North Africa is experiencing growing interest in data centre infrastructure, driven by digital sovereignty requirements and cloud adoption. This analysis focuses on Morocco, where EXXING conducted data centre planning in Casablanca (2010, Project #28), revealing strong demand from public institutions and offshoring parks.
EXXING Experience: In 2010, data centre planning for a Casablanca-based facility identified demand drivers including government digitization initiatives, offshoring sector growth, and banking sector compliance requirements. This early work highlighted infrastructure gaps that have since attracted international investment.
Explosive Growth and Considerable Potential
Currently, Africa represents less than 2% of global data centre capacity with approximately 850 MW installed at end-2024. This figure, far from indicating failure, underscores the immense growth potential. Projections are compelling: by 2030, installed capacity should reach 2,100 MW, representing 2.5x multiplication in six years.
North African Data Centre Landscape
| Country | 2024 Capacity (MW) | 2030 Projected (MW) | CAGR | Key Demand Drivers |
|---|---|---|---|---|
| Egypt | 110 | 280 | 16.8% | Government digitization, Suez Canal logistics, regional hub ambitions |
| Morocco | 45 | 125 | 18.6% | Offshoring sector (BPO/ITO), banking compliance, smart cities (EXXING #28) |
| Tunisia | 15 | 40 | 17.7% | Nearshoring to Europe, ICT services export, regulatory stability |
| Total North Africa | 170 | 445 | 17.4% | Digital sovereignty, cloud adoption, nearshoring |
Note: This analysis excludes Sub-Saharan Africa (Nigeria, Kenya, South Africa) where EXXING has no direct project experience. North African markets share regulatory characteristics (cost-based pricing, infrastructure sharing mandates) distinct from Sub-Saharan models.
Investment Flow Analysis
| Source | 2020-2024 Investment | 2025-2030 Projected | Key Players |
|---|---|---|---|
| International operators | $1.8B | $4.2B | Equinix, Digital Realty, Vantage |
| Regional specialists | $1.2B | $2.8B | Africa Data Centres, Teraco, OADC |
| Hyperscalers | $0.8B | $3.5B | Microsoft, Google, AWS |
| Local operators | $0.4B | $1.2B | MainOne, Rack Centre, WIOCC |
| Total | $4.2B | $11.7B | — |
Transformation Drivers
Four fundamental pillars support Africa's emergence as a key player in global sovereign cloud infrastructure.
Driver One: Digital Sovereignty and Regulatory Compliance
The necessity to host data locally has become a strategic priority for governments and enterprises. The Nigeria Data Protection Act (2023), Kenya Data Protection Act (2019), and South African POPIA impose strict constraints on cross-border data transfers [3]. This regulation stimulates demand for local infrastructure:
Sector Adoption of Local Hosting:
| Sector | Local Hosting Rate (2024) | Change vs 2022 | Primary Driver |
|---|---|---|---|
| Banking | 78% | +23pp | Regulatory mandate |
| Public sector | 65% | +18pp | Sovereignty policy |
| Fintech | 92% | +15pp | Licence requirements |
| Healthcare | 58% | +22pp | Data protection |
| Telecommunications | 85% | +8pp | Infrastructure proximity |
Regulatory Framework Comparison:
| Country | Legislation | Data Localisation | Cross-Border Transfer | Enforcement |
|---|---|---|---|---|
| Nigeria | NDPA 2023 | Mandatory (sensitive) | Adequacy required | Active |
| Kenya | DPA 2019 | Recommended | Consent required | Moderate |
| South Africa | POPIA 2020 | Conditional | Adequacy/consent | Active |
| Egypt | DPL 2020 | Mandatory (government) | Approval required | Developing |
| Morocco | Law 09-08 | Conditional | Adequacy required | Active |
Driver Two: Economic Impact
Data centres generate substantial economic benefits beyond direct employment.
