African countries are some of the fastest-growing internet markets, but lack the necessary digital infrastructure
Behind the scenes of its ancient quays, container seaport and pastis sellers, the French city of Marseille is also the linchpin of Africa’s internet. Its high-tech data centres are vital for Netflix streaming, social media and cloud services, accessed via undersea cables.
Although African countries are among the world’s fastest-growing internet markets, many lack the digital infrastructure to enable faster speeds.
“What is very strange about the African data centre market is that a very large part of it is based in Marseille,” explains Stephen Beard, head of data centres at Knight Frank, the global real estate consultancy.
But that is changing fast. For instance, new high-speed subsea cables — some of them initiatives backed by Google and Facebook — will soon land at many coastal cities across the continent, helping to accelerate data transfer speeds.
Africa’s internet traffic is also staying closer to home as governments and companies look to store data less far away. That is driving demand for “co-location” centres, which rent out capacity. At the same time, internet exchange points, which direct local traffic and are often linked to data centres, are booming.
Africa currently accounts for barely 1 per cent of the world’s data centre capacity, but providers are racing to meet demand, says Xalam Analytics, an industry observer. Teraco, Africa’s biggest independent operator, has broken ground in Johannesburg on the continent’s largest data centre facility yet, aiming to lure top cloud computing providers as customers.
“Public cloud services growth has averaged 40 per cent a year since 2017,” says Guy Zibi, Xalam’s founder. “This is arguably the biggest digital gap Africa has faced in the modern era.”
Global investors are rushing to fill that gap. Last year, Actis — the private equity group — set up a $250m platform to invest in regional data centres, including a stake in Nigeria’s Rack Centre. In March, Old Mutual-backed Africa Infrastructure Investment Managers acquired a majority stake in what will be Ghana’s biggest data centre.
While office buildings and shopping centres have lost investment appeal because of the pandemic’s effect on working patterns, data centres stand to profit from the trend of working from home. But they do not come cheap. It costs an average of $10m per megawatt to equip a data centre, says Knight Frank, and the sites require high rates of uptime. But, as the industry comes under pressure to cut carbon emissions,
Africa’s power deficit could attract investors keen to back renewables, Beard says. Already, the biggest data centre in eastern Africa, being built by Liquid Telecom in Nairobi, is to be solar-powered.