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Global research firm Endeavor Insight has named Cape Town the technology capital of Africa. Endeavor Insight recently released Evaluation and Network Analysis of the Cape Town-Stellenbosch Tech Sector, the results of a study aiming to discover the present state of the Cape tech entrepreneur community and identify where the opportunities for growth lie.

Cape Town is Africas technology capitalThe research, which was commissioned by the Cape Innovation & Technology Initiative (CiTi), Wesgro, and the Allan Gray Orbis Foundation, with the support of the Western Cape Government, found that that the Cape Town entrepreneurial technology 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 – two of the leading tech hubs on the continent.

The report 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. However, the city has generated an “objectively higher level of productivity than Lagos and Nairobi combined if employment is used as a measure”.

The research highlights the “vibrancy” of the Cape’s technology entrepreneur community. “Cape founders of scaled tech companies (100+ employees) continue to engage with the ecosystem, with 30% of founder-to-founder mentorship coming from these companies, compared to only 12% in Lagos and 4% in Nairobi,” it states.

The findings revealed that 20% of Cape Town’s technology companies are working in the e-commerce and Software-as-a-Service (SaaS) sectors, with 15% working in fintech. 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.  

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

Although the technology sector in the Cape has demonstrated innovation and growth, it still has challenges, respondents to the survey indicated. Among the primary challenges is access to talent, which is a challenge in Johannesburg as well as in other African cities. Access to equity, finance and customers were all mentioned as challenges entrepreneurs faced, as was access to customers.

“This report shows that the Cape is the tech capital of Africa – a place of innovation and the future. It also shows us that we can do even more to unlock its full potential and become one of the top tech destinations in the world. 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 R1-billionn in investment in the Cape tech sector over the last five years. We look forward to growing this investment total even further,” Tim Harris, WesGro CEO said at the study’s launch.

The full report can be downloaded at: https://www.citi.org.za/wp-content/uploads/2018/07/CiTi_Cape-Town-Stellenbosch-Endeavor-Insight-Report.pdf

Image credit: https://endeavor.org/team/rhett-morris/ https://endeavor.org/team/rhett-morris/

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