Where is Africa in the cloud? (4)

African countries still have limited broadband internet coverage. Lingering legacy power infrastructure constraints, which are ordinarily limiting, sustain a vicious cycle that impedes the development of the foundations upon which faster internet infrastructure must be laid on.

Some governments have shown enthusiasm toward 5G mobile telephony, which is seen as a means through which growth in cloud computing could be leveraged on, as it will enable quicker internet connections that can carry heavier loads of data at a time. Limited tech talent is also a constraint.

With varied tech skill levels across the continent, seamless movement of people and capital that the AfCFTA is aimed at should ease current difficulties in due course. But this may also take a while, as even the hitherto easing intra-African travel restrictions were hardened again owing to the Covid-19 pandemic and may take longer still before they are eased again, and perhaps much more thereafter to the extent envisaged in the AfCFTA.

A continental unification of standards, layered on the AfCFTA, say, will be a key prequisite to success

When the myriad infrastructural challenges are countenanced, from power shortages, limited bandwith, low broadband spread, and constraining regulations, it is easy to see that even as the African DC growth outlook is obviously bright, many dark clouds will weigh on its prospects for a while. Even so, there is little doubt about the African DC market outlook.

The continent’s telecoms industry continues to boom despite the challenges of recent years, from Covid-19, the Russia-Ukraine War, rising inflation, depleting incomes and growing indebtedness of African governments. Hitherto closed telecoms industry in African countries like Ethiopia that have begun to open up also point to growth potential. There is already growing recognition about the continent’s tech potential with venture capital funding on the rise.

In 2021, $4 billion worth of venture financing was secured by various African tech startups spread across the continent, albeit concentrated in Nigeria, South Africa and Kenya, with $1.8 billion in new VC funding already recorded in Q1 2022.

Read also: Where is Africa in the cloud? (3)

Conclusion

While cloud computing is still a novelty of sorts for African firms and governments, there is an increasing trend of adoption, even though there is still a preference for foreign data storage providers. Growth in digital services is forcing greater IT infrastructural needs on banks, telecommunication firms and governments on the continent, which they either can ill-afford on their own or acquire and maintain optimally.

It is certainly now cheaper to outsource the hardware and software requirements of deploying these digital services. New submarine internet cables on the shores of the continent, with others planned, will enable faster and heavier data transmission. Basic infrastructure like electricity, which remains in short supply in many African countries, is a constraint, adding to costs.

Electricity via diesel-powered generators in key markets like Nigeria, where almost the entire value chain, from the docking station of the internet submarine cables, the telecommunication masts that send the signals, to the banks and firms that offer digital services, depend on privately generated power is expensive and limiting. Unfortunately, this is a constraint that will endure in many African countries for a long while, as new power generation capacity is not being added fast enough to match the growth in internet infrastructure and the digital economy.

African governments, which still rely a great deal on foreign data centres, are increasingly pivoting towards localisation for public and private data. Sensing an opportunity, Chinese firms have been leading the charge, offering to build data centres for African governments that obilge, most recently in Senegal. There are concerns that the intentions of the Chinese in offering to engender data localisation are not anymore self-interested than those of their western counterparts. In any case, western tech firms have not been particularly enthused about data localisation, opting instead to build their own data centres on the continent, which are no more than extensions of their server farms abroad.

Even so, a robust trend towards data localisation, with laws and infrastructure in tandem, suggests the outlook for cloud computing in Africa is very bright indeed. In sum, more carrier-neutral DC capacity will be required to service what is palpably a robust long-term African demand.

A continental unification of standards, layered on the AfCFTA, say, will be a key prequisite to success. Some constraints will take a while to overcome. Energy and internet infrastructure will take a while to build even if capital were not a constraint, as will be the scarce African tech talent that is continually drawn abroad at the expense of the continent.

An edited version was first published by the NTU-SBF Centre for African Studies at Nanyang Business School, Singapore. References, figures and tables are in the original article. See link viz. https://www.ntu.edu.sg/cas/news-events/news/details/where-is-africa-in-the-cloud