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Why Cape Town is an economic powerhouse
6 December 2021
Cape Town is an economic powerhouse with booming industry and businesses. Thriving industry, an innovative business environment, established infrastructure, and a unique foothold in the African market contribute towards Cape Town’s strong economy. Top this off with an idyllic lifestyle and relatively low cost of living and it’s no surprise that Cape Town has such a successful economy.
Cape Town is South Africa’s second largest municipal economy and second most important contributor to national employment. Both the country’s second busiest container port and international airport are in Cape Town. The city has a per capita GDP that is 32% higher than the national average and its economic growth, or real GGP has grown at rates higher than the national average.
Cape Town’s economic success is largely due to its strength in several important sectors. The city’s world-class central business district (CDB) is easily accessible, has established infrastructure and is digitally connected. Its abundance of natural assets has led to a well-developed agriculture industry. This, along with its proximity to the port and airport have seen Cape Town become a processing, trade and retail hub for a wide variety of export-quality produce.
The Mother City’s beautiful mountains, coastlines and vineyards have made it a world-renowned tourism destination. These same qualities offer an attractive working environment. Many South African and foreign companies and individuals move to the city to take advantage of the lifestyle while doing their business.
Cape Town’s infrastructure a strong foundation for economy
A key element of Cape Town’s economy is industry, where the city has established itself as an African leader. This is largely thanks to its comprehensive infrastructure across several sectors.
The Mother City is Africa’s DigiTech hub thanks to its significant investments into technology. More than 800km worth of fibre-optic cables have been installed, there are more than 400 free Wi-Fi zones across the city, and more than 1 million people have been provided with accelerated internet access.
Cape Town’s economy also benefits from its well-developed transport system. The municipality has worked to improve mobility for private transport. It has also built public transport networks and ensures that pedestrians and cyclists are considered in its spatial planning and development.
Around R8.4 billion is spent annually by the city to maintain and build new infrastructure and transport solutions – evidence of its commitment to attracting business and industry to continue growing its economy.
Supportive environment for all businesses
Another contributing factor to Cape Town’s robust economy is the city’s good governance which provides a stable business environment. The many global brands and local start-ups that are already thriving in the city are testament to this.
In 2018, the city was ranked the top metropolitan municipality in South Africa when it comes to the ease of doing business. Cape Town also ranks highly for its business innovation, according to the 2021 Paymentsense global index.
To further support business, the city invests heavily in organisations such as the Cape Innovation and Technology Initiative (CiTi) and Silicon Cape. These organisations offer financial and logistical incentives for new business and support the entrepreneurial ecosystem with incubation programmes. Four top universities and two globally recognised business schools in the region also contribute to the growth of talent, innovation, and skills in Cape Town.
Green economy prioritised by Cape Town
Cape Town recognises that the green economy should not be regarded as a separate sector of the economy. It is working to fully incorporate the green economy into all its economic activities.
The Atlantis Green Tech Special Economic Zone (ASEZ) was created to boost the city’s green technology manufacturing capacity. The ASEZ has already attracted investments of around R700 million and is expected to draw around R3,7 billion in investments over the next 20 years. This as well as the opening of several renewable company head offices in Cape Town is driving the renewable energy and clean-teach industries in the city.
To further its campaign to become a green economic leader in South Africa and on the continent, Cape Town is investing in skills development programmes in the renewable energy sector. The City of Cape Town has provided funding towards GreenCape at the South African Renewable Energy Technology Centre. Students from previously disadvantaged communities are being trained in green economy related skills sets such as water, solar photovoltaic and waste and are being prepared for future jobs in the renewable energy industry.
In November, Cape Town hosted the Africa Energy Week, further positioning the city as a leading hub for the green tech and clean energy sectors. Global and African industry leaders attended the event which aims to grow industrial growth.
Economic strategy in place to overcome Covid-19 challenges
While the Covid-19 pandemic has had a negative impact on the global economy, Cape Town has implemented an economic strategy to mitigate these effects. Ongoing investments into Strategic Business Partners (SBPs) has paid off and there is expansion in high-growth and emerging industries as well as increased employment prospects.
This is evidence of the city’s dynamic approach, which, along with its significant investment into industry, infrastructure and business are instrumental in securing its place as an economic powerhouse.
