By addressing investment challenges, improving infrastructure, reforming regulations, and nurturing talent, we can unlock Africa's digital potential. (Getty Images)
As Africa embraces the digital age, the growth of data centres (DCs) stands at the forefront of technological advancement. These centres sustain global commerce and connectivity, enabling cloud services, e-commerce, and seamless communication.
However, several challenges impede their expansion, and it is crucial to address them strategically to accelerate Africa’s digital transition and broader economic transformation.
Investment and Finance
Africa’s DC investment landscape is evolving rapidly. In 2020, the continent witnessed a $2bn investment surge, projected to reach $5bn by 2026. The demand for DCs doubled between 2016 and 2023, driven by cloud service adoption and the presence of global giants like Amazon Web Services, Google Cloud, Microsoft Azure, Oracle, and Huawei.
This growth, however, requires substantial financial backing to maintain momentum and meet the continent’s burgeoning digital needs.
Public-private partnerships (PPPs) are essential to foster an environment conducive to data centre investments. Governments must collaborate with private investors and multilateral institutions to create policies that attract foreign direct investment. Offering tax incentives and streamlined regulatory processes can significantly boost investment flows. Additionally, investing in local talent is crucial to ensure that data centres are managed and operated efficiently. Building a skilled workforce will not only support the data centre industry but also create job opportunities, driving economic growth.
Access to Land and Power
Sourcing suitable land and securing reliable power remain critical challenges for DC expansion in Africa. The continent needs between 1.4 to 3.5m square metres of well-located land and approximately 1,000 MW of additional data centre capacity. To match South Africa’s levels, a 1,200 MW increase is necessary by 2030. Identifying and securing appropriate land parcels is a foundational step. Governments should take steps such as digitalising the land registry and creating comprehensive databases of available land to facilitate investor access and decision-making.
Renewable energy offers a viable solution to Africa’s power challenges. Leveraging solar-powered solutions can provide a sustainable and reliable energy source for DCs. Collaborations with the private sector could enhance power infrastructure, reducing dependence on traditional energy sources. Moreover, liberalising energy markets, as underscored by South Africa’s 2021 energy reform, can encourage private power generation and improve the overall power supply landscape.
Market Reform
While mature DC markets in Nigeria and South Africa thrived due to early telecom sector liberalisation, progress in regulatory reform across Africa remains uneven. Persistent monopolies hinder competition and innovation, stalling DC growth in certain markets. Creating robust regulatory frameworks is essential to foster a competitive market environment. These frameworks should penalise data protection violations while encouraging collaboration between industry stakeholders and regulatory bodies.
Liberalising the telecom sector across the continent is another important step.
Encouraging competition and breaking monopolies can spur DC growth by making services more affordable and accessible. Further, investing in cross-border fibre-optic networks can enhance interconnection services, fostering a more integrated and efficient digital infrastructure across Africa. Such investments can improve internet connectivity, reduce costs, and stimulate economic activity.
Improving the ICT Talent Pool:
Human capital development is pivotal to Africa’s digital transformation. Before the pandemic, only 7% of informal firms in sub-Saharan Africa used the internet for business purposes. Bridging the ICT skills gap can boost internet adoption and increase DC demand. Educational reforms are necessary to integrate digital literacy into school curricula and lifelong learning initiatives. Supporting STEM education, scholarships, and digital skills training can create a workforce equipped to meet the demands of the digital age.
Furthermore, leveraging Africa’s vibrant start-up ecosystem can contribute significantly to skill development. Start-ups often serve as incubators for innovation and talent, providing practical training and experience to young professionals. Governments and private sector stakeholders should support initiatives that foster a thriving start-up environment, ensuring a continuous supply of skilled ICT professionals.
Africa’s digital transformation hinges on collaborative efforts. By addressing investment challenges, improving infrastructure, reforming regulations, and nurturing talent, we can unlock Africa’s digital potential.
The path to a connected continent where DCs thrive involves strategic planning, robust policies, and a commitment to sustainable development. As we build this future, we bridge gaps and power progress, creating opportunities for millions across the continent. It is through these concerted efforts that Africa can fully embrace the digital age, ensuring that no one is left behind in this era of rapid technological advancement.
Chudi Okoye is the Deputy Regional Editor at Africa Oxford Business Group