KEY TO SUCCESS: Tax incentives are crucial in making investment in South African technology firms attractive to global investors - and Cape Town is pushing for them. Picture: MARIANNE SCHWANKHART


SOUTH African billionaire Johann Rupert yesterday urged the national government to create tax-free zones within the Western Cape to draw foreign investment to the province.

He was speaking at the launch of the Silicon Cape technology movement that punts Cape Town as SA's Silicon Valley. He said he has already raised the idea with African National Congress officials.

"I have also spoken to international investors who have indicated that, given the right conditions, the money (for financial and IT sector investment) will be there and the Cape will flourish," he said.

Rupert said it was vital for SA's economic future to progress beyond the primary sector and to capitalise on its advantages such as being in the right time zone and having English as a business language.

"We cannot survive if we rely on the export of raw materials. In the future, countries that are not net exporters of intellectual capital will not survive. The power of the people will increase and those countries who do not nurture the growth of entrepreneurs, we will get poorer, because people with intellectual capital are mobile," he said.

Rupert's comments tied in with the Silicon Cape movement's aim to create an "ecosystem" in the province that will attract intellectual property start-ups and link them with local and international investors. Global examples of intellectual property companies that have made it big are Facebook, Twitter and Google.

Venture capitalist Justin Stanford, one of the brains behind Silicon Cape, said tax incentives were a crucial ingredient in making investment in South African technology firms attractive to global investors. Other issues that hindered the sector's growth were South African regulations restricting the movement of intellectual property and currency on a global level. "We need an enabling environment where businesses can move (intellectual property) around freely. Now some entrepreneurs are forced to register their intellectual property offshore and this is keeping investors out of SA.

"(Intellectual property) development is already happening organically in Cape Town, but with minimal exposure and entrepreneurs are not finding each other as each operates in isolated pockets.

"We know that if the environment is right, investment will flow here and more great minds will be attracted here."

Silicon Cape has established a web base that has attracted buy-in from Western Cape politicians and technology entrepreneurs, notably from businesswoman Mamphela Ramphele, who chairs the Technology Innovation Agency - and yesterday's event was attended by more than 400 people.

Talking about the requests to relax regulations around the movement of intellectual property and capital beyond our shores, Western Cape premier Helen Zille said her provincial powers did not allow her to change national laws, but she would lobby for those changes.

"We are competing within a global economy and will have to take down the barriers. Exchange controls did protect SA from the economic meltdown, but now as we emerge from the crisis it is time to look at opportunities that will enhance our growth."

Zille said the development of intellectual property was one of the province's key priorities.