Mboweni should use revenue windfall to support SA’s tech start-ups
Tech can and will outperform every other sector, if given the opportunity to do so, but needs government support to reach its full potential, writers Ahren Posthumus
In his state of the nation address, President Cyril Ramaphosa made mention of several compacts and masterplans that bring together the public and private sectors in an immense effort to help rebuild the SA economy in a sustainable manner that will result in job creation, employment and great future investment.
While the plans that have been set out may yield positive results, the president failed to address the vast opportunities available within our local technological sector.
Cape Town has been termed the Silicon Valley of Africa, providing a fertile ground for tech start-ups with incredible solutions to a vast array of problems. These tech start-ups have the capability to transform our lives with their problem-solving skills, and they have a unique ability to attract a great deal of international investment, supplementing our local economy with much-needed foreign revenue.
And the buck doesn’t stop there — technology and the development thereof is currently not subject to any export taxes, levies or tariffs. This means if we can empower our local tech start-ups and entrepreneurs, they could build useful tools or solve problems that can be scaled for sale worldwide, at a fraction of the cost other industries pay to generate revenue for our country.
There is no doubt that SA has an incredibly capable workforce within the tech sector. While several industries were left battered, beaten and bruised by Covid-19, local tech start-ups were creating jobs faster than they could fill them. We have witnessed a range of international companies showcase an exceptionally high demand to move their technological development over to cheaper, but just as capable, SA shores.
Several large international companies have recently raised capital ranging from $40m to $120m for global expansion and have turned to SA contractors, consultants and developers to help them do so, including Amazon, Trainer Road and SEON security. This trend has proven to be a phenomenal opportunity for local developers to earn foreign currency — the only downside being that the solutions being developed by South Africans is not being used by South Africans, with foreign companies siphoning the revenue generation of what our developers build, back to their home countries.
This is in stark contrast to local rising stars such as Sweep South, Mama Money, Offer Zen and Project Kooda. If this were not enough to convince even the strictest of economists, local tech companies have been outperforming the current harsh economic climate. Project Kooda, for example, saw a 300% increase in its employment figures over the hard lockdown, while increasing revenue tenfold, in less than 12 months.
They did this by creating a free local calendar booking tool for freelancers during lockdown, thereby also empowering other professionals in completely different lines of work to secure their income more efficiently and professionally, both locally and internationally. This is just one example of the many solutions being created in the country by a niche set of skills that we are lucky to have, with an exchange rate that makes SA an attractive prospect.
There is no doubt that tech can and will outperform every other sector, if given the opportunity to do so, but it cannot reach its full and true potential without government support. Leading economists have estimated a R100bn revenue windfall for the coming financial year, and while the vultures circle the treasury to take a bite of the windfall it would do finance minister Tito Mboweni well to consider where he could place the money to drive innovation, create jobs and increase both investment and foreign revenue.
Incubating and supporting SA’s tech start-up scene would not only yield dividends in years to come, it would also accelerate the rate at which we achieve the outcomes as set out by the Presidential Commission on the Fourth Industrial Revolution.
The only question left to ask Mboweni is will he take our tip or will SA lag behind and miss the opportunity to reinvent, rebuild and reconstruct a more resilient and empowered economy?
Posthumus is director of tech start-up Ebb & Air.
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