Irish renewable energy group Solar Capital is the region’s largest investor, with R38,98-billion invested in 2023. Tech giant Amazon is the province’s second-largest investor.
By Larry Claasen
The Western Cape is becoming a magnet for foreign direct investments (FDI), with 269 global companies investing R139,6-billion and creating 17 822 jobs in the province over the past ten years.
FDI is seen as key to generating economic growth by all spheres of government. According to Wesgro, the trade and investment promotion agency for Cape Town and the Western Cape, FDI brings much-needed capital and expertise to the region and provides access to global markets, talent, and technology.
Wesgro’s 2024/25 annual report reveals a significant surge in FDI into the Western Cape from January 2014 to December 2023. In 2014, the region drew in R4,67-billion, but by 2021, 2022, and 2023, the annual investment had more than tripled, reaching over R13-billion per year over the past three years.
The 2023 period was a particularly good year for attracting investment from abroad, with R45,93-billion being invested in 37 projects, creating 3 679 jobs.
Renewables power the economy
Solar Capital, a subsidiary of Irish-based Phelan Green Energy, made the biggest investment in terms of capex value, with R38,98-billion, equivalent to 27,92% of total capex, invested over the 10-year period.
Solar Capital’s local headquarters are in Cape Town. Its two De Aar Projects, located in the Northern Cape, will produce 85,26MW and 90MW in power, respectively.
The investment by Solar Capital is the main reason Ireland is the leading FDI investor in the cape. Investments from Ireland totaled R42,76-billion from 10 projects.
The US came in second with investments of R30,64-billion across 68 projects. The UK was in third position with capex worth R11,52-billion invested across 63 projects.
The growing importance of the renewable energy sector to the Western Cape economy cannot be underestimated. When measured by capex, the renewable energy sector dominates, with accumulative capex investment value of R50,33-billion.
The country’s move to become less dependent on its coal power stations has been a big driver of growth in the renewable energy sector, notes Wesgro in its annual report.
“Over the past decade, the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), which was established in 2011, has driven and continues to drive investment in this sector, with much of this investment focused on solar PV [photovoltaic] and wind. Other IPP sources of power under the REIPPPP program include concentrated solar power (CSP), biogas, biomass, landfill gas and small hydro.”
Silicon Cape
Aside from the renewable energy sector, the province and the country have also had success in attracting investment into the technology sector. FDI into South Africa’s software and IT sector peaked in 2020, with capex investment worth R10,82-billion invested across 18 projects.
“Tech giants such as Amazon, International Business Machine (IBM), Otello Corporation (Opera Software), Oracle and other leading tech companies continue to invest and support South Africa’s economic digital transformation,” said Wesgro.
Though Gauteng was the leading investment destination for tech FDI, the Western Cape came in second, attracting R19,17-billion in investment, which went into 106 projects and creating 9 598 jobs between January 2003 and November 2023.
The growing importance of the tech sector in the province can be seen in Amazon Web Services (AWS) investing R5,97-billion in the region – the second largest after Solar Capital’s investment.
AWS plans to invest R46-billion in the Cape Town region by 2029.
The payoff of this investment into the cape will be huge, according to the AWS Economic Impact Study, which came out in 2023.
“The investment associated with the AWS Africa (Cape Town) Region will contribute an estimated R80-billion to the GDP of South Africa from 2018–2029. By the end of 2022, the AWS investment in Cape Town had generated R12-billion in domestic GDP,” said the study.
The Belgium bakery
Though Solar Capital and Amazon’s investments in the region are well known, less known is that of Belgium bakery, Lotus Bakeries, which has invested a total capex of R5,33-billion in 2023.
Lotus Bakeries invested in two factories in Wolseley in 2019, and opened a new state-of-the-art production facility for its nãkd® Bars in the town in February 2024.
“This expansion positions the South African site as the second-largest production site for Lotus Bakeries, contributing significantly to the local economy and employment opportunities,” said Lotus Bakeries in a statement at the time.