Economic Multiplier Effects:
| Impact Category | Per MW Installed | Methodology |
|---|---|---|
| Direct jobs | 25-35 FTEs | Operational staff |
| Indirect jobs | 80-120 FTEs | Supply chain, services |
| Construction jobs | 150-200 (temporary) | Build phase |
| Annual operating expenditure | $2-3M | Local procurement |
| Tax contribution | $0.5-1M annually | Corporate, property, utilities |
Case Study: Teraco Johannesburg Campus
| Metric | Value |
|---|---|
| Total capacity | 85 MW |
| Direct employment | 450 FTEs |
| Indirect employment | 1,800 FTEs |
| Annual local procurement | $45M |
| Customer enterprises | 600+ |
| Internet exchange participants | 40+ |
Driver Three: Hyperscaler Entry
The entry of global hyperscalers—Microsoft Azure, Google Cloud, AWS—transforms market dynamics and validates African data centre investment.
Hyperscaler African Presence:
| Provider | Regions | Capacity | Investment | Launch |
|---|---|---|---|---|
| Microsoft Azure | South Africa (2), Egypt (planned) | 50+ MW | $1B+ | 2019 |
| Google Cloud | South Africa | 30+ MW | $500M+ | 2022 |
| AWS | South Africa, Nigeria (planned) | 40+ MW | $800M+ | 2020 |
| Oracle Cloud | South Africa | 20+ MW | $300M+ | 2022 |
Hyperscaler Impact:
- Validation: International investment signals market maturity
- Standards: Raises operational and security benchmarks
- Ecosystem: Attracts ISVs, system integrators, managed service providers
- Pricing: Competitive pressure benefits customers
- Skills: Training programmes develop local talent
Driver Four: Connectivity Infrastructure
Submarine cable investments have transformed African international connectivity, enabling data centre growth.
Submarine Cable Capacity:
| Cable | Capacity | Landing Points | Status |
|---|---|---|---|
| 2Africa | 180 Tbps | 33 African countries | Operational 2024 |
| Equiano | 144 Tbps | Nigeria, South Africa, Namibia | Operational 2023 |
| PEACE | 96 Tbps | Egypt, Kenya, South Africa | Operational 2022 |
| EASSy | 10 Tbps | East Africa | Operational 2010 |
| WACS | 14.5 Tbps | West Africa | Operational 2012 |
Connectivity Cost Evolution:
| Route | 2018 Cost ($/Mbps/month) | 2024 Cost | Reduction |
|---|---|---|---|
| Lagos-London | $45 | $8 | -82% |
| Johannesburg-Amsterdam | $35 | $6 | -83% |
| Nairobi-Mumbai | $55 | $12 | -78% |
| Cairo-Frankfurt | $25 | $5 | -80% |
Market Segmentation and Opportunities
By Service Type
| Segment | 2024 Revenue | 2028 Projected | CAGR | Key Drivers |
|---|---|---|---|---|
| Colocation | $450M | $1.1B | 25% | Enterprise migration |
| Hyperscale | $280M | $850M | 32% | Cloud adoption |
| Edge | $80M | $320M | 41% | Latency-sensitive applications |
| Enterprise | $120M | $280M | 24% | In-house to outsourced |
| Total | $930M | $2.55B | 29% | — |
By Customer Vertical
| Vertical | Share of Demand | Growth Rate | Key Requirements |
|---|---|---|---|
| Financial services | 28% | 22% | Security, compliance, low latency |
| Telecommunications | 22% | 18% | Capacity, connectivity |
| Government | 15% | 25% | Sovereignty, security |
| Cloud/Internet | 18% | 35% | Scale, power efficiency |
| Enterprise | 12% | 20% | Reliability, support |
| Media/Content | 5% | 30% | Capacity, CDN integration |
Investment Considerations
Site Selection Criteria
| Factor | Weight | Key Considerations |
|---|---|---|
| Power availability | 25% | Grid reliability, renewable access, cost |
| Connectivity | 20% | Submarine cable proximity, IX presence |
| Market demand | 20% | Enterprise density, cloud adoption |
| Regulatory environment | 15% | Data protection, licensing, taxation |
| Talent availability | 10% | Technical skills, labour cost |
| Political stability | 10% | Investment protection, currency stability |
Country Risk Assessment
| Country | Power | Connectivity | Demand | Regulation | Talent | Stability | Overall |
|---|---|---|---|---|---|---|---|
| South Africa | 3/5 | 5/5 | 5/5 | 4/5 | 4/5 | 4/5 | 4.2/5 |
| Nigeria | 2/5 | 4/5 | 5/5 | 4/5 | 4/5 | 3/5 | 3.7/5 |
| Kenya | 4/5 | 4/5 | 4/5 | 4/5 | 4/5 | 4/5 | 4.0/5 |
| Egypt | 4/5 | 4/5 | 4/5 | 3/5 | 4/5 | 3/5 | 3.7/5 |
| Morocco | 4/5 | 4/5 | 3/5 | 4/5 | 4/5 | 5/5 | 4.0/5 |
Financial Metrics
| Metric | African Average | Global Average | Variance |
|---|---|---|---|
| Build cost ($/MW) | $8-12M | $10-15M | -20% |
| Power cost ($/kWh) | $0.08-0.15 | $0.06-0.12 | +25% |
| Colocation pricing ($/kW/month) | $150-250 | $100-180 | +40% |
| Occupancy rate | 65-75% | 75-85% | -10pp |
| Target IRR | 18-25% | 12-18% | +6pp |
Investment Thesis: Higher pricing and returns compensate for elevated power costs and country risk, making African data centres attractive for risk-tolerant investors.
