It is economic déjà vu for Zimbabwe as the central bank battles spiralling inflation. The Reserve Bank of Zimbabwe is attempting to introduce ever-higher denomination notes; but inflation still approaches 400%.
Africa needs high-fibre diet to profit from data-centre growth
African countries can trigger investment and create jobs by providing secure, diversified fibre and power supplies to take advantage of growth in demand for data centres.
The centres are used to store computing and networking equipment. They provide data storage, backup and recovery, data management and networking.
As such, they are essential to keeping the corporate show on the road. The coronavirus pandemic has highlighted the value to businesses of being able to reliably access applications from virtually anywhere, says Guy Zibi, principal at Xalam Analytics in Cambridge, Massachusetts.
“Companies that were already evolving their architectures to achieve this have a new impetus. Those that were either hesitant, or slow to move have a new urgency,” he says.
For data centres to really take off in Africa, competitive markets, or at least some type of diversity, are needed for both electricity and fibre connectivity, says Zibi. “The primary obstacle to building more data centres is that few countries in Africa offer this type of combination.”
- Additional terrestrial fibre, both in terms of volume and diversity, is “absolutely critical” to long-term data centre growth, says Zibi.
- This will help to ensure that good quality Internet isn’t limited to coastal capitals, but also expands into the interior.
South Africa, Nigeria
Martin Botha, a portfolio manager at Reitway Global in Cape Town, expects significant growth in the African data centre market. It’s relatively easy to keep a centre running while observing social distancing. Centres may need as few as 12 people to keep running, he says.
Botha likens the global scramble to get data centre access to panic buying of toilet paper in the early stages of the COVID-19 pandemic. The difference is that the need of companies for data centres is only going to increase.
- According to research from RBC Capital Markets in April, South Africa is seen by industry participants as ranking alongside global emerging markets such as China, Brazil, India and Indonesia as having strongest data-centre demand from customers and developers.
- Microsoft’s Azure set up data centres in Cape Town and Johannesburg in 2019.
- Huawei of China has also said that it plans two South African data centres.
- Amazon’s cloud computing division, Amazon Web Services, in April started data centre operations in Cape Town. Botha sees this as a “very positive sign.”
The article continues below
Get your free PDF: The Sahel trap
States under strain
Complete the form for your free download of The Africa Report’s special feature "The Sahel trap". Get your free PDF by completing the following form.
In March, emerging-markets investor Actis bought the Rack Centre in Lagos, citing potential for expansion across Africa. Actis plans to invest $250m to buy and build African data centres. Nigeria is Africa’s largest data centre market outside South Africa.
Fibre and power supply need to be addressed.
- Improved supply of subsea cables would be a major driver for African data centres, says Botha.
- He points to the reliability of power supply as another African constraint.
- The cost of electricity and the lack of diverse supply sources discourages data-centre leases from being signed in South Africa, he says.
- Companies like Google or Amazon are unlikely to commit to a single national provider in Africa, Botha says. “They want a back-up.”
- Zibi agrees that US tech giants would use more African data centre capacity if power infrastructure was improved.
Bottom line: Data centres are on a secular growth trend from which Africa can benefit with the right fibre and power mix.