In today’s data-driven economy, data centers form the bedrock of digital infrastructure, supporting everything from cloud computing and artificial intelligence (AI) to financial transactions and critical government services.

Africa’s data economy is at an inflection point. The continent’s data center market is projected to grow at a CAGR of over 12% between 2023 and 2028 and anticipated to reach US$ 10 billion by 2028., driven by increasing internet penetration, enterprise cloud adoption, and the expansion of AI-driven services. Despite this growth, Africa holds less than 1% of the world’s total data center capacity,  presenting a significant gap that must be addressed to meet the continent’s growing digital needs. Leading cloud providers, telecom operators, and investors are accelerating efforts to bridge this infrastructure deficit, with major investments in hyperscale, edge, and colocation data centers.

The strategic importance of data centers in Africa extends beyond commercial growth. These facilities are essential to digital sovereignty, cybersecurity, and economic resilience, ensuring that African businesses and governments retain control over their data while driving digital inclusion. However, challenges such as high energy costs, unreliable power grids, and sustainability concerns must be addressed to create a robust and future-ready data center ecosystem.

In this article, we explore how data centers are shaping Africa’s digital transformation, the challenges they face, and the opportunities that lie ahead in ensuring a connected and data-driven future for the continent.

The Growing Importance of Data Centers in Africa

As cloud computing, AI, fintech, and e-commerce boom, Africa’s demand for secure, localized data storage is soaring. Rising internet penetration and mobile data usage are driving a data center surge, with cloud adoption leading the charge. Global hyperscalers like AWS, Microsoft Azure, and Google Cloud are expanding, while South Africa, Kenya, and Nigeria emerge as cloud hubs, ensuring compliance with data sovereignty laws.

Fintech, projected to hit $65 billion by 2030, and e-commerce, set for $75 billion by 2025, further fuel demand for high-performance infrastructure. Major players like Equinix, Digital Realty (Teraco), Raxio, and Africa Data Centres are investing in large-scale facilities, while edge computing improves connectivity in remote areas.

With 570 million internet users and mobile data traffic growing 45% annually, Africa’s data center market is poised for massive expansion. However, high energy costs, power reliability, and regulatory hurdles remain challenges. Overcoming these barriers is crucial to sustaining growth and ensuring digital inclusion across the continent.

Challenges and Opportunities in Africa’s Data Center Expansion

As Africa’s data center revolution is underway, it faces several critical challenges—but also exciting opportunities. At the International Data Centre Day industry gathering in Nairobi Kenya, we had conversations with industry leaders, and they highlighted key areas that will shape the sector’s future, from energy efficiency and talent development to AI-driven innovation and investment strategies.

Challenges: Navigating the Complexities of Growth

•  Power Consumption & Energy Efficiency: The Balancing Act

Data centers are notorious for their energy-intensive operations, and in Africa, where power supply remains inconsistent and expensive, this challenge is even more pronounced. Cooling systems alone account for nearly 40% of a data center’s total energy use, making efficiency a top priority. Traditionally, air-based cooling has been dominant, but liquid cooling technologies are emerging as a more energy-efficient alternative, especially in high-performance computing environments.

• The Skills Gap & Talent Drain

Africa’s digital economy is expanding faster than its workforce can keep up. The demand for cloud engineers, cybersecurity specialists, and data center operators is outpacing local talent supply. This gap is further widened by the brain drain, as top professionals are lured by global firms offering competitive salaries and career growth opportunities abroad.

• Convincing Hyperscalers & Global Investors

Despite Africa’s rising internet penetration and booming digital services sector, some global cloud giants remain hesitant about expanding data center investments. Concerns around regulatory uncertainty, data protection laws, and market readiness often slow commitments from hyperscalers.

One of the key challenges we are discussing with global co-locators and hyperscalers is the cost to build in the region. The regulatory framework needs to support data center builds through tax incentives and duty breaks to ease the process.

– Rohan Patil, Sales Director-East Africa, Vertiv

Opportunities: Unlocking Africa’s Data Center Potential

• Renewable Energy: Africa’s Competitive Advantage

With countries like Kenya generating over 90% of its electricity from renewables (green power), Africa has a unique opportunity to pioneer green data centers. Investments in solar, wind, and hydro-powered facilities could position Africa as a leader in sustainable cloud computing. Countries like South Africa, and Egypt are leading in solar, wind, and geothermal power, providing an opportunity to build sustainable, AI-ready data centers that reduce reliance on fossil fuels.

• Collaboration to Bridge the Skills Gap

Industry leaders stress the importance of public-private collaboration to tackle this challenge. Initiatives between governments, tech companies, and academic institutions can help build a strong local talent pipeline.

For technology service providers like us (Africa Data Centres), we are already taking the right steps by being intentional about supporting local talent. We don’t see a skills gap; rather, we create employment opportunities for local talent. That’s what we do.

– Dan Kwach, Managing Director – East Africa Region, Africa Data Centres

• AI-Ready Data Centers: Preparing for the Next Wave of Innovation

As Africa embraces AI, high-performance computing infrastructure will be essential. The continent is seeing early investments in AI-ready data centers, which will support everything from machine learning applications in healthcare to predictive analytics in agriculture.

Africa’s Data Center Future: Policy, Investment, and the Road Ahead 

Africa’s data center industry is no longer just an emerging sector—it is becoming a critical pillar of economic growth, digital transformation, and technological self-sufficiency. As demand for cloud computing, AI, and digital services surges, the need for robust, localized, and scalable infrastructure has never been greater. However, the continent’s success in this space will depend on forward-thinking policies, strategic investments, and sustainable development practices.

African governments are beginning to recognize that data is the new oil, and the policies they craft today will determine whether the continent can refine and harness its digital wealth or remain dependent on foreign infrastructure. Countries such as South Africa, Kenya, Nigeria, and Egypt are already introducing data protection laws, tax incentives, and regulatory frameworks to attract global hyperscalers and cloud providers.

Beyond regulation, public-private partnerships (PPPs) are proving to be game-changers. The collaboration between telecom operators, cloud providers, and governments is bridging connectivity gaps, lowering costs, and accelerating infrastructure deployment—particularly in underserved regions. The push for localized cloud services is also gaining traction, as businesses and governments seek lower latency, improved cybersecurity, and compliance with local data laws.

With its strategic location, renewable energy potential, and growing digital economy, Africa has the chance to become a major global data processing and cloud computing hub—serving not just local users but international markets. We can leapfrog traditional digital infrastructure models and if we get this right, we’re not just building data centers—we’re building the backbone of Africa’s digital economy for decades to come.

As the world marks International Data Center Day, Africa must seize this moment to prioritize digital infrastructure as a pillar of economic growth.