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ICT sector defies South Africa economic challenges

from DION HENRICK in Cape Town
CAPE TOWN – THE information and communications technology sector (ICT) has come out tops in the latest Southern Africa Venture Capital (VC) Industry Survey.

The survey has been carried out on the back of a low-growth economy, high unemployment and the mounting pressures posed by the ongoing energy crisis have continued to weigh heavily on start-ups in the bloc over the past year.

The South African ICT sector, spearheading efforts to digitise the local economy, has retained its position of attracting investor interest and confidence, despite the subdued investment climate.

The Southern African Venture Capital and Private Equity Association (SAVCA) published the results.

Of notable interest was the fact that although the value of VC deals concluded during the survey period (2022), showed a 14,5 percent contraction from the year prior, the 2023 survey marked the fifth consecutive year that the industry has attracted over R1 billion in early-stage investments.

At 48,1 percent, South Africa’s ICT sector represented the largest combined sector by number of deals in 2022.

The local ICT sector held the largest allocation by number of active deals held in portfolios at the end of 2022 (40,6 percent).

A detailed look at the spread of ICT-related investments revealed that the leading sub-sectors within this category were FinTech (12,3 percent), Software (8,9 percent), Telecoms (4 percent), AgriTech (3,9 percent) and Electronics (2,3 percent).

Tshepiso Kobile, SAVCA Chief Executive Officer, said of particular relevance is the fact that the FinTech category overtook the Food and Beverage category this year.

“This is testament to the sector’s ability to leverage technology to address the mass market and existing inefficiencies in delivery of services,” Kobile said.

– CAJ News

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