By Larry Claasen
Amazon Web Services (AWS) plans to invest R46-billion in Cape Town by 2029.
THE setting up of hyperscale data centres in South Africa has become a major boost to the local economy.
Hyperscale data centre providers have committed to spending up to $6-billion – about R112-billion – in Africa over the next three to five years on the continent according to the 2023 Africa Interconnection Report. With South Africa making up 90% of the African data centre market, it is set to get the lion’s share of this investment.
The emergence of local companies like Teraco, Africa Data Centres and NTT (Dimension Data), along with international rivals Digital Realty, Equinix and Vantage has seen a spike in these types of data centres. Established local players like the telecom groups, Telkom, MTN and Vodacom also have extensive data centre facilities.
The growing importance of data/internet to South Africa can be seen in the sharp rise in internet traffic seen on the NAPAfrica internet exchange, which reached 4,17Tbps as of March 2024. This is factors higher than the 1Tbps generated in March 2020.
World Wide Worx founder Arthur Goldstuck says, on the consumer side, streaming services like Netflix and Spotify are behind the need for hyperscale data centres. Demand has also been driven by business’s increasing dependence on data.
Goldstuck says tech group Cisco has long predicted the sharp rise in data traffic, but he expects it to rise even further with the growing popularity of Generative Artificial Intelligence (AI), which requires huge amounts of data.
An essential service
Though there is no official description of hyperscale data centres, they are generally regarded as being able to scale up rapidly in capacity and provide “mission critical” services.
Examples of services offered by hyperscale data centres is being a “carrier hotel.” This is where multiple telecom carriers store equipment, so they can exchange data directly with each other.
Exchanging data at the hotel is seen as a safe option, as doing so in the carrier’s data centres might lead to allegations that carriers are favouring transferring their own traffic over that of a competitor.
The business case for these services has also been supported by the landing of several high-speed undersea cables and the rolling out of metro fibre and the increased availability of the high-speed wireless broadband service, 5G.
Not the whole picture
The figure in the Africa Interconnection report, however, is not the whole picture as the report only records investment in carrier-neutral data centres and does not include that made by operators like Amazon Web Services (AWS), which plans to invest R46-billion in the Cape Town region by 2029.
AWS, which is currently building its African headquarters in Observatory, Cape Town says this figure includes investment in construction, engineering, energy consulting, plumbing, maintenance, security, specialised engineering regarding heating ventilation and air conditioning.
“They [data centres] support a vast ecosystem of employment,” notes Goldstuck.
The data centre supply chain
Several South African companies have established expertise in the construction and servicing of data centres. EDS Engineering, for example, has provided civil and structural engineering services for Teraco, and b2 Architects designed several of its centres.
For its part Cummins is a global provider of backup power solutions for the data centre industry, and Fire and Security Techniques provides a range of services to suppress and fight fires in these centres.
The importance of data centres to some companies can even be seen in the construction equipment group, Caterpillar joining the African Data Centre Association, a trade group that promotes the growth and awareness of data centres among government agencies, media, and the public across Africa.
“The evolution of digital business services, rapidly accelerating mobile data consumption, and the expansion of the tech sector are driving growth for African data centres,” said Alban Hohmann Schauly, data centre segment manager for Caterpillar’s Electric Power Division.
