Market Trends of Africa Data Center Rack Industry
IT and Telecom to have significant market share
- The major end-users expected to increase IT load capacity during the forecast period include cloud, BFSI, e-commerce, telecommunications, media and entertainment, and others. Since cloud aggregation and remote service provision have become the new norm in Africa, more companies leverage colocation services to enhance service provision and customer experience with new online platforms.
- With the rollout of initiatives like AfCFTA (Africa Continental Free Trade Area) by trade associations and governments, the ease of doing business across Africa has increased, allowing more e-commerce platforms to surface. This has also encouraged users to access services and commodities, contributing to sector growth.
- The need for data localization has encouraged global cloud aggregators to introduce cloud data centers in the country in the recent past. This highlights the growing demand and favorability of investment in the region, helping sectors like the cloud grow. Further, the World Bank data highlighted how Africa would require significant investments for better internet connectivity, with new 4G base stations and other infrastructure for long-term network evolution. As the network evolves in the region, it would directly impact the need for more data centers to cater to the increase in data traffic, which is expected to reach about 7 gigabytes per month per subscriber by 2025 through about 30 million 5G subscribers.
- Also, this would lead to the manufacturing sector deploying new technologies to offer real-time insights to managers, helping them avoid machinery failure and plan maintenance. The end users are expected to grow owing to the above-mentioned factors during the forecast period.
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South Africa is the largest Country
- South Africa is the most prominent country for data centers in Africa since the country comprises about 42 million internet users. It also has internet penetration rates closer to 70%, and its adaptation to e-commerce and other demand-generating aspects is growing. This, in turn, has led data center operators to set up their data center facilities in the region to leverage the increasing demand for the facilities.
- South Africa held a market share of around 63.1%, followed by the Rest of African countries at 24.4%, and Nigeria accounted for 12.4% in 2021. The company that has strengthened its market share in South Africa is Teraco Data Environments (acquired by Digital Realty), which currently has a market share of 36.72% and operates at an IT load capacity of 150 MW. Through its subsidiaries, Medallion Communication Ltd and Teraco Data Environments, companies such as Digital Realty have announced plans to develop mega and massive data centers with IT load capacities of 160 MW and 110 MW during the forecast period.
- Cape Town has been ranked among the top smart cities worldwide for its IoT and real-time data analysis through sensor implementation. Smart cities create huge amounts of data owing to the varying smart services imparted to the citizens.
- The country is expected to witness more such smart cities as operators plan to extend the deployment of IoT-based devices. The Rest of Africa segment also comprises smart cities like Kigali, Rwanda, which have sensors to measure air quality, monitor the power grid's safety, and detect water leakages. Due to all the above factors, the South African data center market is expected to grow and register a CAGR of 15.68% over the forecast period.
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