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Cape Town’s five biggest economic engines
22 April 2022
Cape Town’s thriving economy is driven by five main sectors, namely, the manufacturing industry, financial and business services, tourism, agriculture and agro-processing, and construction. While these sectors make up the city’s engine, they are supported by several, essential ‘parts’. A highly skilled workforce, an environment conducive to innovation and creativity, good governance, and world-class infrastructure provide the setting which allows these sectors to flourish, promoting economic growth in the Mother City.
Manufacturing industry
The manufacturing industry in Cape Town is essential to its economy. Supported by multinational corporations, the industry includes petroleum products, chemicals, rubber and plastic, metal products, marine manufacturing, electronics, machinery and equipment. Much of the manufacturing in Cape Town and the Western Cape as a whole is linked to the food and beverage industry.
Sectors such as information technology, telecommunications, medical and research equipment and other high-tech processes are growing in the city, adding increased capacity to the manufacturing industry.
Cape Town is widely known as a ‘green’ city and this reputation has been cemented by the development of the Atlantis Green Tech Special Economic Zone (SEZ) – a Greentech manufacturing hub. Renewable energy and cleantech industries are based here, with several opportunities available for those looking to manufacture wind turbines, solar panels, insulation, biofuels, electric vehicles, materials recycling, and green building materials. There is also potential to produce medical cannabis.
Financial and business services
The economic landscape in Cape Town has largely shifted towards a service-driven economy. In fact, 74% of the economic activity in the Western Cape province is in services-related industries. Cape Town has an established business culture and numerous, trusted financial institutions.
The city’s sophisticated and well-developed financial and business services sector is backed by a sound regulatory and legal framework. It offers a full range of services in commerce, insurance, retail, merchant banking, investment, and mortgage lending.
Cape Town’s world-class central business district (CBD), infrastructure, talent pool, good quality of life, and strong data-protection laws make it an excellent location for global business services delivery. The city is also known as a financial services hub, with private investment and asset management services, law firms, insurance brokers and more basking themselves in Cape Town.
These sectors are fed by highly competent graduates from four top universities and two globally recognised business schools in the region.
Tourism
The tourism industry contributes significantly to Cape Town’s economy. The Mother City is the ideal tourist destination, and several local and international accolades are testament to this.
The natural beauty in and around the city is world-renowned and tourists flock to it for sight-seeing and to participate in outdoor adventure activities. This, combined with the magnificent Table Mountain – crowned the seventh wonder of nature – as well as rich culture, fascinating history and wonderful cuisine, add to its appeal.
Cape Town’s infrastructure, world-class international airport, and public transport network are part of what makes it excel in tourism. Its accommodation and restaurant sector continue to contribute significantly to employment.
Because the tourism industry overlaps with several other sectors such as transport, business and community services, and craft manufacturing, it helps to attract talent and foreign investment to the city. Cape Town has enticed major companies in, amongst others, conventions centres, hotels, tour operators and hospitality, travel planners, restaurants, attractions and supporting bodies.
In addition, the City of Cape Town’s Tourism Development Framework 2024, has implemented plans to significantly improve and grow the city’s tourism sector, which in turn will result in further economic growth.
Agriculture and agro-processing
Agriculture and agro-processing is a significant part of the economy of Cape Town. The city is surrounded by agriculture, and it acts as a processing centre, and trade and retail hub of farming products.
The Western Cape Department of Agriculture notes that around 45% of South Africa’s agricultural exports move through the province and the value added in the sector amounts to more than R14 billion each year. The department actively works to grow the sector through various programmes and services including technology, research and development for animal crop producers; agricultural advice and guidance; agricultural infrastructure; training; analytical services; and more.
Eleven different commodities are produced in Cape Town and the province as a whole, with fruit, poultry, eggs, winter grains, viticulture and vegetables making up three quarters of the total output.
Agribusiness – which includes inputs, production, processing, marketing and distribution of agricultural, forestry and fishing products – makes up around 8% of the Western Cape’s economy. The province is the largest exporter of agribusiness products in the country, making up nearly half of the country’s agribusiness exports.
Construction
Construction contributes significantly towards employment in Cape Town, adding to the city’s economic growth. In the third quarter of 2020, construction was the second-largest contributor to employment growth in Cape Town. This creates an attractive environment for local and international investors wanting to get involved in future construction projects.
Cape Town is the fastest city in South Africa when it comes to issuing construction permits.
Investing in Cape Town
Cape Town provides several excellent investment opportunities across various areas. It is a comparatively low-cost destination with outstanding transport connectivity and port infrastructure for exporting, and acts as the African hub for business, industry and other sector. The five sectors driving its economy each offer unique prospects for investment that promises positive growth.
