South Africa’s AI ambitions just got a boost from Microsoft. The global tech giant is significantly expanding its cloud infrastructure in South Africa, pledging $298 million to establish artificial intelligence (AI) capabilities and bolster data centre resources, the tech giant’s vice-chair Brad Smith announced on Thursday. The investment indicates the growing strategic importance of the African continent for global technology firms and signals a deepening commitment despite recent geopolitical headwinds.
Speaking at a Johannesburg conference, Smith revealed the new capital injection would build upon existing commitments, including a prior $1 billion investment in South African data centres and a January pledge to train one million South Africans in AI and cybersecurity by 2026. The latest funds are earmarked for expanding local AI infrastructure and data processing capacity, aiming to position South Africa as a regional hub for cloud services and AI innovation.
“We are investing more money to expand our AI and data centre investment here,” Smith stated, highlighting the strategic rationale behind the move. The commitment includes funding for 50,000 individuals to pursue advanced certifications in cloud architecture, AI, and cybersecurity, addressing a critical skills gap in the burgeoning digital economy.
South African President Cyril Ramaphosa, also present at the conference, lauded the investment as “momentous,” particularly as the nation prepares to host the G20 summit in November. “This to us is such a momentous occasion, to have an investment of such enormous proportions,” Mr. Ramaphosa remarked, emphasising the timely nature of Microsoft’s pledge.
The announcement arrives at a complex juncture for South Africa, which has recently faced strained relations with the United States, including a freeze on aid by the Trump administration citing policy concerns. Mr. Ramaphosa wryly acknowledged the geopolitical backdrop, joking to Mr. Smith, “I said to Brad: you are very brave,” while characterising Microsoft as “an American company with an African heart.”
Pretoria is actively promoting an “equitable, inclusive and just” development of AI as a key priority during its G20 presidency. Mr. Ramaphosa stressed the necessity for inclusivity in the adoption of new technologies, cautioning that “the technology’s use must be inclusive and equitable and make sure no one is left behind.” He reiterated South Africa’s commitment to leveraging technological advancements to “catalyse and boost Africa’s growth and industrialisation.”
Microsoft’s investment is part of a broader surge in data centre development across Africa, driven by escalating demand for cloud computing, digital services, and data localisation. Africa currently represents a mere 1% of global data centre capacity despite accounting for 17% of the world’s population, indicating significant untapped potential.
Foreign capital remains the dominant force in this expansion. The US International Development Finance Corporation (DFC) recently disbursed $83 million of a potential $300 million loan to Africa Data Centres, while Nasdaq-listed Equinix announced a $390 million investment plan for the continent. Global tech giants like Amazon, Huawei, and Equinix are also aggressively expanding their African data centre footprint.
However, local and pan-African investors are also vying for a stake. Africa50, backed by the African Development Bank (AfDB), recently invested $15 million in Egypt-based Raya Data Center, and African private equity firms like Actis and AIIM are launching dedicated data centre platforms. Africa Data Centres itself secured ZAR 2 billion (US$109.5 million) in financing to expand its South African operations.
Despite these efforts, significant challenges persist. Africa faces a substantial ICT infrastructure deficit, hindering broader economic development. Data sovereignty laws in countries like Nigeria and Morocco, mandating local data storage, are driving investment, but building world-class facilities requires substantial capital, technical expertise, and crucially, reliable power supply — commodities often scarce across the continent.