Nigeria’s emergence as a key player in 5G network deployments is fueling the growth of data centres across Africa, according to a new report.
“Africa Data Center Construction Market – Industry Outlook & Forecast 2023-2028,” a study by Research and Markets also predicts that the Africa data centre construction market will experience a compound annual growth rate (CAGR) of 10.70%, reaching $1,405.5 million by 2028, up from $763.7 million in 2022.
South Africa currently leads the region in data centre capacity, contributing over 50%, followed by Nigeria, Kenya, and other African countries. Investments in cloud-based services, smart city developments, and fibre connectivity are driving the continuous growth of data centres across the region, according to the report authors.
Major global cloud service providers, including Amazon Web Services, Microsoft, Google Cloud, Oracle, and Huawei Technologies, are actively involved in the African market. Google Cloud, for instance, announced plans in September 2022 to establish a new cloud region in Cape Town, South Africa, with operations expected to commence within the next two to three years.
To enhance connectivity, the Africa data centre construction market is deploying new submarine cables such as Africa-1, 2Africa, India Europe Xpress (IEX), Equiano, and Medusa Submarine Cable System SeaMeWe-6, all of which are projected to be operational during the forecast period.
How 5G fuels data centre construction market
One significant trend driving the market, the report says, is the deployment of 5G technologies. The introduction of 5G networks in Africa is expected to generate a substantial amount of data, leading to increased investments in data centre construction.
Nigeria, like other countries like South Africa, Kenya, Egypt, and Ethiopia have already witnessed the commercial launch of 5G networks, while others are in the early stages of development. Telecoms operators such as Vodacom, MTN, Ericsson, Orange, Ethio Telecom, and Rain are actively involved in the commercial deployment of 5G services across the continent.
“In the Africa data centre construction market,” the report authors say, “countries like South Africa, Kenya, and Nigeria are the developed data centre markets in the region. Facilities in the region are developed with government support, which includes incentives for the operation of the data centres.”
Others like Smart Cities, Special Economic Zones, Free Trade Zones, and governmental incentives and exemptions drive Africa data centre construction market growth. South Africa, Kenya, Morocco, Nigeria, Egypt, Ethiopia, and Ghana are some of the major countries in the region which triggered the smart city investments. For instance, the Lanseria Smart City project, and Nkuna City project in South Africa, and the Eko Atlantic City in Nigeria, the report says.
Another key factor driving the growth of data centres in Africa is the procurement of renewable energy sources. Due to inadequate power infrastructure in the region, data centres are investing in renewable energy infrastructure for power generation. MTN, for example, is utilising renewable energy to power its facilities and aims to achieve carbon neutrality by 2040 through its “Project Zero” programme. In addition, Vantage Data Centers signed a 20-year Power Purchase Agreement with SolarAfrica to procure 87 MWp of solar energy for its new facility.
Various African countries have set ambitious goals for renewable energy generation. Nigeria, for instance, plans to generate 30 GW of electricity from renewable sources by 2030, accounting for 30% of its total production. Similarly, Egypt aims to increase the share of electricity produced from renewable sources to 42% by 2035.
The report further says that the Africa data centre construction market is investing in power infrastructure with a minimum of N+1 redundancy and focusing on cooling infrastructure to address the high-temperature climate in some African countries. The deployment of data centres with Tier III and Tier IV certifications is on the rise, and both private and public entities have received Uptime Institute’s Tier III/IV certification.
Major vendors involved in the Africa data centre construction market include energy, ABB, Caterpillar, Cummins, Delta Electronics, EATON, EVAPCO, Enlogic, Legrand, Master Power Technologies, Rittal, Rolls-Royce, Schneider Electric, Siemens, STULZ, Vertiv, and many others.
The growth of Africa’s data centre construction market is further driven by increasing adoption of cloud services, penetration of big data and IoT, renewable energy adoption, and the expansion of submarine cables and inland connectivity. However, challenges such as low budgets and investment constraints, location constraints, scarcity of skilled workforce, and security threats still constrain market growth.