Africa’s digital revolution is powered by data centers — the physical hubs that store, process, and share the vast amounts of information driving everything from your favorite apps to essential business operations. Imagine them as the brains of the internet, where all the data you send and receive gets securely processed and routed. Now, Africa’s data center market is exploding, fueled by a wave of foreign investment building these critical facilities at breakneck speed. But as international giants dominate the scene, local players are racing to stake their claim, often with bold visions but far fewer resources. The stakes are high: will Africa take charge of its digital future, or will foreign funds or interests continue to script the story?
This week, Africa50, a pan-African infrastructure investor established by the African Development Bank (AfDB), announced a $15 million investment in Egypt-based Raya Data Center (RDC). The funding aims to bolster RDC’s existing operations and facilitate the development of a greenfield Tier III data center in Egypt. Pending regulatory approvals, the project is expected to accelerate Egypt’s digital economy and provide much-needed infrastructure for its growing startup ecosystem.
Raya Data Center, wholly owned by the Egypt Exchange-listed Raya Holding for Financial Investment, operates two Tier III facilities in Cairo. With Africa50’s backing, RDC plans to expand sustainably and attract international hyperscale customers. Ahmed Khalil, CEO of Raya Holding, declared, “This partnership reaffirms investor confidence in Raya’s vision and positions us as pivotal players in Egypt’s digital transformation.”
This isn’t Africa50’s maiden voyage into the data center realm. In 2022, it invested $20 million in PAIX Data Centres, funding a Series B round that helped the operator expand its footprint in Accra and Nairobi. “PAIX’s hubs are at the core of Africa’s digital economy,” said Wouter van Hulten, CEO of PAIX, emphasizing the company’s role as a catalyst for regional connectivity.
Africa50 is not the only African investor to have thrown its hat into the ring. In June this year, Africa Data Centres, which owns and operates Africa’s largest network of interconnected, carrier- and cloud-neutral facilities, announced that it had secured funding to expand its data center capacity and meet the growing demand for cloud computing services in South Africa.
The funding was facilitated through a bespoke financing solution arranged by RMB Private Bank, a division of FirstRand, South Africa’s integrated financial services group. RMB acted as the coordinator, initial mandated lead arranger, and bookrunner on the ZAR 2 billion (US$109.5 million) facility. The financing agreement, the partners noted, demonstrates the strong financial position of Africa Data Centres and its commitment to investing in South Africa’s digital transformation.
Africa Data Centres operates a network of hyperscale and edge data centers across Southern, East, and West Africa. The financing enables it to accelerate the expansion of its hyperscale capacity by an additional 20 MW.
African private equity firms like Nigeria’s Actis and South Africa’s African Infrastructure Investment Managers (AIIM) are also leading the charge. In 2020, Actis launched a $250 million pan-African data center platform, starting with Nigeria’s Rack Centre, while in 2021, the Old Mutual-backed fund, AIIM, acquired a majority stake in Ngoya Etix DC, a carrier-neutral data center in Ghana.
Foreign Funding Still Dominates the Scene
Despite the buzz around local funding efforts, Africa’s data centers remain heavily reliant on foreign capital. In 2022, the U.S. International Development Finance Corporation (DFC) announced the first disbursement of $83 million from a potential $300 million loan to Africa Data Centres. This investment, part of the Biden Administration’s Partnership for Global Infrastructure and Investment (PGII), aims to expand data center facilities in South Africa, Kenya, and other countries. DFC CEO Scott Nathan remarked, “Building secure, trusted information technology networks will help enable development and economic growth throughout Africa.”
Africa Data Centres plans to add 31.3 MW of IT load capacity within three years and create over 100 direct formal jobs.
Earlier this year, Nasdaq-listed Equinix also announced plans to invest $390 million in Africa over the next five years to build data centers and expand operations in South Africa and West Africa. The California-based data center operator is also eyeing East Africa, potentially increasing its investment as opportunities arise.
Equinix entered Africa two years ago with a $320 million acquisition of MainOne Cable Co. It began building its first data center in Johannesburg, South Africa, in 2023. Sandile Dube, Equinix’s Managing Director for South Africa, stated, “We will continue to invest where it makes sense on the continent, and we are undergoing studies to ascertain opportunities. We’re going to need key hubs on the continent as we have in Europe, which is why we have started with Lagos, Joburg and, in time, we would like to add Nairobi.’’
Global tech companies, including Amazon.com and Microsoft from the US, as well as China’s Huawei Technologies, have also been ramping up investments in Africa’s data centers in recent years. This surge comes in response to the increasing demand for connectivity and storage across the continent. With Africa representing only 1% of global data center capacity even though its hosts 17% of the world’s population, there is significant potential for investors looking to capitalize on the region’s growth, albeit with challenges such as unreliable power supplies.
French infrastructure investor Meridiam, in collaboration with Raxio, has also been rolling out facilities in the Democratic Republic of Congo, Uganda, and Ethiopia. Meridiam’s $48 million investment in 2021 illustrates how even ostensibly African-led projects depend on external funding. The data center in Kinshasa was recently commissioned for operations.
“Johannesburg and Nairobi, Africa’s leading data centers, have a combined live IT power of just 74 MW — starkly inadequate compared to Dublin and London’s over 1,500 MW,” observed Ed Stumpf, Investor Director at AIIM.
The Bottom Line
Africa faces a vast information and communications technology (ICT) infrastructure deficit, impeding economic development across the continent. The gap between supply and demand is widening as cloud computing, AI, and digitized services gain traction. According to Knight Frank’s Africa Horizons report, localization is a significant driver of investment. Countries like Nigeria and Morocco have passed data sovereignty laws, mandating in-country data storage to reduce dependency on foreign facilities.
Yet localization isn’t a panacea. Building world-class facilities demands substantial upfront investment, technical know-how, and reliable power — scarce commodities in many African markets. Without these, aspirations for homegrown dominance may remain just that.
Foreign investments bring much-needed capital, expertise, and infrastructure, creating jobs and enhancing connectivity. However, they also raise concerns about sovereignty and long-term control. With foreign firms setting up shop, local players risk being sidelined, unable to compete at scale or attract hyperscale customers.
The race to balance these competing forces is intensifying. Local stakeholders must dissect the challenge of leveraging foreign expertise while sustaining indigenous capacity. Whether Africa can seize the reins of its digital infrastructure remains uncertain, but the stakes — like the servers humming in newly minted data centers — are undeniably high.