Africa’s Data Centre Boom: A Frontier Poised for Leapfrog Growth

Africa’s data centre market is at the cusp of transformative growth. Rapid digital adoption, mobile-driven economies, the shift to local data storage & processing and sustainable infrastructure solutions that curb power constraints, are converging to create compelling opportunities for investors and operators across the continent.

The Opportunity Landscape:

Africa’s data centre market, valued at US$3.49 billion in 2024, represents a young but fast-evolving digital landscape with enormous growth potential, with industry forecasts projecting its value to reach US$6.81 billion by 2030 (~12% CAGR). Africa hosts 229 operational data centres with a combined capacity of 300MW, accounting for less than 1% of global capacity, despite 38% of its population already being online.  This disparity signals a major infrastructure gap and opportunity, with demand for data centres on the continent projected to exceed supply by 300% or additional 1,200MW of data centre capacity.

Currently, about 40% of Africa’s data centres are concentrated in South Africa, Nigeria and Kenya (with 56, 19 and 17 operational data centres respectively), highlighting both the sector’s regional concentration and the substantial untapped potential across the broader continent.

The Industry Leaders and their Edge: 

Teraco Data Environments is the clear market leader in Africa with a capacity of more than 200MW. Its dominance is anchored in South Africa, where it operates the massive 110MW Isando Campus, along with additional facilities in Cape Town and Durban.  The closest competitor in the sector is Africa Data Centres with a footprint spanning nine cities across six countries.  Rounding out the top three is Equinix, which strengthened its African presence through the US$320 million acquisition of MainOne in 2022, adding three operational data centres in Nigeria, Ghana, and Côte d'Ivoire.

Teraco, Africa Data Centres, and Equinix have succeeded in Africa where many others have struggled. Their advantage lies in building infrastructure that is independent of network and hardware vendors, enabling them to operate as colocation providers. This vendor-neutral model has proven highly attractive to hyperscalers. 

Unlike pure cloud services, colocation gives them greater control and customization of IT infrastructure, while also delivering improvements in reliability, scalability, and security. As a result, global players such as AWS, Microsoft, and Google have become key partners at Teraco and Equinix facilities. Their presence, in turn, drives enterprise demand by offering direct cloud connectivity that can cut transit costs by as much as 70%.

For operators, collocation translates into superior revenue density and stronger margins. Vendor neutrality, hyperscaler partnerships, and interconnection capabilities combine to create powerful network effects: each new tenant increases the value of the ecosystem for existing customers. 

This model has been especially effective in Africa’s emerging markets, where enterprises prioritize flexibility and cost efficiency. In fact, colocation providers captured 52% of the continent’s data centre power market revenue in 2024, underscoring how well the approach aligns with local needs.

The Unique Catalysts Fueling Africa’s Surge:

Whilst the growth of data centres in Africa reflects global trends such as rising demand for AI processing and cloud computing, the continent’s growth is also driven by several unique catalysts.

Africa’s mobile-first digital economy is experiencing rapid growth, propelled by both explosive data consumption and swiftly expanding connectivity. Mobile data usage across the continent is increasing at ~40% annually, almost twice the global average.   In Sub-Saharan Africa, monthly data usage per smartphone is projected to rise from 5 GB to 14 GB by 2030, with region-wide data traffic expected to surge from 2.3 exabytes to 11 exabytes per month over the same period.  Today, approximately 708 million Africans use the internet, accounting for roughly 13% of the world’s total internet users.  These significant and fast-growing increases are driving a critical need for local data centres to efficiently process and host digital services throughout the region.

Another significant catalyst for Africa’s data centre growth is data sovereignty—with numerous governments implementing stringent data localization laws to enhance national security.  Notable policies include Nigeria’s Data Protection Act of 2023, Kenya’s Data Protection Act 2019, and South Africa’s National Data and Cloud Policy 2024, all mandating that certain data be stored and processed within their borders. This approach differs from countries like the US, where data sovereignty is shaped mainly by competitive concerns rather than national security.

Technology and infrastructure advancements are pivotal in driving the rapid expansion of data centres across Africa. The continent’s lack of legacy systems enables new facilities to leapfrog intermediate technology generations, adopting state-of-the-art, energy-efficient solutions like clean energy and advanced cooling technologies from the outset.  In addition, transformative regional connectivity projects such as 45k km2 Africa submarine cable, are significantly expanding fibre access and reducing latency, which in turn escalates data traffic volumes.  These factors collectively intensify the demand for local data centre capacity.

Infrastructure Hurdles:

Despite promising growth, Africa’s data centre industry faces its greatest risk from the continent’s challenging power infrastructure. Building a data centre in Africa costs between US$10–15 million per megawatt - significantly higher than the global average of US$5–12 million per MW, with total development costs potentially exceeding global averages by 25% to 100%.  This premium is driven by the need for robust backup diesel and gas power systems and higher redundancy standards to cope with unreliable grids. These additional precautions also amplify operating expenditure.

Tackling Power & Infrastructure Hurdles

To address power infrastructure challenges, African data centres are increasingly adopting off-grid, climate-friendly solutions and locating facilities in regions with strong renewable energy potential. Examples include:

In South Africa, Gold Synergy has deployed self-cooling rack technology at its CPT1 facility in Cape Town – demonstrating the viability of self-cooling racks in African conditions.  Solar integration and hybrid renewable energy systems are becoming standard, with projects like Teraco’s 120MW solar PV plant to power its Data Centres (expected to come online in 2026).

In Ghana, Onix’s Accra 1 Data Centre has on-site a 726kWp solar farm and achieves 100% daytime solar operations - setting a precedent for solar-driven digital infrastructure in West Africa.

In Kenya, where 90% of electricity generation comes from renewable sources, geothermal-powered data centres are being pioneered. For example, the Microsoft-G42 partnership is developing a 100MW facility (expandable to 1GW) running exclusively on geothermal energy, making Kenya a global leader in renewable data centre baseload power.

Conclusion:

African data centres present a compelling investment opportunity by combining significant growth potential with structural advantages that are largely unavailable in mature markets. Rapid digital adoption—driven by mobile-first economies and rigorous data sovereignty policies—has created a persistent need for local hosting capacity. This dynamic creates the opportunity for early entrants to command premium pricing and establish dominant market positions before broader competition arises.

Historically, power infrastructure risks hampered the rollout of large-scale facilities in Africa. Today, however, innovations in sustainable energy integration and advanced cooling technologies are not only starting to mitigate these challenges but also creating operating efficiencies that are difficult to replicate elsewhere. As a result, Africa’s next wave of data centres is being built to serve both immediate demand and long-term sustainability goals.

Africa’s data centres are more than infrastructure—they are driving economic decarbonization, digital sovereignty, and the continent’s tech transformation. By aligning investment strategies with renewable energy and smart cooling, early movers can capture outsized market share and shape Africa’s digital and environmental future while securing resilient, long-term revenue streams.

By: Estiaan van der Walt – Analyst: Africa Merchant Capital Advisory

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