South Africa holds the majority of African data centres
Wed 3 Nov 2021
Despite investments in sub-Saharan Africa, South Africa holds a disproportionate number of data facilities, and there is a persistent deficit of data centres in the West African region.
The demand for data centre services in Africa is growing steadily. Drivers of demand for increased capacity are much the same in Africa as the rest of the world: the lingering effects of the pandemic, a recognized need to establish a digital economy, increased globalization of business, etc.
But in its current state, investment in South African data centres has far outstripped investment in the rest of the continent, leading to a disproportionate capacity gap in west Africa.
According to a recent report, the continent will require 700 new facilities – for a total of 1000 MW – to meet demand, and bring the rest of the continent on a level with the data centre density and capacity of South Africa.
Currently, there are 55 data centres in South Africa, mostly located in or near the urban centres of Cape Town and Johannesburg. This country alone accounts for 54 per cent of the raised floor space for the entire continent.
The Africa Data Centres Association (ACDA) noted, in a recent white paper, “It is increasingly acknowledged that Africa needs a lot more data centre capacity than is currently available. The need for hosting capacity is largely structural; an outgrowth of a host of megatrends that are transforming the region’s economic and social fabric and are putting considerable pressure on existing infrastructure.”
Challenges to African data centre investment
Even recognizing the need, the ACDA notes that there are many challenges to building and operating data centres in Africa. They include:
Lack of infrastructure
Large areas of the continent are without access to reliable electricity. As recently as 2017, 76 million people did not have electricity in Nigeria alone. And in areas where electricity is available, prices vary dramatically: from $490 USD per MWH in Liberia to $24 USD per MWH in Ethiopia.
This complicates data centre facilities, as power costs are a large proportion of operating costs throughout the industry.
The African continent comprises over 30.3 million square km. Building an interconnected network of data transmission across this physical space is an enormous challenge, particularly with large open spaces without reliable infrastructure.
The second-largest continent, Africa is made up of a variety of different climate types and systems. However, on the whole, it is equatorial, tending to run hotter temperatures than other areas of the world. Cooling systems, the second-greatest consumer of power in the data centre, must be efficient and reliable, optimized to perform well in higher temperatures outside, to ensure a cool temperature inside the facility.
A recent report from the Uptime Institute showed that 50% of global data centre operators are having trouble finding skilled candidates to fill open positions: and 300,000 additional staff will be needed by 2025. This labour shortage is even higher throughout Africa, where a lag in creating a data centre ecosystem has led to fewer training initiatives in the region.
In response, the ACDA has put forward the idea of creating its own data centre and cloud training facility to help bridge this gap.
Benefits of African data centre investment
Looking at it from an alternate perspective, the positioning of the African data centre market has resulted in a number of benefits to investing in African data centres today. These include:
As countries across the globe increasingly adopt data localisation requirements and regulations, businesses must have an option to store consumer data within a nation’s borders. Building a data infrastructure now will help to meet the demand associated with data sovereignty regulations as they permeate Africa.
Because the African data centre market has been underserved to date, there is an existing gap between capacity and demand across much of the continent. This means there is a built-in customer base for data centre services, helping to ensure that a data centre, once opened, will be able to gain customers at competitive prices.
Improvements in connectivity.
A build-out of the fibre optic networks throughout different areas means that increasing areas of the continent are available for low latency transmission. The advantage is that rather than coping with ageing infrastructure and trying to build fibre around it, many areas of Africa can implement fibre from the start.
African data centre investment
Across the continent, the data centre market size is expected to grow tremendously over the next five years: from $2 billion USD in 2020 to $5 billion USD by 2026. This represents an average CAGR of 15% in the near future. A focus on renewable energy, particularly in Egypt, South Africa, Kenya, and Ethiopia can support both a reduction in power costs in the data centre and a reduction of the environmental impact of these facilities.
The data centre market in Nigeria is attracting investment and is expected to grow at a CAGR of over 17% through 2026, tripling in size to over $1.5 billion USD. The Nigerian government’s goal of increasing the adoption of cloud technologies by 30% is one of the demand drivers in the country.
However, investment is still lagging behind demand, particularly in countries outside of South Africa. As a result, the gap between demand and capacity is larger in West Africa than it is in South Africa, despite increasing investment in data centre services in the region.
To provide an equivalent capacity throughout western Africa, and meet the market in South Africa, data centre owners and operators must increase investment in regions outside South Africa.