Africa's data center market is projected to experience significant growth, with a forecasted Compound Annual Growth Rate ("CAGR") of 10.2% from 2022 to 2028. Equinix, a California-based company listed on Nasdaq, has announced a $390 million investment over the next five years aimed at constructing data centers in South Africa and exploring opportunities in East Africa. This commitment follows Equinix's acquisition of MainOne for $320 million in 2021, along with a subsequent $160 million investment in South Africa.
Africa's data center market is projected to experience significant growth, with a forecasted Compound Annual Growth Rate (CAGR) of 10.2% from 2022 to 2028. Equinix, a California-based company listed on Nasdaq, has announced a $390 million investment over the next five years aimed at constructing data centers in South Africa and exploring opportunities in East Africa. This commitment follows Equinix's acquisition of MainOne for $320 million in 2021, along with a subsequent $160 million investment in South Africa.
Equinix is following a trend of data center operators entering Africa. Amazon, Microsoft, Huawei, and more all have data centers in operation or under construction. The impetus to invest is simple and is driven by the rapidly growing demand for connectivity and data storage. Africa accounts for a mere 1% of global data center capacity leaving some to conclude that the data center opportunity in Africa is only just beginning.
Advantages of Building Data Centers Close to Users
Constructing data centers closer to users offers several advantages, including reduced latency and compliance with local data storage regulations. By minimizing the distance data travels from the center to end-users, latency is reduced, enhancing the overall user experience. Moreover, local data centers ensure compliance with regulations regarding data storage and usage, preventing potential access issues in restrictive countries. Additionally, proximity to users mitigates network congestion during peak usage periods, improving overall network performance.
Equinix Established Arica Footprint in 2021
Equinix first entered Africa in 2021 when it acquired MainOne, a leading West African data center and connectivity provider and manager for $320 million. The acquisition brought three data centers under Equinix's control in Nigeria, Ghana, and Côte d'Ivoire. MainOne is an interesting story having been founded by Nigerian businesswoman, Funke Opeke in 2010. The Equinix press release on the acquisition puts the transaction into context:
“This acquisition will extend Platform Equinix into West Africa, giving organisations based inside and outside Africa access to global and regional markets. Nigeria has both the largest population and the largest economy of any country in Africa, with approximately 142 million active internet subscribers. Home to new innovative digital ecosystems in Fintech and content and digital media, it has great opportunity for expansion of digital services.”
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Further Expansion in South Africa in 2022
In 2022, Equinix's next foray into Africa was a $160 million investment to build a new data center in Johannesburg, South Africa. The data center is under construction and expected to launch in 2024 with an initial capacity of 3 megawatts with the ability to expand to 20 megawatts. Given the inability of the ruling party's (i.e., ANC) ability to effectively manage and deliver consistent electricity, don't be surprised to see this launch delayed. Speaking on the initial investment in South Africa, Eugene Bergen, President for EMEA of Equinix, had this to say:
"We entered the African continent earlier this year with the acquisition of MainOne, the leading West African data center and connectivity solutions provider with presence in Nigeria, Ghana and Côte d'Ivoire," said Eugene Bergen, President, EMEA, Equinix. "This investment will give both South African businesses the opportunity to expand internationally and global businesses to expand into South Africa. Both will be able to accelerate their growth by rapidly scaling their infrastructure, easily adopting hybrid multicloud architectures and interconnecting with business partners through the Platform Equinix ecosystem of more than 10,000 customers."
While the data center market in Africa offers promising prospects, navigating the complexities of diverse regulatory environments, infrastructure challenges, and potential energy security concerns will be crucial. It makes sense why most large investments in African data centers have occurred in South Africa, but the larger opportunities in the future will likely lie in the more rapidly growing countries to the north.
