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Africa is rising as a hotspot for data centre investment

CONRAD ONYANGO

AFRICA’S nascent data centre market has begun to experience a boom, driven by a youthful population hungry to explore and connect with the world over the internet.

A new report by property intelligence firm, Broll-API called “Colocation, Colocation Colocation – The rise of data centres in Africa”, says there is an explosion in the youth population with access to the internet. This dynamic demographic is seeking out new avenues to expand their knowledge and interact with friends, families and business, according to the report.

Africa is increasingly “connected” thanks to the rollout across the continent of fibre-optic cables as more and more undersea cables linking the continents. Data centres are able to enhance an internet user’s experience by providing a more “seamless” browsing experience and at the same time provide critical digital services – including “cloud” services – to local businesses. An increase in video streaming via mobile phone and the serving of advertising together with online content is a “push’ factory, driven by major international companies seeking new markets and looking for better and better local “delivery” of content and services over the internet.

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That is creating an increased demand for data centres, according to the report.

“A massive uptake in overall data needs is a direct result of this trend,” it says.

Market research firm, ReportLinker expects the Africa data centre market to grow to more than 3 billion US dollars by 2025, growing at a compounded annual rate of more than 12 percent.

The United Nations estimates Africa’s population – characterized as having some of the youngest people in the world – to more than double by 2050. More than 50 percent of all Africans are expected to live in cities by 2040.

Xalam Analytics, a research and advisory firm focused on digital infrastructure projects Africa’s multi-tenant data centre co-location supply to grow by 25 percent over the next two years. According to the firm, the rate of supply has already doubled in the four years to 2020.

“With the rise in demand for data, it is expected that Africa will make progress in catching up to the rest of the world in regards to the number of colocation centres,” says the Broll-API report.

South Africa, Kenya and Nigeria are likely to see the greatest demand for data centres in the next few years but investors are also looking to set up more in Ghana, Uganda, Cote d’Ivoire and countries in North Africa as part of market entry and market expansion.

“Advances in connectivity and data consumption, particularly as smartphone penetration rises in Africa,” will drive demand, according to Nina Triantis, global head of telecoms, media and technology at Standard Bank.

Broll’s database shows South Africa is currently leading the continent in the number of colocation centres (31) while Kenya and Nigeria have 11 centres each, Mauritius (10), Angola (7) and Ghana (5). Colocation centres are categorised as data centre facilities in which businesses can rent space for servers and other computing hardware.

Demand for internet services during the pandemic, which shifted people’s norms and sparked a rise in the number of people working from home as well as the growth of e-commerce, has been particularly high in South Africa, Nigeria and Kenya.

However, of an estimated 4,900 colocation hubs across the world, Broll estimates that less than 2 percent are based in Africa. While Kenya has an estimated 107 mobile phones per every 100 people and 24 internet users for every 100 people, the country is still largely reliant on international service providers for internet services and cloud storage.

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“It is expected that investors will express interest in this area in a bid to tap into the technology gap….Kenya is ready for the establishment of additional data centres,” says the report.

The rest of the continent is also seeing growing demand. Algeria and Morocco have three colocation centres each, while Tunisia and Zimbabwe both have two. Cameroon, Djibouti, Ivory Coast Democratic Republic of Congo, Ethiopia, Rwanda, Uganda and Tanzania have a single centre each.

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By The African Mirror

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