Investor Resolve Gets Tested, but the Opportunity to Enable Africa’s Age of Cloud and AI Remains Compelling
This deep dive into the key market dynamics, economics and outlook of Africa’s burgeoning commercial data center market. There are plenty of questions around the evolving African commercial model - what’s going on with demand ramp-up? What are the hyperscalers doing outside of South Africa? What’s going on with colocation pricing? Can African facilities support AI deployments? From demand potential to power supply economics, this report explores them all - offering arguably the most extensive, publicly-available investor-focused research on this growing market.
Rarely has the burgeoning African data center market been as challenged as it has over the past two years. African data centers have had to grapple with perhaps the toughest macro-economic environment of the past decade. Data center capacity buildout lost momentum, against a challenging operating backdrop and persistent supply chain constraints.
Building what is essentially a new, capital-intensive, high tech infrastructure business in such a context is tough. And still, we find that the systemic fundamentals anchoring demand for data center capacity in Africa remain very much in play.
The region’s digital foundation is deeper, with ~700m broadband connections. More submarine cables are coming onshore, data traffic growth remains explosive, and the region’s network, content and cloud ecosystems continue to densify. Enterprise digital transformation is proceeding apace and cloud services are the fastest-growing segment in the ICT marketplace outside of mobile money. The region’s demand potential remains considerable and is now boosted by the potential of gigantic requirements to support AI deployment.
There is much to build still. Africa accounts for only around 1% of global installed data center capacity, well short of the region’s contribution to global GDP or population. As AI looms, the African market is primed for a rebound, with a construction spike that is set to surpass all previous buildout surges.
Country Analysis
- South Africa: at the height of cloud, now building to support ai
- Egypt: a supply-constrained market is now racing to catch up in the face of tough macro headwinds
- Kenya: Africa’s next hyperscaler destination gears up for accelerated growth
- Nigeria: West Africa’s largest economy races to catch up in the face of considerable macro-headwinds
- Morocco: macro stability underpins solid upside potential, despite persistent constraints
