As Africa continues to attract interest from major global providers who are looking to expand into the region, the market is expected to grow at a compound annual growth rate (CAGR) of more than 12% between 2019 and 2025 to exceed values of US$3 billion.
Measurable parameters such as the number of ISP subscriptions, the overall number of hosts, IXP-traffic, and overall available bandwidth all indicate that Africa is far behind the “digital divide”. Also, Africa itself exhibits an inner digital divide, with most internet activity and infrastructure concentrated in South Africa, Morocco, Egypt as well as smaller economies like Mauritius and Seychelles.
While the telecommunications market in Africa is still in its early stages of development, it is also one of the fastest-growing in the world.
According to a recent report from The African Data Centres Association (ADCA) and Xalam Analytics, Africa is in need of an aggregate capacity of at least 120MW of multi-tenant data centre capacity over the next decade to meet the current demand.
Analysis suggests that the region will need up to 700 additional facilities at an average of 3MW to hit the proposed India and South Africa benchmarks.
Alex Booth, managing director, business intelligence and investigations, Kroll seems to think that 700 data centres is not a realistic target given the current business environment.
“Data centres are complex, highly specialised facilities that require high volumes of electricity and water, management expertise, and a secure context in which to operate. They also work best with close collaboration between private investors and host governments,” says Booth.
“In many African countries these conditions are simply not present, or not present enough, to allow for the construction of as many as 700 data centres.
“In addition, spending on construction across Africa has suffered as a result of Covid-19, creating negative investor sentiment and slow economic growth.”
Booth was right. The ADCA report warns that Africa’s power, land, and water requirements for data centre facilities at any significant scale would be difficult to achieve without more involved government action at national, regional, and local levels.
The ACDA found that 15 countries in Africa have a deficit between 5MW and 10MW of data centre capacity. Another 20 have a capacity deficit higher than 10MW. Broadband adoption is increasing in Africa, and connectivity has become more essential in the wake of the pandemic.
However, with that being said, Booth is undecided on the necessity of adding 700 data centres to the market.
“Certainly, there are strong fundamental trends indicating a need for more data centres – growing hosting requirements due to population growth, the push for economic diversification, digital transformation and broadband adoption – but these trends will apply to some African markets more than others,” adds Booth.
“For example, markets such as South Africa, Nigeria, Kenya, Senegal, Algeria and Egypt, are ready to embrace digital transformation, and there we will see massive growth in data traffic and the need for data centres. In comparison, in South Sudan, Chad, Zambia and Malawi for example, the demand is much less.
“The adoption of data centres in South Africa can’t convincingly be used as a proxy for requirements in other African markets, as per the ACDA study. As such, the true figure for Africa might be somewhat lower than 700.”
Booth notes that around 30 new data centres have come online across Africa since 2016, and at that rate, it would take more than 20 years to build 700 facilities.
The potential for further data centres across African growth markets is certainly very high. Booth mentions that if infrastructure constraints can be overcome, and growth in data traffic rises concurrently, the need for data centres will increase significantly.
“A perfect combination of these events will contribute towards its success, representing a great opportunity for investors, host governments, citizens and internet users,” he continues.
International comparison
The improvements in Africa’s data centre infrastructure over the past five years have been sizeable in comparison to other global markets, according to ADCA, adding that more than 30 Tier III and above multi-tenant facilities have come online across the continent since 2016 – doubling the region’s hosting capacity.
“The underlying demand is there and is growing, at least in the digital-savvy markets such as South Africa, Nigeria, Kenya, Senegal, Algeria and Egypt. We can count on interest in these countries from domestic and international investors if host governments play an active and supportive role in facilitating this investment,” says Booth.
“As we’ve seen in the past, the development of data centres requires a supportive policy environment – states must be ready to assist with a host of supplementary processes, from securing suitable sites to help with securing land titles to ensuring security and access for sites.
“Furthermore, physical infrastructure to support data centres needs to be in place as such centres are incredibly power and water intensive. Where the national grid is erratic, either dedicated substations or back-up diesel-generators must be installed. Public-private partnerships are a suitable mechanism for delivering this support and will help to accelerate this growth,” he adds.
What Africa needs to succeed
Covid-19 has no doubt fuelled the demand for major infrastructure development in Africa.
Ashley Buckland, MD, JB Associates, a construction consultancy specialising in critical infrastructure says: “With connectivity on the rise, I anticipate rapid growth to take place in the next few years as Africa becomes a prime hotspot for data centre investments.
“Heavy investment and contributions from big local partners will be needed to get connectivity readily available throughout the continent and they will need more companies like Microsoft, Huawei and Amazon (who are opening their first cloud data centre in South Africa) to follow suit.”
Buckland highlights that the key players expected to infiltrate the African market are the likes of Microsoft, Huawei, Equinix and Amazon Web Services (AWS).
Despite its challenges, the Africa data centre construction market is witnessing significant growth, especially in South Africa, Morocco, Kenya, and Nigeria. Government agencies across countries are looking to improve their digital economy.
They are involved in a variety of smart city projects that fuel the growth of data centres and edge facilities throughout the region.
However, Buckland points out that funding remains a key challenge for the region. African governments have for a long-time financed a large share of the continent’s development and infrastructure rollout has been significantly delayed due to budget, he adds.
“Lack of specifically skilled professionals to deliver the job may also become an issue once projects increase and workers are required at large,” says Buckland.
“There could also be issues with policing health and safety as it’s a very different culture to the UK market. Covid-19 vaccine availability is very limited across the continent and I anticipate this being another challenge to facilitate amongst large sites.”
What’s next?
The increasing demand for cloud-based services and modular data centre solutions among enterprises, especially SMEs and government agencies, are expected to drive the market in Africa.
It is expected that over 70% of organisations operating in the region will shift to the cloud region by 2025. South Africa, Kenya, Morocco, Egypt, and Nigeria are at the forefront of improving the digital economy, according to ADCA reports.
These countries, along with cloud-based service adoption, have also witnessed high usage of big data analytics.
“I know a number of key players within the industry talk about demand and Africa needing somewhat near 1000 megawatts to facilitate this growth. Which I assume will happen over the next three to five years,” concludes Buckland.
