Cape Town and Johannesburg have been listed as two cities expected to lead Africa’s tech revolution over the next decade.
This is according to a report by software developer Platform45 and wealth intelligence firm New World Wealth based on popular locations for tech startups, the number of tech millionaires, and established players in the industry.
Cape Town was featured on the list because of its role as a forerunner in the African financial technology space, drawing in many tech entrepreneurs from other parts of Africa.
It is also home to major South African tech companies such as Takealot and Yoco.
On the other hand, Johannesburg has most businesses listed on the JSE Top 40 based in the city, such as MultiChoice, Vodacom, and MTN. Rosebank and Sandton are also listed as popular base locations for tech startups.
Nairobi, Kenya’s capital, was also listed as a city expected to lead the digital revolution in Africa. It accounts for 48% of the country’s wealth, and just over 60% of Kenyan millionaires reside there.
Ebene Cybercity in Mauritius also featured due to its competitive tax rates, thriving financial services sector, and high levels of security and safety relative to the rest of Africa.
The report listed the three biggest tech hubs in the world ranked according to the number of tech millionaires that reside there.
The San Francisco Bay Area in the US was ranked number one, with 265,000 tech millionaires and 60 tech billionaires.
To put this into perspective, there are only 37,400 dollar millionaires in South Africa and 135,200 dollar millionaires on the African continent.
Silicon Valley, located in the San Francisco Bay Area, is seen as a global centre for information technology and is home to tech giants like Apple, Nvidia, Alphabet, Netflix, and Meta.
Greater Seattle in the US came in at number two with 36,200 tech millionaires and nine tech billionaires. Microsoft and Amazon are based there.
Shenzhen in China was ranked third with 32,500 tech millionaires and nine tech billionaires. The city is home to some of China’s biggest tech companies, such as Tencent, Huawei, ZTE, and BYD.
Incentive for tech entrepreneurs to leave South Africa
While Cape Town and Johannesburg are leading the way for many other African cities, many South Africans are leaving the continent for better salaries.
CareerJunction’s latest Employment Insights report for the third quarter of 2024 shows that although jobseeker engagement has increased significantly over the past year, employment activity remains low within the IT job sector.
Q3 of 2024 saw a 3% decrease in hiring activity from Q2, which followed a 4% increase from the start of the year.
This meant a 17% year-on-year (YoY) decrease, the highest of all job sectors reported. Those in admin, office and support roles only saw a 1% YoY decrease, whereas overall average employment activity dropped by 3.5%.
However, on the job seeker side of the spectrum, the IT job market saw the biggest change in job seeker engagement, with a 48% YoY increase from 2023.
Overall, South African jobseekers have become more proactive, increasing their engagement with the labour market by 22% year-on-year.
This environment is challenging for developers of all experience levels who are actively seeking jobs.
Additionally, a recent MyBroadband analysis shows that emigrants working in 10 popular tech jobs in Australia and the UK earn far more than their compatriots who remain in South Africa.
There were an estimated 217,000 South African expats in the UK in 2021 and about 215,000 in Australia by 2023.
MyBroadband compared local annual salaries for ten tech roles on salary comparison sites Indeed and Payscale in Australia and the UK, the two top destinations for South African emigrants.
On average, we found that annual tech salaries in the UK were around double the going rate in South Africa — R976,421 versus R491,093.
Australia offered the best salaries overall, with an average of nearly R1.24 million across the ten positions.
In terms of costs and living standards, South Africa tends to have far lower property and food prices than Australia and the UK.
Cars are cheaper in the UK. In Australia, cars are priced similarly to those in South Africa. However, fuel is much more expensive in the UK and more affordable in Australia than in South Africa.