This single sector in South Africa is on the verge of massive growth
South Africa is on the verge of a data center boom as internet penetration rates increase and the continent begins to catch up with other regions, said Nina Triantis, global head of telecommunications, media and technology at Standard Bank.
So far, Africa represents less than 1% of the global supply of colocation data centers, with South Africa accounting for the bulk of the continent’s capacity. Colocation facilities lease space, power and cooling to businesses and large-scale customers; they also provide interconnection allowing businesses to scale at low complexity and low cost.
African customers are increasingly using data centers to access cloud-based public services from hosts like Amazon Web Services (AWS), Microsoft and others.
We expect to see a substantial wave of data center investment materialize across the continent, led by regional economic powers like South Africa, Kenya and Nigeria. Other markets, including Ghana, which are attracting investment from major US tech giants like Twitter and Google, are increasingly attracting investor interest in data centers.
Uganda and Côte d’Ivoire are other interesting secondary markets, while interest in North Africa is also on the rise.
This inflection point is in part due to advances in connectivity and data consumption, especially as smartphone penetration increases in Africa. In fact, the Middle East and Africa is expected to be the fastest growing region in terms of the number of Internet users in the coming years. The region will also lead the growth in devices and connections per capita.
As broadband penetration increases, download speeds are also increasing at a rapid rate, which increases data consumption.
In addition, new submarine cables to the continent, including Google’s Europe-Africa cable named Equiano and 2Africa cable from a consortium including Facebook, China Mobile, MTN and others, will significantly increase capacity at large. tape and will feed the need for local data centers.
Additionally, the continued adoption of cloud technologies means more companies, especially in manufacturing, financial services, and healthcare, are moving their data and processes off-site to data centers. third. Cloud computing offers compelling cost advantages, among other things.
Meanwhile, the global shift towards hosting data closer to where it is ultimately consumed – driven by data protection regulations and the need to reduce latency to better enable content delivery and other functions – will further encourage investment in the region.
Another important driver is the IT outsourcing market in Africa. The continent’s rapidly growing economies, relatively low labor costs, and improved IT infrastructure make it an increasingly attractive region for outsourcing. As a result, sub-Saharan African software developer communities continue to show strong growth, with Kenya, Nigeria and South Africa leading the way.
To meet growing demand, data center facilities are being developed by telecom groups, corporations, governments, and cloud and colocation service providers including Teraco and Africa Data Centers. Internet hyperscale and cloud players like Amazon Web Services have also recently set up local data centers.
After doubling in the four years to 2020, the supply of multi-tenant data center colocation in Africa is expected to grow an additional 25% by 2023, according to Xalam Analytics.
And despite its lead over the rest of the continent, we believe the South African data center market still has significant room for growth.
With its relatively high Internet penetration rates, the demand for colocation capacity will continue to increase rapidly. The country also remains a data center hub for the entire region, thanks to its relatively advanced internet infrastructure and other advantages. Many sub-Saharan African and international companies are investing in the South African data center market.
After more than tripling in the four years leading up to 2020, South Africa’s roommate supply is expected to increase a further 67% by 2024, according to Xalam Analytics. Growth is largely driven by global cloud and internet content players.
Meanwhile, we expect the telecom groups, which still own a large portion of the data centers in Africa, will follow the lead of their global peers by reallocating these assets so that they can meet the needs of tenants. external. This trend has already started and will further increase the capacity for co-location.
To facilitate the expected growth of the data center market, African countries and businesses will need to continuously invest in the required technical skills. This offers the continent the opportunity to develop its workforce and invest in skills and capacities suitable for the future.
- By Nina Triantis, Global Head of Telecommunications, Media and Technology at Standard Bank
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