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Vantage Data Centre expands South African footprint

South Africa is showing early signs of dominance in Africa’s increasingly red-hot cloud computing industry as the continent pushes for digital sovereignty to tick up its internet economy.

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Hyperscale provider Vantage Data Centers in August this year unveiled a massive campus in South Africa, extending the rainbow nation’s digital infrastructure lead on the continent.

The two-story facility offers 16MW of critical IT capacity across 130,000 square feet (12,000 square meters) which is just 10,000 sqm shy of Africa’s current total capacity.

According to property firm Knight Frank, as of April 2021, Africa boasted just over 140,000 sq m of data centre space – equivalent to that installed in Switzerland’.

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Therefore, Vantage’s new data centre offers a major vote of confidence in Africa’s digital future.

Knight Frank is upbeat that rapid digitisation and the roll-out of 4G and 5G infrastructure across the continent will supercharge growth by 50 per cent by 2026.

Driving this growth is the additional renewable energy wired to Africa’s grid, which could drive down the cost of running the energy-intensive data centres.

Competitive capital streaming from the West and Asia, coupled with localisation efforts, is also expected to drive the market.

Heavy spenders like Google and Amazon Web Services (AWS) are also helping to transform the market.

“Growing competition between emerging powers such as China and countries with longer-standing economic ties with Africa, such as the US, UK and France, is anticipated to open up this sector further to more lucrative investments, with Chinese capital expected to debut in the sector in the near future,” Knight Frank said.

“Adoption of data sovereignty in countries such as Nigeria and Morocco means that new data centres will need to be built in these places.”

The push for data localisation comes amid fears of misuse of sensitive data such as personal information, and government and defence-related data in Africa.

Investments in data centres in Africa comes on the back of its rapidly expanding internet economy, which demands faster data processing and huge data storage.

ReportLinker figures indicate the sector gobbled up US$2.6 billion in 2021 with a total of US$5.4 billion set to be invested across Africa, in the next five years alone.

It further shows that data centre markets in South Africa, Kenya, Egypt, Nigeria and Ethiopia will attract the lion’s share of investment into the sector in the forecast period.

Other states with noticeable investment activity are Morocco, Algeria, Ghana and Ivory Coast.

According to ReportLinker, which describes itself as an “AI-driven market intelligence platform”, the prominent data centre investors in Africa are Africa Data Centres, Icolo.Io (Digital Realty), IXAfrica and MainOne (MDXI).

Telecom Egypt, NTT Global Data Centers, Paratus Namibia, Rack Centre, Raxio Data Centres, Teraco Data Environments (Digital Realty) and Wingu are also big players in the space.

“In Africa, there are more than nine data centres that have added the white floor area of around 30,000 square feet area or more each in 2021. Several country governments are taking initiatives by developing special economic zones, and industrial parks, which provide tax exemptions for data centre development,” the report reads in part.

ReportLinker shows the increase in submarine cable investment and fibre connectivity is likely to attract more data centre investments in the region.

South Africa has the highest number of submarine cable deployments, followed by Nigeria and Kenya.

While the Internet of Things (IoT) is not new in Africa, COVID-19 has forced businesses once resistant to digital transformation to embrace tech.

This includes restaurants where more people now order food online, as well as the retail, logistics and education sectors, which, in a bid to keep pace with demand, as well as satisfy new expectations and retain customers, are forced to adopt digital solutions.

To store, communicate, and transfer data seamlessly, these businesses are creating more demand for data centres to ensure that their supply chain is not disrupted.

It’s a significant opportunity. Currently, most of Africa’s data is stored elsewhere, zipping down undersea cables that often make landfall in places like the French city of Marseille.

The time lag for signals to get there and back – a phenomenon known as ‘latency’ – can be frustrating to users.

The Economist reported that from the continent’s southern tip “it can take 180 milliseconds for a message to reach Europe and back— long enough to frustrate people trying to trade shares or play games.”

But with new multi-billion dollar investments into data centres, the internet will be brought much closer to users, laying the ground for the advancement of Africa’s tech revolution.

According to ReportLinker, cloud adoption is primed to edge up some 25% annually in South Africa, generating up to 1.5 billion US dollars, by 2024.

“SaaS (Software as a Service) is being widely adopted among organizations in South Africa, followed by IaaS (Infrastructure as a Service) solutions in the country’s data centre and networking market,” said the report.

Growth in renewable energy availability is also driving international investors – who increasingly demand “clean” power sources – to South Africa.

“In September 2021, Eskom, a utility firm based in South Africa, announced it would invest around $7 billion for renewable energy plans for the next nine years. This will drive the demand in the South African data centre market.”

Allied Markets Research figures show the global data centre market was valued at 187.35 billion US dollars in 2020 and is projected to reach 517.17 billion dollars by 2030, registering annual growth of 10.5 percent from 2021.

ReportLinker notes that global cloud service providers such as AWS, Microsoft, IBM, and Oracle are expanding their presence with new cloud regions.

As such, it argues there is “an opportunity for vendors to grow in suburban areas and fuel the demand for hyperscale data centres in Africa.”

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