Over R100bn data centre investments set for Africa

An estimated amount of over R100 billion will be invested in carrier-neutral data centres in Africa over the next three to five years.

This is according to the Console Connect Africa Interconnection Report 2022. For the study, over 100 organisations were interviewed to reveal their insights on the continent’s data centre market.

It says an estimated $5 billion (R85 billion) to $6 billion (R102 billion) will be invested in carrier-neutral data centres in Africa over the next three to five years.

Carrier-neutral data centres are colocation data centres or hyperscale data centres that interconnect with a large range of connectivity suppliers. By using this type of data centre, businesses can outsource costly IT processes, freeing teams up to concentrate on other tasks.

The report notes the inflow of investment in Africa has consolidated and internationalised the carrier-neutral data centre sector.

It points out that three of the big players that have come to the continent – Digital Realty, Equinix and Vantage – all have international networks of data centres across the globe.

In South Africa, US-based Digital Realty in August completed the acquisition of Teraco – a carrier-, cloud- and vendor-neutral data centre provider – which has since grown to become Africa’s largest data centre provider.

In July, Vantage Data Centres, a US-based provider of hyperscale data centre campuses, opened its R15 billion data centre facility in Johannesburg, which it dubs JNB11.

Also earlier this year, Equinix, a US-based digital infrastructure company, announced its expansion into Africa through its intended acquisition of MainOne, a leading West African data centre and connectivity solutions provider, with presence in Nigeria, Ghana and Côte d’Ivoire.

According to Console Connect, the number of existing carrier-neutral data centres has increased from 20 to 50 and the number planned from 15 to 68.

It says while SA has now exceeded the 100MW milestone, other countries are either in the tens or single figures.

The report notes the arrival of Google’s Equiano cable and the A2Africa cable is accelerating two things – the availability of considerable amounts of new bandwidth capacity at what is promised to be lower prices, and the rollout of carrier-neutral data centres in new countries.

“These two things are linked as those behind both cables favour a more open approach to the sale of bandwidth and the building of carrier-neutral data centre ecosystems. In addition, more capacity is being delivered by the Metis and Peace cables,” says the report.

It adds that Amazon Web Services (AWS), Microsoft, Google Cloud, Oracle Cloud and Huawei Cloud are laying the foundations for a robust African hyperscaler market.

For example, it says, AWS has established Kenya as a local cloud zone; Microsoft views Nigeria as a “prime” location for development; and Google has announced a $1 billion investment in Africa over the next five years, including the launch of its first South African Google Cloud region.

Both AWS and Microsoft have established local data centres in South Africa, as more organisations take their workloads to the cloud.

Oracle Cloud opened its first cloud region in Johannesburg, which it says “enables customers to easily migrate IT workloads and data platforms to the cloud or build new cloud-native applications. In addition, Oracle offers a wide range of application modernisation and cloud strategies to help African organisations operate with global competitiveness.”

According to the report, Huawei Cloud is present in six data centres in South Africa and can be accessed in Kenya and Nigeria. It can also be made available in other countries through companies like MTN, Vodacom, Teraco and Dimension Data.

Console Connect points out that a significant number of African businesses adopted distributed work practices before COVID-19.

It says lockdowns forced many organisations to operate remotely; however, increasing bandwidth demands and the need for unbroken connectivity means the public internet is now inadequate in meeting corporate requirements.

The report found cloud adoption and innovation are being driven by the start-up community and cloud-native African businesses.

Advantages include scalability, enhanced connectivity and cost savings that reduce both on-premises maintenance and operational expenditure, it explains.

“Many African companies are hampered by legacy equipment and attitudes, alongside tight infrastructure investment budgets. Furthermore, a proportion of business leaders are unaware of the benefits of cloud technology, and the global shortage of talent is being felt acutely in the region.”

According to the study, the need for reliable connectivity is expanding the market for network-as-a-service (NaaS) and network automation solutions.

“The emergence of NaaS platforms provides businesses in Africa with new options for their cloud and data centre connectivity. Thanks to advancements in software-defined networking and network functions virtualisation, it is possible for businesses to access private, high-performance networks in real-time and on-demand,” says the report.

The creation of new data centre infrastructure, subsea cable networks, and fresh streams of investment will propel cloud adoption forward in Africa, it adds.

Neil Templeton, senior vice-president of marketing at Console Connect, believes the current reliance on public internet-facing systems “do not always meet increasingly stringent requirements around security and performance when moving data and workloads between cloud services and the people and applications that require them”.

He adds: “The emergence of NaaS platforms can help businesses in Africa overcome this challenge. Advancements in software-defined networking have made it easier to access high-performance networks and create a dedicated connection to the cloud that drives efficiency and reduces cost for businesses.”