Cape Town’s tech SMEs outshine their African peers in job creation
Cape Town’s entrepreneurial tech sector continues to show strong signs of growth and now employs more people than other peer African cities, according to a new report.
The report by global research firm Endeavor Insight, entitled Evaluation and Network Analysis of the Cape Town-Stellenbosch Tech Sector, found that the Cape Town entrepreneurial tech sector now employs between 40,000 and 50,000 people, which is more than double the people employed in the sector in Lagos and Nairobi combined. Lagos and Nairobi are two of the leading tech hubs on the continent.
The report was commissioned by the tech incubator Cape Innovation and Technology Initiative (CiTi), trade and investment promotion agency Wesgro, and the Allan Gray Orbis Foundation, with the support of the Western Cape government.
Cape Town authorities have been pushing to establish the city as an innovation hub and the Silicon Valley of Africa. The city has produced multiple firms, such as Naspers, GetSmarter and Clickatell, that have stood out for their innovative breakthroughs and who have a strong global presence as a result, the Endeavor Insight report notes.
It states that Nairobi and Lagos have more software companies than the Cape Town area, with 2017 estimates ranging from 700-800 in Nairobi and 800-900 in Lagos.
While Cape Town has just over 500 tech companies, the city has generated an "objectively higher level of productivity than Lagos and Nairobi combined if employment is used as a measure".
"Cape Town’s tech sector has generated over 40,000 employees compared to over 9,000 in Lagos and 7,000 in Nairobi," according to the report.
Karen Gabriels, the head of finance and operations, at Allan Gray Orbis Foundation, said: "With SA’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."
The report aimed to discover the current state of the Cape tech entrepreneur community and identify where the opportunities for growth lie. It is 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.
A key recommendation from the report was an increased focus on investment into talent development.
Ian Merrington, the CEO of the Cape Innovation and Technology Initiative, said the lack of skills was limiting growth.
"As an integral catalyst for the ecosystem’s growth, we are hearing a similar challenge across African tech sectors — sourcing specialised talent for digital teams is seriously limiting business growth."
Wesgro CEO Tim Harris said the report showed that the Cape was the tech capital of Africa.
"The tech sector will be a key driver of economic growth and job creation over the course of the next 10 years and we look forward to watching this ecosystem flourish. Already our investment promotion team has helped land over R1bn in investment in the Cape tech sector over the last five years. We look forward to growing this investment total even further," said Harris.