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 percent 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 data centre, or often the absence of data centres. We need more African data centres. To give you an example of how few there are, let’s compare the amount of data centre space available on the whole continent with London. Last year, London’s data centre 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 data centres 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 data centre is based matter? To put it as simply as possible, the closer a data centre is to the user, the faster that user will be able to access information and use services hosted at the data centre. The data centre’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 $130 to $170bn a year. Today, the financing gap is between $68 and $108bn. We need to attract more private investment. The amount of money flowing into the data centre 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 data centres.
Given the potential for growth, you’d think money would be pouring in. Africa’s data centre 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 organizations in the continent will move their data and applications to the cloud by 2025. Data centre 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 data centre. Power supply reliability is another challenge; data centres 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 data centres.
Smart players are already investing in technologies that will reduce power usage. Taken for example our Tunisia-based customer Dataxion, which runs the largest colocation facility in North Africa. Working with us, they’ve brought down their energy costs by 35 percent, which is no mean feat given that temperatures often reach 34 degrees Celsius in summer. Dataxion are using the climate to their own benefit, by installing solar panelling that will provide a significant amount of power for the facility. This will both cut power costs and make the data centre greener and more sustainable.
When I look at the continent’s data centre 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 data centres across Africa.
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