Market Trends of Africa Data Center Cooling Industry
IT and Telecom Expected to Witness Highest Growth
- According to the "Measuring Digital Development – ICT Development Index 2024" report released in late June, Libya, Morocco, and the Seychelles lead Africa in ICT development levels. The report evaluates ICT development progress in 170 countries and territories, utilizing 10 key indicators. These indicators encompass metrics such as the percentage of individuals accessing the internet, mobile broadband penetration rates, mobile broadband internet traffic, costs associated with mobile data and voice services, and ownership rates of mobile phones.
- Libya, with a score of 88.1 points, has surged from fifth to first place in just a year, primarily due to notable mobile and internet penetration boosts. Morocco closely trails with a score of 86.8, while the Seychelles secures the third spot with 84.7 points. The top 10 is completed by Mauritius (84.2), South Africa (83.6), Algeria (80.9), Botswana (78.7), Tunisia (77.2), Egypt (76.8), and Gabon (74.7).
- Further, the key telecom players in the region focus on upgrading the network and increasing 5G coverage. For instance, Nigeria has a large number of active mobile connections, with around 2.7 million subscribers using 5G technology, which accounts for 1.24% of the total 219 million connections. MTN Group, a South Africa-based telecom provider, has played a significant role in rolling out 5G services in Nigeria, with several cities including Lagos, Kano, Port Harcourt, Abuja, Ibadan, Maiduguri, and Owerri benefiting from its network upgrade. As a result, coverage has increased from 3% in 2022 to 11% in 2023, contributing to the growth of data centers in the country.
- The adoption of cloud services is propelling the IT industry in Africa. The continent is emerging as a hotspot for cloud investments, driven by the dual imperatives of business expansion and innovation, despite ongoing skills and cost management challenges. Industry titans like AWS, Microsoft Azure, and Google Cloud dominate this landscape. For example, in September 2024, Amazon Web Services (AWS) reaffirmed its commitment to the region by announcing an additional USD 1.7 billion investment, set to be deployed by 2029, to bolster its cloud and artificial intelligence services. Such market moves are poised to amplify the demand for cloud services, subsequently driving the need for data centers and, in turn, heightening the demand for data center cooling solutions.
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South Africa Accounts for Largest Market Share
- Johannesburg and Cape Town are the primary hubs for data center growth in South Africa. At the same time, other cities like Centurion, Durban, and Port Elizabeth are anticipated to experience significant expansion in the country's data center market during the forecast period.
- South Africa's strategic position and supportive business environment make it an advantageous location for data center investments. The country's data center market is fueled by the growth of digital technologies like AI and big data, the increasing adoption of cloud services, and the need for huge data storage and processing capabilities. This is evident in the investments made by major cloud providers such as AWS, Google, Microsoft, Huawei, and Oracle. For example, AWS plans to invest USD 1.66 billion in expanding its cloud infrastructure in South Africa by 2029, as announced in April 2023.
- The expansion of digital connectivity is gaining momentum with the development of submarine cables like 2Africa, which is expected to be online in 2024, and T3, which is slated for the end of 2024, significantly decreasing latency. This latency reduction has enabled data center operators to provide customers with faster and more dependable services, sparking investment in the South African data center market.
- In South Africa, the demand for data is rising steadily across various industries. As of January 2023, the country had 43.48 million internet users, with a penetration rate of 72.3%. The growing popularity of e-commerce, particularly in electronics and retail, and the increasing use of social media are driving the growth of colocation services in the country. For example, over the past five years, Netflix has invested over ZAR 2 billion (USD 110 million) in local productions, showcasing over 200 titles.
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