Africa must focus on datacentres to reach its digital potential
Africa is by far the most exciting region when it comes to digital growth. Every one of the continent’s indicators points to massive demand for both connectivity and content. Sub-Saharan Africa’s population is growing at 2.7% a year, and population numbers that could double to two and a half billion by 2050.
Africa’s young population is hungry for more, cheaper internet access. As are businesses. In the space of less than a year, COVID-19 has done more for digital growth than over a decade of planning and investment. We’re seeing demand soar online. One example is that of our e-commerce partner Jumia, which saw a 400% increase in sales for essential items during the last 15 days of March vis-à-vis 2019.
But it’s not all plain sailing. There’s issues around high data costs and high latency. And there’s the question about network connectivity in-country, and away from coastal areas. The one common denominator is the datacentre, or often the absence of datacentres. We need more African datacentres. To give you an example of how few there are, let’s compare the amount of datacentre space available on the whole continent with London. Last year, London’s datacentre space was 260,000m2; in comparison, Africa’s total space was estimated at 861,207m2.
There’s also a challenge when it comes to the distribution of datacentres across the continent. Nearly half, thirty-one to be precise, of Africa’s 67 colocation facilities are based either in South Africa or Nigeria. Kenya follows with seven, and Morocco with five. The irony of the internet is that most African websites are hosted in Europe.
So, why does where a datacentre is based matter? To put it as simply as possible, the closer a datacentre is to the user, the faster that user will be able to access information and use services hosted at the datacentre. The datacentre’s location also impacts reliability. And, like with any service, the more capacity that is offered, the lower the cost will be.
Data centres are the basis for digital transformation. And we’re going to need many more data centres everywhere across the continent to power economies, speed up connectivity and reduce the overall costs for server-hosted services.
There are two basic challenges when it comes to building tech infrastructure in many parts of Africa, especially outside South Africa and Nigeria. The first is funding. We need more investment, much more. The African Development Bank estimates that the continent needs a total infrastructure investment of US$130 to US$170bn a year. Today, the financing gap is between US$68 and US$108bn. We need to attract more private investment.
The amount of money flowing into the datacentre space has edged up this year – one example is a deal in March, when emerging-markets investor Actis bought the Rack Centre in Lagos and announced plans to invest US$250m to buy and build African datacentres.
Given the potential for growth, you’d think money would be pouring in. Africa’s datacentre market is expected to grow at a compound annual growth rate of 12% between 2000 and 2025, to hit three billion dollars. And much of that demand will come from cloud adoption – 70% of organisations in the continent will move their data and applications to the cloud by 2025. Datacentre growth will be double digit for the foreseeable future.
The other issue we have to address is energy and climate. North Africa is hot and dry, whereas Central Africa is humid. Both can pose particular issues when building a datacentre. Power supply reliability is another challenge; datacentres need lots of power, and they don’t do well with power shutdowns. As the power quality improves across the region and power costs decrease, there’s going to be more confidence in building local datacentres.
When I look at the continent’s datacentre landscape, I see huge potential for growth. And the more that others look at digital investments, the more they’ll realise that we must start with putting money into building datacentres across Africa.