Amazon’s launch in South Africa reinforces the country’s position as an investor-friendly destination

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The recent launch of Amazon.co.za in South Africa goes far beyond providing customers in the country with a new online experience. While retail and e-commerce disruptions are inevitable, Amazon’s presence in South Africa highlights one key factor; South Africa remains a competitive and attractive market for investors across the globe.

 

 

In 2022, The Global Innovation Index (GII) ranked South Africa second in innovation in Africa, and in 2023, South Africa performed above the regional average in all 7 categories of the GGI index, including, creative outputs, business sophistication, market sophistication, human capital and research, infrastructure, amongst others. South Africa’s intellectual property rights protection is regarded as the second best in Africa, and the country is fast becoming a technology hub in Africa, with a growing ecosystem in the tech sector ranging from technical expertise to finance support for entrepreneurs.

 

 

Amazon’s planned investment in South Africa amounts to R46 billion which is associated with Amazon Web Services (AWS Africa) Cape Town Region, with a total of R15,6 billion already invested as of 2022, signalling exponential progress in the company’s investment trajectory in South Africa. Additionally, AWS estimates its contribution to South Africa’s gross domestic product towards 2029 at R80 billion. By 2022, R12 billion had already been contributed to the country’s economy.

 

 

With South Africa providing access to several world-class universities and producing a skilled, talented, and capable workforce, investors like AWS recognise that the country offers a diversified skillset, a large pool of trainable labour, and government support for training and skills development. “With thousands of African companies using AWS for years, we’ve been able to witness first-hand the technical talent and potential in Africa,” says Andy Jassy, CEO of Amazon. Over 5,700 full-time equivalent job opportunities have been unlocked locally on an average annual basis, spanning local vendors in construction, engineering, energy consulting, plumbing, maintenance, and security. According to the EIS, AWS operations will add an estimated ZAR 68 billion more to South Africa’s GDP by 2029.

 

 

South Africa has a well-developed, diversified manufacturing base, that has shown its potential to compete globally and serves as a manufacturing hub to supply the balance of the continent for several consumer product companies. AWS asserts that its investment is currently impacting other parts of the South African economy as well, helping develop the next-generation workforce, digitally transform businesses, and promote sustainability throughout the country.

 

 

Very few will know and appreciate that the modern cloud revolution originated on South African soil before Amazon Web Services (AWS) became a global leader in cloud computing. According to Amazon, this origin story traces back to the founding of the Amazon Elastic Compute Cloud (Amazon EC2) service in 2004, which is now regarded as one of the fundamental pieces of cloud computing technology.

 

 

According to AWS, a passionate team of AWS developers and engineers in Cape Town, South Africa, created a single virtual server instance, allowing South African customers to access practically unlimited cloud computing capacity without needing an on-premises data centre. It was a watershed moment for AWS, and it changed the trajectory of cloud computing worldwide. The development of Amazon EC2 in South Africa also resulted in significant economic impacts.

 

 

Since Amazon’s launch of data centre infrastructure in South Africa, the company has invested ZAR 15.6 billion through 2022 to meet customer demand for cloud computing services, according to a new economic impact study (EIS) from AWS. Thousands of South African customers have used AWS technologies to transform their businesses and accelerate their innovation, agility, and cost savings since AWS launched the AWS Africa (Cape Town) Region in 2020. The new eCommerce Infrastructure Services (eIS), the framework upon which every Amazon business is built, states that AWS plans to invest over R30 billion more in its South African cloud infrastructure by 2029.

 

 

To this end, South Africa remains the investment destination of choice for a substantial number of global corporates, who enjoy the benefits of doing business in Africa’s most diversified and biggest economy. More than 180 Fortune Global 500 companies are present in South Africa, signalling the country’s strong proposition as a pivotal location and an investor-friendly destination.