Feature/OPED
Africa’s Data Centre Market Projected to Reach $7bn by 2028
By Divij Ruparelia
Africa’s data centre market is growing at an unprecedented rate, driven by increasing internet penetration, rapid adoption of cloud computing, and soaring demand for digital services. As the continent embraces the digital revolution, the data centre market is projected to reach over $7 billion by 2028, with an annual growth rate (CAGR 2024-2028) of 7%. This growth is not only transforming Africa’s digital landscape but also presenting significant opportunities for investors, technology companies, and local businesses.
The Rise of Internet Users and Cloud Adoption
There has been a significant surge in internet usage across Africa, with the number of users soaring to approximately 645 million in 2023, representing a remarkable 3.5-fold increase compared to 2014 figures. The upward trend is anticipated to persist, with estimates suggesting that by 2029, the African continent will boast an impressive online population exceeding 1.1 billion connected individuals. This rapid growth, coupled with the COVID-19 pandemic accelerating the shift to cloud computing and remote work, has intensified the need for robust data centre infrastructure. As more businesses and individuals rely on digital services, the demand for data storage, processing, and transmission continues to soar, fuelling the expansion of the African data centre market.
Navigating Challenges and Seizing Opportunities
The growth of data centres in Africa presents immense potential, but it also comes with significant challenges. Many current data centres are concentrated in crowded markets where supply outpaces short-term demand. These facilities, often built to hyperscaler specifications to suit the requirements of tech giants like Meta and Amazon, are prohibitively expensive and over-specced for local enterprises and SMEs. The costs associated with these hyper-scaler data centres are simply too high for the vast majority of African businesses, rendering them inaccessible and impractical. Consequently, the largest data centre providers find themselves competing for a limited number of hyperscalers, leading to revenue traction struggles.
To overcome this challenge, a plethora of local providers offering a true local product-market fit with appropriately sized data centres have emerged and are now uniquely well-positioned for success. These local providers understand the financial constraints and specific needs of African businesses and can offer tailored solutions at more affordable prices. By catering to the budgets and requirements of local enterprises and SMEs, these providers can tap into a much broader customer base and achieve more sustainable growth. Moreover, strategic positioning within core data corridors, connecting landlocked countries to sub-sea fibre cables and housing internet exchanges, presents a lucrative market opportunity for these local providers. This approach not only makes data centre services more accessible to African businesses but also contributes to the overall digital growth and transformation of the continent.
Innovating Amidst Power Instability
One of the most significant challenges facing African data centres is the issue of intermittent power and unreliable electricity supply. Many countries in Africa experience frequent power outages, which can be detrimental to the operation of data centres that rely on a constant and stable power supply.
To mitigate this issue, data centre providers are investing in backup power solutions, such as uninterruptible power supply (UPS) systems and diesel generators. However, these solutions can be expensive to operate and maintain, and they also contribute to carbon emissions. Some data centre providers are exploring alternative power sources, such as solar and wind energy, to reduce their reliance on the grid and improve their sustainability.
Another approach is to locate data centres in areas with more reliable power infrastructure, such as industrial zones or near power generation facilities. This strategy can help to minimise the risk of power outages and ensure a more stable power supply for the data centre.
Data Centres at the Crossroads of Connectivity
The growth of Africa’s data centre market is also contingent upon the availability and accessibility of high-speed internet connectivity. Undersea cables play a crucial role in connecting Africa to the global internet, and data centres that are located near these cables can benefit from faster and more reliable connectivity.
Currently, several major undersea cable systems connect Africa to the rest of the world, including the SEA-ME-WE 5, the Africa Coast to Europe (ACE), and the South Atlantic Cable System (SACS). These cables land at various points along the African coastline, such as Cape Town, Mombasa, and Djibouti, and provide high-capacity connectivity to the continent.
Data centre providers are strategically positioning their facilities near these landing points to take advantage of the available connectivity. For example, Wingu Africa with data centres in Djibouti has connections to SMW-3, EIG, EASSy, AAE-1, SEA-ME-WE-5, and Aden-Djibouti and Liquid Intelligent Technologies has established a data centre in Cape Town, which is near several undersea cable landing stations, including the WACS, SAT-3/WASC, and ACE cables.
In addition to undersea cables, the growth of Africa’s data centre market is also dependent on the availability of terrestrial fibre networks. These networks connect data centres to end-users and enable the delivery of high-speed internet and other digital services.
The development of fibre networks in Africa has been uneven, with some countries having more extensive coverage than others. However, there are several initiatives underway to expand fibre coverage across the continent, such as the pan-African fibre network being built by Liquid Intelligent Technologies.
