Nowadays Cape Town is a big draw for more than just tourists. The city boasts the weather, workforce and exchange rates to attract an array of national and international industries. James Eedes reports.

Cape Town is winning hearts and minds as a premier tourist centre. It has been voted one of the world’s top destinations, as well as Africa’s premier attraction. The phenomenal growth in this sector stems largely from the Cape’s natural beauty, its wide variety of world-renowned tourist attractions and its well-established infrastructure.

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But while this sector provides numerous investment opportunities, it would be a mistake to think tourism is the only area of activity and development. Cape Town sells itself as a world-class business environment, characterised by a skilled and competent workforce; highly competitive factor costs; a wide range of professional business support services; and excellent infrastructure.

The city is courting investors looking to expand into Africa or seeking to access world markets from a key maritime transport node at the confluence of the Atlantic and Indian Oceans, en route between Europe, the Americas and the Middle and Far East. South Africa benefits from preferential trade access to Europe and the US.

Attracting talent

Cape Town’s diverse economy has opportunities for new investment, making it a strong business location with an orientation towards value-adding industries. Lifestyle decisions draw many of South Africa’s brightest and most capable talent to Cape Town, particularly in the field of information communications and technology (ICT). The city’s excellent skills base provides a wealth of opportunities for software development, website development and ICT outsourcing and training. With a well-established IT infrastructure and an abundance of language-proficient semi-skilled workers, Cape Town has become a popular location for international call centres.

To develop the sector further the city has a number of initiatives under way. The Cape Information Technology Initiative (Citi) was established to develop an ICT cluster in the Western Cape, the provincial home of Cape Town. Citi’s aim is to leverage off the numerous advantages offered by the province – such as attractive lifestyle, a favourable exchange rate for foreigners, cheaper flights and a similar time zone to Europe – to encourage foreign companies to use the Cape as a launch pad into global markets and encourage local greenfield investment.

ICT incubator

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Cape Town’s Bandwidth Barn provides incubation for start-up ICT firms and offers affordable, always-on Internet connectivity and a supportive community to create synergies.

The Barn, having already outgrown its original premises, is now attracting entrepreneurs from the US and Europe, which are using South Africa as a launch pad or a testing ground for products and services destined for global markets. It cites several competitive advantages of setting up in Cape Town, including modern telecommunications infrastructure; sub-sea cable connectivity to the Internet; and low-cost labour. The net result is significant cost advantages over its competitors.

The Cape Town Partnership, a public-private alliance responsible for urban renewal in the centre of Cape Town, is developing the e-City Precinct, creating a cluster of new e-commerce businesses and entrepreneurs. Cape Town is already rapidly on its way to becoming a preferred international filming location. Long, dry summer daylight hours; professional service and infrastructure and the favourable exchange rate augment Cape Town’s diverse natural beauty, making it one of the most sought-after locations for commercial, TV and film shoots.

Among other things the city offers skilled and qualified crew; diverse landscapes and architecture within an hour of the international airport; excellent light; English-language talent from a cosmopolitan ethnic mix; and top-of-the-range equipment and post-production facilities.

The city’s attractiveness has been boosted by the announcement of a R30m ($3.7m) investment in a new high-end post-production facility by Condor Europe. Says Rob Meddens, the Dutch businessman behind Condor Europe: “Cape Town was the obvious choice in looking to extend the Condor network. The city is recognised as an attraction to the international film industry: the time zones suit Europe and the culture of Cape Town is highly appealing. People working in the film industry want to be here.”

The Western Cape provincial government has identified the film industry as one of the top five growth industries and is working actively with stakeholders to facilitate the establishment of the Cape Town Film Studios complex.

The industry is currently worth R2bn in direct and indirect spin-offs to the provincial economy and growth of 20% per year is anticipated.

As one of the leading port cities in the world, Cape Town has developed a strong tradition and culture of boat-building. Almost three-quarters of South Africa’s boat-building companies are located in the city. Since 1994 when South Africa rejoined the international community, the boat-building industry has grown by 120% with exports making up 83% of the growth. The industry is now steaming ahead, growing at 20-25% a year and industry turnover is expected to be R1bn by 2005.

Hundreds of new businesses have emerged to supply the industry with parts and components as well as specialist services.

Earnings from these exports barely register against some of South Africa’s other major value-added exports such as motor cars. However, the boat-building industry is frequently cited as an example of the potential behind Cape Town’s good infrastructure and low-cost, skilled labour backed up by South Africa’s weak currency.

The relative size of the industry has kept it out the spotlight. However, Cape Town-built boats frequently earn the highest accolades from the international yachting fraternity based on design and workmanship. Although a weak rand and cost-effective labour means South African boats sell typically at 20% below international prices, industry insiders claim robust demand is due to quality rather than price.

Cape Town and the immediate areas beyond it have numerous other industries at early stages of development and suitable for further investment.

The metal processing sector is characterised by the high value-added processing of metals for automotive components, maritime equipment, food, wine and beverage equipment, medical equipment and other niche products. In recent years, exports of automotive components have more than tripled.

Agri-processing is proving an important export earner, in particular emerging niche products that include fruit-drying, the processing of herbal teas (particularly rooibos and honeybush) and cosmetics derived from aloes and kelp (seaweed).

Banking centre

Cape Town has a well-established and growing base of banking, insurance and financial services, combined with many consulting firms. South Africa’s insurance giants – Old Mutual, Sanlam, Santam and several others – are headquartered in the Cape.

Top-quality clothing and textiles are synonymous with Cape Town. With the African Growth and Opportunities Act (AGOA) in place, permitting duty-free export to the US, the sector is again hotting up.

Cape Town is the heartland of South Africa’s publishing and printing industry, accounting for 86% of the country’s publishing and 35% of its printing turnover.

The city is also playing an instrumental role in transforming the crafts industry into a high-value, export earner. The craft industry reflects a cultural diversity of design influences from Africa, Europe, the Middle East and the Far East, with crafts varying from textiles, leather, woodwork and beadwork to ceramics, metalwork and jewellery.

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