Africa data center market size is expected to cross $3 billion by 2025, growing at a CAGR of over 12 per cent during the forecast period. The Africa data center industry has witnessed a steady interest from major global cloud service providers such as AWS and Microsoft, along with Huawei over the last five years.
The latest report by Research and Markets has indicate that Africa data center market revenue is expected to grow at a compounded annual growth rate of over 12 per cent during the period 2019-2025.
The Africa data center construction market is witnessing significant growth, especially in South Africa, Morocco, Kenya, and Nigeria. The growing internet population has been a strong factor for growth. Government agencies across countries are looking to improve their digital economy. They are involved in a variety of smart city projects that fuel the growth of data centers and edge facilities throughout the region. African countries such as South Africa, Kenya, and Morocco have started taking initiatives for smart cities and plan to improve network coverage.
The increasing demand for cloud-based services and modular data center solutions among enterprises, especially in SMEs and government agencies, are expected to drive the market in Africa. It is expected that over 70% of organizations operating in the region will shift to the cloud region by 2025. South Africa, Kenya, Morocco, Egypt, and Nigeria are at the forefront of improving the digital economy. These countries, along with cloud-based service adoption, have also witnessed high usage of big data analytics.
Several African countries are yet to be cloud-ready, and the improvement in inland and submarine connectivity will see multiple enterprises migrating their workloads to the cloud during the forecast period. A majority of the investment in Africa is led by colocation and telecommunication service providers, followed by enterprises and government agencies due to the installation of modular data centers.
Manufacturing, financial services, and healthcare sectors are among the major contributors to data center investment as they are rapidly adopting cloud computing. The market will witness steady growth over the next few years, with internet penetration and adoption of technologies such as big data, IoT, and artificial intelligence fueling the Africa data center construction market growth.
The spread of COVID-19 has affected major countries that have data center operations in Africa. Few facilities are affected due to the slowdown in construction works owing to lockdowns and supply chain-related challenges. The global health crisis has significantly increased data traffic since March 2020.
In Africa, the projects that are expected to open between Q1 2020 and Q4 2020 will be partially affected through supply chain-related challenges compared with construction halts. To provide high availability services to end-users, operators are taking precautionary measures for their on-site employees.
Colocation data center operators have taken steps to manage the available workforce to monitor their existing faculties without any service disruption. They have installed physical security solutions ranging from perimeter to rack-guarded through CCTV cameras and biometric systems. Companies have also adopted DCIM/BMS solutions that enable remote monitoring of entire data center operations. Most colocation facilities in Egypt are developed with support and funding by enterprise and government agencies.
The market also lacks a skilled workforce for data center construction and operations, where the definite investments in greenfield projects are low. Hence, most service providers are developing modular facilities. In terms of security, facilities are equipped with physical security, biometric protection, CCTV surveillance, and fire detection alarms. The increasing OPEX will boost the implementation of DCIM solutions, and the rapid growth in colocation data centers will increase the investment in physical security systems in the Africa data center construction market.
In Morocco, data centers are certified as Tier III facilities in terms of design. The facilities in Egypt are mostly Tier III standard certified in terms of design and are developed to support at rack density of up to 15 kW, with their average PUE being around 1.5. In Nigeria, most facilities are certified Tier III facilities by the Uptime Institute in terms of data center design and construction. In terms of redundancy, most Nigerian data centers have both power and cooling infrastructure equipped with minimum N+1 redundant components.
Construction projects in African countries have not been completed halted after the outbreak of the COVID-19. A reduced workforce followed restrictions imposed by the government on site. The impact of the pandemic in African countries is low-to-moderate.
Data Centre developers face a series of challenges in Africa, including raising finance for facility investment, overcoming legal land ownership issues, securing power, ensuring fibre connectivity, and ensuring that the facility is resilient in the face of weather conditions, heat, and humidity. Additionally, due to intermittent power supply issues, many Data Centre facilities use diesel-generated power for much of the day in developing markets.
Lower priced rack space is now available in South Africa benefitting from multiple Data Centre providers and facilities offering different tiers of service and power which can be adapted to specific customer needs.
The increasing procurement of renewable energy sources is expected to be a significant driver for the Africa data center market. The growth in power consumption and the need for reliable power sources are also driving hyperscale service providers to purchase clean and renewable energy sources to power their facilities in Africa. Therefore, the availability of renewable energy sources in Africa sources is expected to drive hyperscale data center to adopt renewable energy infrastructure.