecosystem in the area bigger than Nairobi and Lagos combined, said Wesgro. The province’s position as the ‘tech hub’ of South Africa has also been seen through instances of domestic companies expanding abroad.

On Wednesday (10 August), Cape Town-founded artificial intelligence (AI) start-up DataProphet completed its R166 million series A round to accelerate its growth globally.

Venture capital firm Knife Capital (also based in Cape Town) led the round, joined by South Africa’s International Development Corporation (IDC) and Norican.

DataProphet was started in 2014 by two friends at UCT, Frans Cronje and Daniel Schwartzkopff, who decided to pool their AI knowledge to start their own business. The company’s systems aim to optimise factory floors and manufacturing processes through AI.

Alongside domestic startups, heavy-hitters such as Amazon have made Cape Town its home. The multinational online retailer has been in the process of developing its new R4.6 billion Africa headquarters in the city – prior to its launching its e-commerce platform in South Africa next year to challenge Takealot.


The Cape’s tech culture has extended beyond startups to fostering the skills necessary for further development.

EdTech Hubs is one of the province’s initiatives to upskill graduates to adapt to a more digital working environment. In Cape Town, there are 73 Edtech startups that provide online learning opportunities for engineering, business services and data science, to name a few.

The province has taken it upon itself to make it more enticing for foreign investment. On 18 July, under a technology programme CapaCiTi, funded by the City of Cape Town, 198 graduates were trained in sought-after technology skills.

The City’s mayoral committee member for economic growth, James Vos, said that the new graduates have equipped with some of the most sought-skills in the country right now in one of the world’s fastest-growing regions for foreign direct investment with IT being one of the biggest sectoral drawcards for foreign investors.

The students were upskilled in various aspects of digital literacy, such as systems and software development.

Vos said that with all the opportunities available in Cape Town, including 600 tech companies, he hoped that students would choose to put their skills to work in the city.

Global companies are increasingly outsourcing their skills and moving jobs to develop economies to target highly skilled workers.

OfferZen, a local developer job marketplace, said that companies in South Africa looking for local software engineers might find they have lost them to Europe – without them having to leave the country. It said that while South African developers’ skills are increasingly in demand across Europe, they no longer need to emigrate to land these jobs.

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