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Paper short abstract

South Africa's tech ecosystem shows how venture capital reproduces racial exclusion and extractive innovation. This paper argues efficiency operates as capitalist ideology, not neutral optimisation, privileging extraction over transformation and encoding colonial hierarchies into digital futures.

Paper long abstract

Artificial intelligence is positioned as the transformative core of contemporary digital economies, yet critical interrogation of who controls AI development, whose rationality shapes its design, and who benefits from its deployment remains sparse, particularly from Global South perspectives. This paper examines the political economy of AI-driven innovation through empirical research on South Africa's technology startup ecosystem, where AI constitutes the foundational infrastructure of platform-based business models.

Drawing on analysis of 120 startups launched between 2013-2018 and a national foresight study examining digital economy futures (2025-2035), this research reveals how, three decades after apartheid's end, venture capital financing structures continue to produce demographic exclusion and extractive innovation trajectories. The ecosystem exhibits stark racial stratification: in Cape Town, 80% of funded startups were white-founded, while nationally, 60% concentrated in fintech and e-commerce platforms optimised for transaction extraction rather than productive transformation. Black entrepreneurs remain confined to survivalist ventures sustained by philanthropic funding that cannot support scale.

Theoretically, the paper draws on Marcusé's critique of technological rationality to demonstrate how efficiency - AI's dominant ideological goal - operates not as neutral optimisation but as capitalist discipline that privileges extraction over transformation. Using Bonilla-Silva's racial praxis and Calderón's epistemic violence frameworks, the analysis shows how supposedly neutral market mechanisms reproduce structural racism.

Rather than democratising development, South Africa's AI-driven digital economy replicates colonial patterns of extraction and exclusion through new technological forms. The paper demonstrates that AI's political economy fundamentally determines whether these technologies serve post-apartheid transformation or reproduce inequality.