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Tech sector can help drive future growth in Western Cape says Wesgro head

The tech sector has the potential to be one of the most critical drivers of future economic growth in the Western Cape believes Wesgro CEO Tim Harris.

The head of the Western Cape government’s investment agency says with the services sector already making up more than 70% of the province’s gross domestic product (GDP), a strong opportunity exists for the province to position itself as a leading hub for innovation on the continent.

“Central to this process is the development of a strong tech ecosystem that has global recognition, and in turn attracts multinational entities, capital and talent to the province,” says Harris.

A strong opportunity exists for the Western Cape to position itself as a leading hub for innovation on the continent says Wesgro head Tim Harris

He should know. Harris, who formerly served on Silicon Cape’s board (today his place has been taken by Wesgro’s head of investment promotion, James Milne) says the tech sector has matured “significantly” since that time some five years ago.

He adds that through the efforts of Silicon Cape and other lobbying bodies many of the barriers that have been blocking progress in the sector have been removed.

During the previous financial year, he points out that Wesgro helped secure close to R500-million in outward investment deals which included a R200-million tech deal in the banking and ICT sector in Ethiopia, by a Western Cape tech company.

Ventureburn asked Harris to explain more on how the agency is assisting tech startups. Here is what he had to say.

How is Wesgro relevant to tech startups?

Wesgro works closely with key stakeholders in the local business ecosystem to promote an enabling environment for tech startups in the Western Cape.

These include the Western Cape Government, City of Cape Town, Cape Innovation and Technology Initiative and Silicon Cape and entities across the private sector.

How does Wesgro’s investment promotion unit work?

The Wesgro investment promotion unit works with businesses ranging from multinationals to startups, with the core objective of attracting local and foreign fixed direct investment to the province to create new jobs.

Examples of businesses we have worked with in the tech space include: Amazon, La French Tech, MEST, Barclays Rise and Prodigy Finance.

It should be emphasised that the core focus of the unit is attracting and promoting fixed investment (ie the establishment of a brick-and-mortar facility).

If you would like to connect with the Wesgro Investment Promotion unit, reach out to us at invest@wesgro.co.za.

What about Wesgro’s international trade unit?

Wesgro is currently developing a trade-in-services strategy. As part of this initiative, the unit will be taking tech companies to various international trade exhibitions to showcase their products and services.

Recently Wesgro trade, together with the Department of Trade and Industry, supported 14 SA companies to showcase their ICT and tech innovations at Viva Technology in France.

The mission took place from 24 to 26 May and out of the 14 companies that participated, five were from the Western Cape including: Alvarita, Karisani, Domestly, Jonga and the Ispani Group.

The three-day event was aimed at fast-tracking the growth of digital industries. and connected startups with global investors, companies and tech leaders. Last year’s event attracted over 6000 startups, 1400 investors and 68 000 visitors from 103 countries.

How does Wesgro see the tech sector in the Western Cape?

Wesgro views the tech sector as one of the most critical drivers of future growth in the Western Cape economy.

With the services sector already making up more than 70% of the province’s gross domestic product (GDP), a strong opportunity exists for the Western Cape to position itself as a leading hub for innovation on the African continent.

Central to this process is the development of a strong tech ecosystem that has global recognition, and in turn attracts multinational entities, capital and talent to the province.

What does Wesgro have to say about the apparent increase in tech startup activity in Gauteng (according to Ventureburn’s 2017 tech startup survey)?

It is encouraging that there has been an increase in start-up activity in Gauteng — “co-opetition” is important for any economy, and a growing South African tech ecosystem means more opportunities and a stronger skills pipeline.

Wesgro continues to work with a number of organisations and institutions to ensure that Cape Town remains the top tech destination.

Finally, on an ongoing basis, the Wesgro team develops and promotes collateral that showcases successes in the local tech ecosystem, in order to continue to “tell the story” of major successes in Cape Town.

What is holding the tech sector in Cape Town back? 

Commonly cited challenges for startups are: access to markets, funding, and governmental red tape.

And what then is Wesgro doing to help?

Some examples of Wesgro-led interventions include:

Access to international markets: In terms of access to markets, Wesgro’s trade promotion unit is continuing with their Export Advancement Programme (EAP).

Removing Red Tape: Last year the InvestSA One Stop Shop was established — an infrastructure hub funded by the Department of Trade and Industry in conjunction with support from multiple governmental entities, operated by Wesgro.

Enhancing access to funding: Aside from directly working with financiers (both internationally and locally), Wesgro has increasingly been working on lobby positions to enhance investment flows through tackling key issues affecting finance flows to startup entities in particular. These include areas such as: Exchange control regulations, Immigration and visa issues and IP policy.

What kind of support has Wesgro offered to tech firms here to move into the rest of Africa in particular?

Wesgro has recognised that on a global basis, companies are increasingly leveraging decentralised structures that focus on ensuring that key components of their business models are located in a region or geography that enables them to excel in specific objectives.

In this regard, Cape Town is already being selected as a key location on the African continent for edtech and fintech start-ups – with a number of additional sub-sectors evolving.

It is our view that countries, regions and cities that are not differentiating themselves in terms of focusing on certain areas of excellence, as well as offering an enabling climate for startups, will be left behind.

Aligned to this thinking, is the additional mandate of Wesgro’s international trade unit – which focuses on assisting local businesses in not only growing their global export potential in Africa, but also supporting actual outbound fixed direct investment.

During the previous financial year, the unit secured close to R500-million in outward investment deals which included a R200-million tech deal in the banking and ICT sector in Ethiopia, by a Western Cape tech company.

Featured image: Wesgro CEO Tim Harris (Supplied)