As the data centre landscape continues to evolve in Africa, the opportunities and challenges it presents have never been more significant. Lee Perrin, Director MEA at CBRE, draws from his extensive experience in both established and emerging markets to provide invaluable insights into the complexities of this burgeoning sector.
From my experience in the data centre market, particularly in London for 14 years and now back home in South Africa, the fundamental difference between mature markets and emerging ones is the established talent pools and supply chains. In established markets like London, everything from site selection to the recruitment of consultants and data centre engineers is well experienced and mature. The infrastructure is ready, and operators benefit from years of accumulated knowledge.
In contrast, in Africa, we are witnessing the inception of data centres. For many countries, this is their first data centre due to rising content needs. Operators in Africa often navigate land selection processes without the experience of established markets. For example, South Africa can be seen as the London of Africa, with nearly 300kW of capacity available, but the challenges remain significant. On the ground operational staff there are still gaining experience, and local design engineers may only have experience building one or two data centres. This lack of experience permeates the broader market. Through talent acquisition it is common to see on the ground operational resource averaging only 2-3 years in the DC field. Saying that, there is hidden talent in the market rooting from telecommunications company Telkom in South Africa, the BT in the UK. However, many high skilled engineers with experience in this sector are now older, which creates a gap in the younger talent pool needed to drive the market forward.
Mapping the data centre landscape
Africa is incredibly diverse, with more than 50 countries. For data centres, one can focus thoughts on Tier 1 markets like South Africa, Nigeria, and Kenya, and the Tier 2 markets of Ghana, Ivory Coast, Rwanda, Ethiopia, DRC, Mozambique and Morocco. Nevertheless, each country presents unique challenges for land acquisition and utility access.
In Nigeria, land acquisition is exceptionally complex. Land ownership often involves historical claims from tribal families, complicating the documentation process. One might think they’ve secured a piece of land only to face claims from various parties later. Thus, standard brokerage functions struggle to navigate this landscape, and extensive due diligence is necessary to ensure land ownership legitimacy. Despite these challenges, Nigeria boasts a population of over 200 million, a significant factor driving data centre growth. Over the next 25 years, Nigeria’s population is expected to grow to 400 million, creating immense demand for digital infrastructure.
In comparison, Kenya’s land acquisition process is less encumbered by familial complexities but is hindered by government zoning regulations that concentrate development in specific areas. While zoning can facilitate site selection, it also drives up costs due to increased competition among operators. South Africa, being the most mature market on the continent, has seen operators congregate in strategic areas with good power availability. However, issues remain, with recent government policies around land expropriation. This law has faced legal challenges and international scrutiny, potentially impacting investor confidence.
Some similarities can also be observed across the region; to mitigate risk in entering the African market is the willingness to partner or enter into JVs throughout all stages, from operator acquisition and lease and development models. Meanwhile, when discussing power, each country has a drastically different landscape. In Nigeria, power supply is so unreliable, often providing only four hours of electricity per day at unpredictable times, leading operators to rely heavily on generators. Gas-powered generators are becoming a more common solution as they can provide a more stable energy source, despite challenges in maintenance.
Kenya still carries unreliable power outages, however, very promisingly, the power infrastructure is undergoing significant advancements, particularly through the integration of renewable energy sources, to support the growing data centre sector. The country is leveraging its abundant geothermal resources, with large-scale projects already underway to provide reliable and sustainable power for data centres. These developments position Kenya as a key player in Africa’s digital infrastructure.
South Africa’s power infrastructure has undergone a major shift over the past year. The country experienced two years of severe power cuts, followed by almost a full year without loadshedding. This turnaround is largely due to increased private sector investment in renewable energy and policy changes allowing businesses to generate their own electricity. However, the reduction in load shedding has significantly improved business confidence, making South Africa a more viable option for energy-intensive industries like data centers.
The race for anchor tenants
In the data centre industry, securing a major anchor tenant is crucial. Locking in one large client can justify the entire funding mechanism for building a facility. These hyperscale clients typically sign agreements that allow them to take a portion of the capacity now and expand later, providing a solid business foundation.
However, it is noticeable that there was some excitement over hyperscale pace for demand while developing and pushing capacity into the market. With capacity in the market, the operators are having to be flexible to move from hyperscale, wholesale and retail models to ensure they can fill their capacity under a demanding and competitive landscape. The upside is that with capacity available, if there’s a sudden spike in demand, the resources are already there.
Leveraging transferable skills
Africa has a youthful population, with the median age around 18 years. This demographic trend presents an opportunity to channel talent into digital infrastructure roles. However, training and developing the workforce will be crucial. The experience in operating data centres in Africa differs vastly from that in developed markets. African engineers must regularly engage with complex power systems and manage outages, leading to a hands-on learning environment that is less prevalent in mature markets.
For an operator building a data centre, it’s possible to begin onboarding staff towards the end of the construction phase, as the site moves into commissioning and operation. Some global operators have the opportunity to send new employees and train them at an existing site in Europe, for example, that mirrors the one being built. This way, by the time the new site becomes operational, the staff have already had some familiarisation.
Instead of manual training, we focus on industries that offer transferable skills. We look for talent in critical fields such as shipyards, manufacturing, and mining — sectors where employees are accustomed to working under pressure and adhering to strict processes and procedures. Building this bridge is key to workforce development in this sector.
Population growth and broadband penetration
While the African data centre activity has seen substantial growth compared to prior years, it may not be as rapid as some hoped. Key factors influencing market growth include data sovereignty with governments investing in data centres to facilitate this transition. Population growth and the resulting broadband penetration are also significant drivers.
With over 1.4 billion people and a fast-growing middle class, digital adoption is accelerating across the continent. The rise in smartphone usage, mobile banking, e-commerce, and cloud services is fuelling the demand for reliable and scalable data infrastructure. While AI is a buzzword, the real impact is from the growing number of people using the internet for various services, including banking and e-commerce. This user demand is escalating, and our infrastructure must adapt accordingly.
