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REGIONS MIDDLE EAST & AFRICA


StoringAfrica’sdata I


FOREIGN INVESTORS ARE DRIVING A NEW WAVE OF INVESTMENT INTO AFRICA’S DATA CENTRES. TAWANDA CAROMBO REPORTS


T industry investors are increas- ing their investment into data centre facilities in Africa, pinning


their prospects on booming demo- graphics and growing digitisation across the continent. While digital infrastructure has


traditionally been scarce in most African countries, more than 30 major data centres have come online


across the continent since 2016, essentially dou- bling the region’s hosting capacity, according to research by the Africa Data Centre Association (ADCA). However, this capacity is still unevenly distributed, with South African facilities accounting for two-thirds of the total in 2020. With Covid-19 drawing attention and


resources to the needs of the digital economy, a newwave of foreign investment ismounting in a diverse range of countries, with new facilities being built inZambia,Namibia,Ghana,Uganda and elsewhere. “There is considerable interest in the data


centre sector from international investors in Africa,” Guy Zibi, managing director of Xalam Analytics, which closely monitors financial and operational activity in the industry, tells fDi.


Strongfundamentals The sector is expected to growby an annual 12% between 2019 and 2025 to reach an overall value of $3bn by 2025 in revenue, according to data analytics firm ReportLinker. Demographics and uptake of digital ser-


vices are vital drivers of this market growth. Africa’s population in important markets, such as Nigeria and the Democratic Republic of the Congo (DRC), is expected to triple by 2100, according to data from a report published in The Lancet. As populations in key African countries


boom, so does the need for digital services, such as banking, in addition to risingmobile uptake — crucial sectors for data centres. Sub-Saharan


POWERSUPPLY INMUCH OF AFRICACANBE SPORADIC,SOOFF-GRID SOLUTIONS AREANECESSITY


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Africa is estimated to have 500 million mobile subscribers, up from 477 million in 2019, according to global mobile phone industry organisation GSMA. And this accounts for just 45% of the region’s population. Moreover, only 272 million of those phone users have access to mobile internet, representing massive upside for mobile phone operators, which ultimately feeds into demand for data centres. Withan eye on these fundamentals,MrZibi


is bullish that capital expenditure within Africa’s data centre industry will bounce to $600m this year, up from the average $200m–300m in the past few years. In 2022, capital expenditure in the sector will likely grow to $800mas investors increase their expo- sure to benefit from the wave of digitisation and the rush to invest in online platforms, he adds.


Foreign investors’ interest AFebruary 2021 report by theADCAand Xalam Analytics shows that Africa requires an addi- tional gigawatt and 700 facilities to meet grow- ing demand for data storage. There are cur- rently 139 facilities up and running across the continent, ADCA estimates. And partly feeding into this, are at least


“four large scale data centres due to be devel- oped in 2021” in South Africa, in addition to “many feasibility studies currently being undertaken” elsewhere in the country, accord- ing to data centre market research firm, Turner and Townsend. In Nigeria alone, “there are two large data centres scheduled for com- pletion” in 2021. Prime investors include Africa Data Centres


(ADC), which canvassed $300m from the US’s Development Finance Corporation (DFC) in 2020, for expansion into new markets such as Ghana and Nigeria, where it is now construct- ing large facilities, according to Stephane Duproz, chief executive of ADC. In 2020, Actis, a London-based private


equity company, invested around $250m into the acquisition of a controlling stake in the Nigerian facility Rack Centre, in which the World Bank’s International Finance Corporation (IFC) is also invested through the Convergence Partners Communication Infrastructure Fund. The IFC is making an investment bet


towards data centre facilities in Africa as it seeks to “support the expansion of Africa’s data centre markets through direct investments in data centre opportunities or indirect invest- ments through digital infrastructure” funds, it told fDi. Its Africa director for infrastructure and industry, Linda Munyengeterwa, believes that Africa’s data centre market is “experienc-


www.fDiIntelligence.com August/September 2021


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