A reflection on growth, challenges and prospects
Africa’s data centre market is booming. Growth drivers like cloud, digitalization and AI are all helping fuel increased demand for data infrastructure, yet challenges remain. We checked in with Snehar Shah at IXAfrica Data Centre and Eckart Zollner at Digital Parks Africa to find out their views on the future of Africa’s data centre ecosystem.
Africa’s data centre market has witnessed a period of rapid expansion and transformation, driven by increased digitalization, the proliferation of cloud services, and growing investments from global tech giants. This evolution underscores Africa’s rising role in the global digital economy, though challenges such as power reliability, regulatory hurdles, and infrastructure limitations persist.
A market on the rise
South Africa remains the leader in Africa’s data centre expansion, with its deployment capacity exceeding a couple of hundred megawatts. Hyperscalers such as AWS, Microsoft, and Google have established regional zones there, driving increased cloud adoption. “South Africa leads the pack,” confirms Snehar Shah, CEO of IXAfrica, emphasizing that “a lot of the financial services enterprises have moved to the cloud, hosted locally.”
“We’ve seen tremendous investment in the African data centre market, particularly South Africa, with the arrival of quite a few new cable systems coming into the market, which is bringing a lot of the hyperscalers – and they require data centre presence,” agrees Eckart Zollner, Business development Manager, Digital Parks Africa.
And while South Africa has seen major investments in the past few years, “even into the rest of Africa, we are seeing that the telecommunication environments are growing at an amazing pace, with new data centre locations being opened in countries that were previously reliant on single operators. Such countries are now opening their markets into a deregulated, privatized environment,” says Zollner.
Nigeria follows closely behind South Africa, with a deployment capacity of 40-50MW, while Kenya, a growing hub, is currently estimated at 5-10MW. Indeed, despite the gaps between markets, Kenya and East Africa are catching up. Shah notes that the region is benefitting from submarine cables like Africa-1 and 2Africa funded by tech giants like Meta and Google.
This growth is also evident in the increasing number of data centre operators entering the market. IXAfrica, Digital Parks Africa, and Africa Data Centres are among those spearheading expansion efforts, building new facilities to cater to the rising demand. “We’ve secured our second site — 30km from Nairobi — where we’ll build a 53MW facility. And we’re already exploring a third site,” Shah reveals.
Beyond investment from local and international players, government incentives and regulatory improvements are fostering growth. Countries such as Kenya, Nigeria, and Ghana are implementing tax breaks and policy reforms to attract data centre developers, reducing entry barriers and enhancing the business climate.
Key growth drivers
Cloud adoption continues to be a primary catalyst for data centre expansion across Africa. As businesses in the region increasingly transition to cloud-based solutions, the demand for reliable and scalable data centre infrastructure has surged. “With a proliferation of good connectivity, we are seeing a great adoption of cloud services,” notes Zollner. “Finance and government are probably the leading sectors, also some of the content providers, the streaming providers, pushing the delivery of their services over the cloud.”
“Some 20,000 of the Kenyan government’s services are now being digitalized, which will require more data centre capacity,” adds Shah. Beyond enterprise adoption, increasing mobile penetration and digital content consumption are fuelling demand. Affordable smartphones, innovative financial models such as M-Kopa’s financing for mobile devices, and digital services are broadening the market.
Moreover, the growing prevalence of AI and big data analytics is significantly impacting the demand for data centre services. As AI-driven applications continue to emerge across various sectors such as agriculture, finance, and healthcare, they are anticipated to further escalate the need for data consumption and storage capacity.
“We are seeing AI technology as a key driver of the next wave of data centre deployments and data centre demand across the continent. Africa is a little bit behind Europe and the US when it comes to AI, but we are seeing the first very exciting developments taking place there now,” explains Zollner.
Another factor contributing to growth is the expansion of local startups and small businesses into digital platforms. E-commerce, fintech, and online education platforms are thriving, creating additional demand for local data hosting solutions. In addition, gaming and entertainment industries are fuelling further data centre demand. “The content delivery networks (CDNs) are expanding their footprint, and this is a strong indicator that local data storage will be more crucial than ever,” says Shah.
Threats to stability
One of the biggest challenges for Africa’s data centre operators is the continent’s unreliable power supply. In South Africa, power outages due to loadshedding have significantly impacted the industry, while other regions also face grid instability. “Data centres should be treated as national key points, mostly from a position of power surety or power energy guarantee, because national power grids across Africa are under strain,” asserts Zollner.
In some countries, data centre operators are relying on diesel generators virtually 24/7 to keep the power on – “that is hugely expensive, and diesel generators are also very maintenance intensive machines. Protecting the power is absolutely key,” says Zollner. Data centre operators are addressing these challenges by investing in alternative energy solutions. Some are exploring nuclear energy and battery storage solutions to reduce reliance on diesel generators.
Physical security also remains a concern. “When Orange took over the incumbent operator in Kenya and gained all its landline infrastructure, one of the biggest issues that we faced was vandalism of the copper cables,” recalls Shah. “We had to lobby extensively, but the government listened to us, and now that infrastructure is treated as critical. I think the same now applies to data centres.”
Zollner notes that cyber-attacks, too, are a significant threat. “With the digitization of our economies, data is a new gold,” notes Zollner. “There’s more and more value in getting to the data. Unlike physical threats, criminals can launch cyber-attacks from any point in the world TO any point in the world.”
Net Zero and renewable energy
Sustainability is becoming a major focus on the continent as global hyperscalers increasingly demand greener infrastructure. As Zollner explains, “the CO2 emissions from any jurisdiction don’t just stay within a country: they affect all of us.” Shah highlights that 93% of Kenya’s power comes from renewable sources like wind, hydro and geothermal, on top of a very reliable grid.
“We’re strategically located close to the airport. We have uptime from the grid alone of more than 99% which for Africa is amazing,” says Shah. “I think you don’t necessarily need renewable energy to provide stability. Everybody asks us, why don’t you use solar power? To provide 22MW of solar power, we must provision 30 acres of prime land in Nairobi – that’s just not cost effective.”
However, renewable energy alone may not solve power stability issues. “Renewables are important, but base-load energy sources are necessary for 24/7 operations,” says Zollner. “A lot of large data centre deployments are looking at smaller nuclear powered energy sources now.”
The future: AI, Edge computing, and expansion
Looking ahead, Africa’s data centre market is set to experience further growth, driven by AI, edge computing, and continued investment. “We are seeing that data centres need to be much closer to where the data is being consumed, and with this, a shift towards more distributed architecture,” says Zollner. “Modular technology allows you to cost effectively deploy data centres very quickly into small economies.”
“We are in active dialogue with regulators to ensure we get the reliability and cost structures we need,” Shah affirms. Zollner echoes the sentiment: “Partnering within the greater ecosystem is key to bringing data centre solutions to emerging markets. Rather than everybody investing in the same infrastructure, infrastructure can be shared. The same can be done at the data centre.”
