The critical success factors and competitive advantage of a South African AI Hub

Althoff-Thomson, Savannah

The critical success factors and competitive advantage of a South African AI Hub

Thesis / Dissertation

2026

Publisher

University of Cape Town

Department

Department of Information Systems

Faculty

Faculty of Commerce

Abstract

Background: Despite South Africa's ambition to become a global 4IR leader through AI advancements, little research has been done to examine national AI capacity, capability, and competitiveness. AI offers even the least developed countries valuable opportunities to harness potential and gain a competitive edge, simultaneously restructuring their economies and driving digital transformation. However, foreign AI applications adopted in Africa may lack contextual relevance and fail to harness the unique resources and skills in the local landscape. The development of an AI hub in Cape Town could address these issues – alongside the contextualisation of knowledge and technology creation, an AI hub offers the distinct opportunity to harness AI competitive advantage through aligning interventions with strategically valuable national resources and capabilities. Objective: The objective of this study is to explore the critical success factors and competitive advantage of an AI hub in Cape Town. Methodology: This study was interpretivist, abductive, and followed a qualitative approach, interviewing AI-knowledgeable South African stakeholders from diverse sectors using purposive sampling and semi-structured interviews. This study was guided by Porter's Diamond of National Advantage and Cluster Theory as the theoretical frameworks, informing the interview guide and the thematic analysis. Findings: Vision, bottom-up hub functions, collaboration, proximity, funding, leadership and location emerged as major critical success factors for an AI hub in Cape Town. These critical success factors are moderated by government involvement and rapid AI change. In discussing the potential competitive advantage of an AI hub, and our unique resources and capabilities, participants overwhelmingly pointed out the ability to solve African use cases using artisanal capabilities, the need to create and safeguard South African data, and the harnessing of our diversity and culture. Using deductively derived themes, the study confirmed the relevance and interdependence of the constructs in Porter's Diamond of National Advantage in a developing context. The framework is enriched by the emergent sub-themes. The physical proximity inherent in Cluster Theory was extended to include digital proximities. Contribution: Considering theoretical contributions, the research foregrounded the capacity, capability and competitiveness of South Africa in the 4IR, adding to the literature on hubs in developing contexts and Porter's frameworks. Moreover, it addresses the government proposal to establish an African AI Institute. Practically, the study provides a starting point for the conceptualisation and competitive advantage of an AI hub in Cape Town. Actionable recommendations to specific stakeholders groups on their role in nurturing South African AI are outlined, catalysing the advancement of AI in Africa.