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Alibaba Cloud’s strategic move to gain foothold in Africa

The exclusive agreement between Alibaba Cloud and Telkom subsidiary BCX announced this week represents a unification of market influence that will differentiate both companies. It is a significant development especially as competition to secure a share of Africa’s increasing GDP (from 3% of global GDP in 2021 to between 16% and 20% in 2050) heats up.

That is according to Jonas Bogoshi, CEO of BCX, and Julian Liebenberg, Chief of Cloud Platform Solutions at BCX.

The executives spoke to ITWeb Africa hours after signing an exclusive distribution agreement to bring the Chinese company’s services to the South African market.

Bogoshi said the deal is a long-term undertaking of different phases, the first being the provision of access to cloud services to the South African market. The second is the physical introduction of public cloud to South Africa.

Liebenberg explained that Alibaba has a very strong presence in China and the Asia-Pacific region and has been looking for greater business prospects in Africa.

“When they entered into some parts of Middle East and Africa, they adopted a model where they partner with businesses that already exist in those markets, sort of distribution partners or reseller partners. They found that this works very well for them, and because they wanted to accelerate into the South African market, they were looking for a partner with scale, and scale into the enterprise customer base, and they were looking for a reliable partner. Based on that approach, they evaluated four companies in South Africa altogether and they had certain criteria that they put down, and that’s really what cemented the partnership for us,” he said.

Daniel Jiang, General Manager of the Middle East and Africa, Alibaba Cloud Intelligence said, “We are happy to build a partnership with BCX to bring advanced, secure, and reliable cloud services and technologies to businesses in South Africa and beyond. We believe our partnership with a local industry leader like BCX will further upscale the local cloud computing market and better support the local businesses to embrace a digital economy.”

For BCX, the deal is a timely affirmation that its focus on IaaS, PaaS and SaaS as high growth areas has been correct.

“This partnership enables us to play in that space and allow us to bring in elastic cloud in our region, an elastic cloud that can handle a million transactions per second. Alibaba is one of the biggest. So we are bringing in that capability into the country and obviously for our clients. The second thing is we are bringing in over two hundred industry applications, including retail, financial services and healthcare,” added Bogoshi.

He noted that in terms of South Africa’s public cloud market, the hyperscale market owns 72% market share and system integrators own the balance of 28%.

The entire market is growing at a compound annual growth rate of between 33 and 35%, and expected to do so over the next three years said Bogoshi, with the biggest growth emanating from the hyperscale segment of the market.

“So this partnership allows us to play in that space. We are now a hyperscaler,” he said.

However, Bogoshi also pointed out that the South African market is looking for choice, and the development will not detract the company from its bread-and-butter business of managed cloud services and meeting market requirement, whether for on-prem, public or hybrid/multi-cloud environments.

Liebenberg echoed this and said as far as the company’s value proposition is concerned, it will continue to deliver cloud consultancy, cloud migration and managed cloud services, only now it will do it at much bigger scale.

In addition to presenting a plethora of solutions that it believes will catapult businesses online and tap into the advantages of IaaS, SaaS and BaaS (Business as a Service), BCX plans to leverage what Liebenberg described as a competitive advantage of Alibaba Cloud – a competitive offer at a purely infrastructure layer and flexible pricing models.

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