Cape Town claims it has most productive tech sector in Africa

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The City of Cape Town, according to a report commissioned by the Cape Innovation & Technology Initiative (CiTi), Wesgro, and the Allan Gray Orbis Foundation, is Africa’s tech capital, with between 40,000 and 50,000 people employed by entrepreneurial ventures in the city and the surrounding areas.

The report, conducted by Endeavor Insight, is entitled “Evaluation & Network Analysis of the Cape Town-Stellenbosch Tech Sector”, and aimed to discover the current state of the Cape tech entrepreneur community and identify where the opportunities for growth lie.

It revealed the Cape entrepreneurial tech sector is significantly more productive than other African cities, employing more than double the people than Lagos and Nairobi combined, with 450-550 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.

Meanwhile, in Cape Town three per cent of local companies have reached scale, comparable to Nairobi’s one per cent and two per cent in Lagos.

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.

“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. The report was great validation that the CapaCiTi Tech Skills and Job-readiness programmes we drive are completely market relevant to assist entrepreneurs, corporates and governments to understand and better solve their talent constraints to growth,” said Ian Merrington, CEO of CiTI.

Findings revealed that of the more than 500 entrepreneurial companies in the tech sector, 20 per cent are working in the e-commerce and SaaS sectors, with 15 per cent working in fintech.

“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,” said Rhett Morris, director of Endeavor Insight.

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.

The Cape Endeavor Insight Report is available for download on CiTi’s homepage, and an interactive network map will be published by Endeavor Insight on 12 August.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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