…Data centre market to reach US$5 billion by 2026
The rapid expansion of Africa’s online retail sector, driven by the pandemic’s impact and the subsequent surge in demand for storage, distribution, and last-mile logistics infrastructure, has triggered a substantial upswing in interest towards data centres across the continent.
A recently published report by Knight Frank underscores that data centres present a more economical and efficient IT solution compared to in-house servers, elevating their appeal.
These centres also deliver cloud services, empowering organisations to focus on their core operations.
Investors have already taken notice of the growing demand for additional data centres in Africa.
An excerpt from the report highlights this trend:
“Investment in the market is projected to have a Compound Annual Growth Rate (CAGR) of approximately 15% from 2020 to 2026. In 2020, the data center market size in terms of investment was valued at US$2 billion, and it is expected to reach US$5 billion by 2026.”
Over the past year, several significant transactions have taken place across the continent, including Digital Realty’s acquisition of Terraco for $3.5 billion. This acquisition followed Digital Realty’s purchase of iColo, a leading Kenyan-based platform with facilities in Nairobi and Mombasa, a central subsea cable access point for Africa.
Additionally, Equinix entered the African market by acquiring MainOne data centres, a company with a presence in Ghana, Côte d’Ivoire, and Nigeria, for $320 million.
Further investments are also pouring in, with NTT and Vantage Data Centres committing over $500 million to new data centres in Johannesburg and the surrounding areas.
Pan-African players like Africa Data Centres, Raxio, and PAIX, as well as global giants like China Mobile and Alibaba, are already operational or entering new markets, including the Democratic Republic of Congo, Congo, Ghana, and Côte d’Ivoire.
While South Africa, particularly Johannesburg, has been the dominant player in the African data centre landscape due to its strategic location, abundant subsea cable landing stations, political stability, mature enterprise markets, and corporate presence, other hubs are emerging in Nigeria, Egypt, Kenya, and Morocco.
In Nigeria, the financial services sector’s demand is driving the expansion of data centre capacity. Various local and pan-African data centre operators are announcing new projects to meet this demand, including the unveiling of a Tier IV Data Center in Kano, designed to support private businesses and public sector organizations.
Egypt, in North Africa, is also attracting mature Middle East-based colocation platforms, such as Khazna and GDH, looking to enter the market due to undersupply and potential demand. Historically, the Egyptian market has been challenging to enter due to the telecom monopoly held by Telecom Egypt.
Kenya, with its renewable transmission power access and investor-friendly environment, continues to draw attention. However, the government and public sector have not yet indicated plans to migrate IT infrastructure to the public cloud, which could be a catalyst for further data centre growth.
Morocco’s stable economy and reliable power infrastructure make it an attractive destination for data centre investment.
The African data centre landscape appears promising in the coming years, with expectations of increased merger and acquisition (M&A) activity, primarily led by US data centre operators.
Stakeholders are actively seeking viable development sites with power, fibre, and permitting potential across the continent, anticipating significant growth in the sector in 2023/24.Follow us on social media