Data centre providers are also investing in their fibre networks to improve connectivity and reduce their reliance on third-party providers. For example, Raxio’s 500-kilometre fibre network in Uganda which connects its data centres to key locations across the country.
Growth Contingent upon FTTx
The availability of fibre-to-the-x (FTTx) networks is critical for driving the adoption of digital services and applications, such as e-commerce, video streaming, and remote work. As more people and businesses in Africa gain access to high-speed internet through FTTx, the demand for data centre services is expected to increase.
However, the deployment of FTTx networks in Africa has been limited, with only a small percentage of the population currently having access to fibre connectivity. This is due to several factors, including the high cost of infrastructure development, regulatory barriers, and limited investment.
To address this challenge, governments and private sector players are investing in initiatives to expand FTTx coverage across the continent and data centre providers are also partnering with FTTx providers to improve connectivity and reach a wider customer base.
Embracing Sustainability and Green Energy Solutions
The issue of reliable power supply remains a persistent challenge for the African data centre market. Many data centres still grapple with fundamental power issues and remain heavily dependent on diesel generators due to grid unreliability. In response, data centre providers that prioritise renewable and sustainable energy solutions are likely to build company value faster and have ultimately more medium-term appeal for investors and acquirers.
Teraco are making significant investments in green data centres powered by renewable energy and employing advanced cooling technologies to reduce energy consumption. In 2021, Teraco raised $680 million in debt funding to finance what they claim will be some of Africa’s largest and most environmentally friendly data centres, adding 100MW in capacity, including a utility-scale renewable energy site. This move reflects the growing importance of sustainability in the data centre industry and the need for operators to align their practices with global ESG standards, which are increasingly becoming a fundamental requirement for many investors and strategics in the sector.
Other data centre providers in Africa are also exploring innovative solutions to address the power challenge. For example, Africa Data Centres, part of Cassava Technologies has announced plans to power its facilities with renewable energy, with a target of achieving carbon neutrality by 2030.
Key Players and Investment Landscape
The African data centre market is populated by a diverse array of players, from local start-ups to global technology giants. As the market has matured over the past three years, consolidation and international strategic interest have become more prevalent, with global entrants such as Digital Bridge and Equinix making their mark.
Equinix, a global leader in data centre services, has established a strong presence in Africa, while Teraco, majority acquired by Digital Bridge in 2022, continues to expand its footprint. Raxio Data Centre, having raised up to $170 million in debt and $46 million in equity financing in 2023, is another key player driving growth in the region. Wingu Africa, supported byAfrica Capitalworks, with data centres built or under construction in Djibouti, Somaliland, Ethiopia, and Tanzania, and IX Africa, supported by Helios Investment Partners, are also making significant contributions to the market’s development.
The influx of over $2 billion in funding for African data centre operators in 2021 alone underscores the immense growth potential and investor confidence in this sector. This surge in investment is driven by the recognition of the critical role data centres play in enabling digital transformation, supporting economic growth, and fostering innovation across the continent.
Emerging Markets and Future Growth
While Johannesburg, Cape Town, Lagos, and Nairobi currently have the most cumulative MW of leased data centre capacity in Africa, a 451 Research report from June 2023 highlights that the fastest-growing markets are Kinshasa, Luanda, Cairo, and Dar es Salaam, with 2022-25 CAGRs of 233%, 64%, 48%, and 45%, respectively. There is hardly anywhere else where such sustained growth is available in what otherwise is a globally maturing market.
This highlights the broadening of the market across the continent, with significant growth potential in previously underserved regions. These emerging markets present a unique opportunity for data centre operators to establish a presence early and capitalise on the growing demand for digital services in these areas. The rise of edge computing, the adoption of 5G networks, and the growing importance of data sovereignty will further drive the demand for localised data centre infrastructure across Africa.
Unlocking Value in the African Data Centre Market
The African data centre market is in the midst of a remarkable growth phase, presenting a wealth of opportunities for investors, technology companies, and local businesses. As local and international players continue to invest in the development of state-of-the-art data centres across the continent, Africa is poised to become a major player in the global digital economy.
The key to unlocking value in this market lies in addressing the unique challenges and opportunities present in Africa. Providers that offer appropriately sized data centres with a true local product-market fit, prioritise renewable energy solutions, and strategically position themselves within core data corridors will be well-positioned for success. As consolidation continues over the next three years, operators that achieve scale and market relevance will be best equipped to capitalise on the $7 billion+ market potential.
By investing in the right players, partnering with local businesses, and embracing sustainable practices, stakeholders can tap into the immense growth potential of this sector and play a pivotal role in shaping Africa’s digital future. As the continent continues to embrace the digital revolution, the African data centre market is set to become a key driver of economic growth, innovation, and social progress.
Divij Ruparelia is the COO at DAI Magister
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
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