Tuesday, July 27, 2021

Africa Races To Establish Better High-Speed Connections

If you’re able to read this, it’s because you have access to the Internet. It’s hard for many to imagine life without connectivity, but that’s the reality for half the world’s population. Africa has the lowest number of Internet connections—only 22 percent of the continent has access. It also has the largest potential for progress.

Although African countries are among the world’s fastest-growing internet markets, many lack the digital infrastructure to enable faster speeds.

“What is very strange about the African data centre market is that a very large part of it is based in Marseille,” explains Stephen Beard, head of data centres at Knight Frank, the global real estate consultancy.

But that is changing fast. For instance, new high-speed subsea cables — some of them initiatives backed by Google and Facebook — will soon land at many coastal cities across the continent, helping to accelerate data transfer speeds.

Africa’s internet traffic is also staying closer to home as governments and companies look to store data less far away. That is driving demand for “co-location” centres, which rent out capacity. At the same time, internet exchange points, which direct local traffic and are often linked to data centres, are booming.

“Public cloud services growth has averaged 40 per cent a year since 2017,” says Guy Zibi, Xalam’s founder. “This is arguably the biggest digital gap Africa has faced in the modern era.”

Global investors are rushing to fill that gap. Last year, Actis — the private equity group — set up a $250m platform to invest in regional data centres, including a stake in Nigeria’s Rack Centre. In March, Old Mutual-backed Africa Infrastructure Investment Managers acquired a majority stake in what will be Ghana’s biggest data centre.

While office buildings and shopping centres have lost investment appeal because of the pandemic’s effect on working patterns, data centres stand to profit from the trend of working from home. But they do not come cheap.

But, as the industry comes under pressure to cut carbon emissions, Africa’s power deficit could attract investors keen to back renewables.

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