Dr. Strive Masiyiwa – the Zimbabwean Billionaire businessman, philanthropist and founder of Econet Global, is a well know figure among entrepreneurs and leaders in Africa and around the world.
Over the last few years, Masiyiwa has devoted his time to mentoring the next generation of African entrepreneurs on Facebook. With over 5.4 million fans, Facebook identifies its platform as the most engaged following of any business leader in the world.
In one of his recent Facebook posts, Dr. Strive revealed that Econet Global through Liquid Telecom is making a re-entry into the Nigerian economy with the establishment of a $100 million data centre facility in Lagos. The company has commenced construction of Africa Data Centre – named ADC Atlantic – that will be the largest Data centre in Africa outside South Africa.
In addition, he received the approval of an investment of $300million from the United States government’s International Development Finance Corporation to invest in Data Centres. The fund will allow ADC to expand its facilities in South Africa and Kenya, and also build new facilities in Egypt, Ghana, and Morocco. The group raised $500m in 2020 for Africa Data Centre.
So why did the African billionaire decide to invest massively in data centers across Africa? To get some insight for why Dr. Masiyiwa is investing in data centers, let’s look at the estimated size of this market.
Market value of Data Centres
According to MarketsAndMarkets.com report, as of 2017, the data center market was valued at $31.5 billion and is expected to grow to $62.3 billion dollars by 2022. However, Africa currently accounts for less than 1 percent of the total available global data center capacity. However, the African data centre market is expected to grow to $3 billion by 2025, at more than a 12% growth rate per year.
The massive penetration of Smartphones, mass adoption of business software, and cloud computing services on the continent are leading to soaring demand for data centers to power the technology. As a result, international investors are rushing to fund the boom in the African cloud computing market. In other words, the next gold rush is taking place in Africa. And this time, the gold is data.
Earlier in 2020, London-based private equity firm – Actis invested $250 million into the acquisition of Nigeria-based, Rack Centre. In 2019, Boston-based private equity firm Berkshire Partners acquired a stake in Teraco Data Environments, which owns Africa’s largest data centre and powers much of the cloud computing in South Africa.
Microsoft also launched its first African cloud data centres last year in the country, alongside Nigeria, Kenya and Ghana. Meanwhile Amazon Web Services plans to open a cluster of centres in Cape Town in the coming months — the company’s first major venture on the continent.
To understand the importance of the data centre market, let’s talk about what a data center is used for.
What does a data center do?
Right now, you are watching this video or reading the article from your laptop or Smartphone. But this content is not stored on your device. It is stored on a computer in a data center somewhere around the world. To watch this video, your device had to connect to the data center closest to you where YouTube stored this video. This applies to accessing any form of information on any website or app for any purpose on the internet.
The technology that makes it possible to store and access information from servers in data centers over the internet instead of your computer hard drive is cloud computing. The cluster of data centers scattered around the world is the cloud. This is just a basic layman explanation of what data centers and cloud computing is about. Hopefully that gives some clarity to the novice.
Now the problem
The problem is that because there are not many data centers in Africa if you live in Africa, your device has to access information from data centers as far away as the United States, UK, or Australia to fetch information. In other words, for the most part, the cloud does not live in Africa. This results in slow connection and an overall poor browsing experience.
Also, large organizations like oil companies, banks, and government establishments have to build their own data centers to be able to store and access information locally. This usually comes at a huge infrastructure and maintenance cost. Businesses and organizations don’t want to deal with complex IT functions like managing a data center. They want to focus on their core business.
This is where the opportunity for independent data centers in Africa comes in. Building data centers in Africa will bring the cloud to Africa. These large facilities, which were once the province of telecom operators, are now more frequently run by independent companies. Instead of each large organization building its own data centers, they can outsource data storage and operation to local third-party data centers. African businesses and organizations can host their applications in data centers in Africa rather than in the US or UK.
A driver for the localization of data storage and operation is that it improves connection speeds since users no longer have to fetch data from the other side of the world. Also, Data centers reduce the overall IT cost for enterprises. It is expected that over 70% of organizations operating in Africa will shift to the cloud in the region by 2025.
Why is an African Billionaire investing massively in Data Centres in Africa?
At this point, the reason should seem obvious. Strive Masiyiwa believes cloud computing powered by Data Centers is the next stage of technology in Africa, and he is making an early entry into the market in the continent.
According to him, “A few years ago, Africa Data Center was just a single facility in Nairobi, Kenya. It was not a company. But as my team and I watched what was happening we realized it should become a separate company. We hired experts from around the world, and brought them together. We then began to expand the business by inviting investors.”
Of course, I can’t go without sharing some important takeaway arising out of this growing trend in cloud computing.
Riddle of opportunities
This was what Dr. Strive had to say, “I am kicking off a new revolution in the next phase of technology in Africa. What’s important is not the Data Centre but the technologies that will be unleashed in Nigeria because of this infrastructure. That’s the BIG deal here.”
Data center facility will make it possible to get more Cloud services cheaply in Africa. It will drive investment into the country, help create thousands of hi-tech jobs, and drive the demand for technology-driven experts in the region.
Also, as Africa grows more prosperous, its consumer data is increasingly in demand too. The demand for skills to access and interpret data will also increase.
For consumers, having data centers locally will help to ramp up internet speeds that are currently among the lowest and costliest on earth, since they are physically closer to the data center. Likewise, the presence of data centres in the country will optimize computer network, and enable end-users to process a very high volume of data messages with minimal delay. This will also facilitate the quick execution of operations that require near-real-time access to rapidly changing data.
What about the challenges?
Africa may have its peculiar challenges that will create a big hurdle to succeed in the data center market; challenges such as lack of infrastructure, which complicates an already capital-intensive, power-hungry business, inadequate electricity supply and security.
Regardless of these hurdles, investors and large organizations are not looking back. Dr. Strive revealed that before starting the construction of the ADC Atlantic, they had already signed long term contracts with the large companies and organizations that will use it.
If you are thinking this will not work in Africa, remember the days of the telecom revolution in the continent in the early part of the century. Most people didn’t think it was possible to make mobile phone accessible to everyone but it changed everything. So instead of dwelling on the challenges; look on the opportunities.
Overall, the rapid expansion of the data center market in the continent will create a ripple of positive effect for the 4th industrial revolution in Africa. What are your thoughts?