The infrastructure behind Africa’s digital future

The global economy is being reshaped by rapid advances in artificial intelligence (AI), cloud computing and digital services. At the centre of this transformation lies an often-invisible but critical layer of infrastructure: data centres and high-capacity fibre networks. Data centres – warehousing computer servers that store, process, and transmit data – have become the backbone of the modern digital economy.

While global investment in digital infrastructure has accelerated, Africa currently accounts for less than 1% of global data-centre capacity. This disparity highlights both a structural weakness and a compelling opportunity. As Africa’s digital adoption accelerates, scalable, reliable and locally based data infrastructure is no longer optional; it is essential to economic competitiveness, financial inclusion and long-term growth.

The challenge: soaring digital demand and insufficient infrastructure

Africa’s demand for digital services is growing at unprecedented speed, and mobile connectivity has been a key driver of this shift. As of January 2024, mobile devices accounted for approximately 74% of all web traffic on the continent – around 14% higher than the global average. This reflects both the affordability and accessibility of mobile connections relative to fixed-line broadband, reinforcing Africa’s mobile-first digital ecosystem.

At the same time, the continent’s internet user base is expanding rapidly. Internet users grew from approximately 181 million in 2014 to around 646 million by 2025, with projections indicating that this figure could reach 1,1 billion by 2029. This surge is fuelling demand for digital content, fintech platforms, e-commerce, cloud-based services, and data-intensive applications such as AI.

However, the pace of infrastructure development has struggled to keep up. Limited local data-centre capacity forces reliance on offshore hosting, increasing latency, costs and regulatory risk. Fibre networks remain unevenly distributed, and power reliability continues to constrain expansion. Without accelerated investment, these bottlenecks risk slowing Africa’s digital momentum and undermining the scalability of its fastest-growing sectors.

The opportunity: a new infrastructure asset class emerges

Despite these constraints, Africa is making progress. The continent is seeing steady growth in Tier III and Tier IV data centres across key markets. While Tier I and II facilities offer basic or partial redundancy, Tier III sites provide fully maintainable power and cooling paths, and Tier IV facilities deliver full fault tolerance and maximum uptime. This shift toward enterprise-grade infrastructure is essential for supporting cloud computing, fintech platforms, AI workloads, and other mission-critical digital services.

The commercial case is particularly strong in fintech. According to BDO’s June 2024 Fintech in Africa report, innovation across the sector is accelerating, with Northern Africa currently leading, and Egypt alone accounting for 9.6% of new fintech start-ups. Driven by markets such as South Africa, Nigeria, Egypt and Kenya, Africa’s fintech sector is projected to reach an estimated US$65 billion in revenue by 2030, reflecting a compound annual growth rate of approximately 32%. As these platforms scale across borders, their dependence on secure, resilient, and locally hosted data infrastructure increases.

The solution: capital, capability and coordinated policy

Unlocking Africa’s digital infrastructure potential requires a coordinated response across three dimensions: investment, skills and energy.

First, sustained capital deployment is essential. Recent investments signal growing confidence in the sector. The International Finance Corporation’s US$100 million commitment to Raxio Group, for example, is aimed at expanding data-centre capacity to support AI, cloud computing and digital financial services across sub-Saharan Africa.

Second, infrastructure development must be matched with skills development. Scaling data centres requires engineers, operators and digital professionals capable of managing complex, high-availability environments. Building this talent pipeline is critical to long-term sustainability.

Third, energy availability remains decisive. Data centres are power-intensive assets, and markets with reliable, cost-effective and renewable energy sources are best positioned to attract investment. Integrated infrastructure models offer a compelling solution. Uganda’s Buheesi project – co-financed by the World Bank, development finance institutions, and two South African commercial banks – combined electrification with fibre connectivity. The results were tangible: schools gained access to digital learning, clinics submitted real-time health data, and public services became more efficient.

The broader socio-economic impact is equally compelling. A 2023 World Bank report found that in Nigeria and Tanzania, expanded internet coverage sustained over three or more years reduced extreme poverty by approximately 7%, while labour-force participation and wage employment increased by up to 8%.

The enabling framework

Regulatory alignment is reinforcing the case for local infrastructure. Governments across Africa are strengthening data-protection and localisation frameworks to ensure that sensitive data remains within national borders. For example, South Africa’s National Data and Cloud Policy requires government data linked to national security to be stored on locally based infrastructure; Kenya’s data-protection regime mandates local hosting for personal data tied to strategic state interests; and Zambia’s Data Protection Act similarly restricts offshore storage of certain personal data.

These measures reflect a broader shift toward digital sovereignty, reducing reliance on foreign cloud providers and increasing demand for domestic data-centre capacity. In parallel, several jurisdictions are moving toward clearer and more streamlined licensing and approval processes for digital infrastructure, reducing regulatory uncertainty and shortening timeframes for market entry.

For investors and operators, greater regulatory clarity, both in data requirements and in licensing frameworks, would serve as a further enabler for investment and growth.

Building Africa’s digital utilities

Africa’s economic resilience and competitiveness are increasingly tied to the strength of its digital backbone. Data centres and high-capacity fibre networks are no longer peripheral assets. Instead, they are the continent’s new utilities, and must be supported by reliable energy infrastructure and coherent regulatory frameworks.

Investing in digital infrastructure is not merely a technology play. It underpins innovation, enables financial inclusion, supports job creation, and anchors Africa more firmly in the global digital economy. As capital, policy and capability converge, Africa’s digital infrastructure is emerging as one of the continent’s most compelling and impactful investment themes.

Khanyisile Malebe and Nomsa Sibanyoni are Corporate Financiers | PSG Capital

This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

DealMakers AFRICA is a quarterly M&A publication
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