Challenges and Mitigation
Power Infrastructure
Power remains the primary constraint for African data centre development.
| Challenge | Impact | Mitigation Strategies |
|---|---|---|
| Grid unreliability | Increased diesel/generator cost | On-site generation, battery storage |
| High electricity cost | Reduced margins | Renewable PPAs, efficiency optimisation |
| Limited renewable access | ESG concerns | Solar/wind investment, carbon offsets |
| Transmission constraints | Site selection limitations | Substation investment, distributed design |
Renewable Energy Opportunity: Africa's solar and wind resources offer long-term cost advantage. Leading operators are investing in renewable PPAs:
| Operator | Renewable Target | Timeline | Approach |
|---|---|---|---|
| Teraco | 100% | 2030 | Solar PPA, wind |
| Africa Data Centres | 80% | 2028 | Hybrid solar-grid |
| OADC | 100% | 2027 | On-site solar |
Skills Gap
Technical talent scarcity constrains growth and increases operating costs.
| Role | Demand (2024) | Supply | Gap | Salary Premium |
|---|---|---|---|---|
| Data centre engineers | 2,500 | 1,800 | -28% | +35% vs market |
| Network specialists | 1,200 | 900 | -25% | +30% vs market |
| Security professionals | 800 | 450 | -44% | +45% vs market |
| Facility managers | 400 | 320 | -20% | +25% vs market |
Mitigation: Leading operators are investing in training academies, university partnerships, and international recruitment programmes.
Case Study: EXXING Advisory for Data Centre Investment
EXXING advised a European infrastructure fund on a $150M data centre investment in West Africa.
Engagement Scope
| Phase | Activities | Deliverables |
|---|---|---|
| Market assessment | Demand analysis, competitive landscape, regulatory review | Investment thesis validation |
| Site selection | Multi-criteria analysis, site visits, due diligence | Recommended location |
| Financial modelling | Revenue projections, cost analysis, returns modelling | Investment memorandum |
| Transaction support | Negotiation support, structuring advice | Completed transaction |
Key Findings
| Factor | Assessment | Implication |
|---|---|---|
| Demand | Strong enterprise and hyperscaler demand | Revenue visibility |
| Competition | Limited quality supply | Pricing power |
| Power | Grid challenges but renewable opportunity | Hybrid solution required |
| Regulation | Supportive framework | Low regulatory risk |
| Returns | 22% projected IRR | Attractive risk-adjusted returns |
Outcome
Transaction completed at $145M for 25 MW facility with expansion rights to 60 MW. Facility achieved 70% occupancy within 18 months of opening.
Conclusion
Africa represents one of the most compelling data centre investment opportunities globally. The combination of structural demand growth, regulatory tailwinds, hyperscaler validation, and improving connectivity creates favourable conditions for both operators and investors.
Key takeaways:
- Growth trajectory: 16% CAGR through 2030 significantly exceeds global averages
- Demand drivers: Sovereignty requirements, cloud adoption, and digital transformation create sustained demand
- Investment returns: Higher pricing compensates for elevated costs and risks
- Power challenge: Renewable energy investment addresses both cost and ESG concerns
- Market maturation: Hyperscaler entry signals transition from emerging to established market
EXXING advises operators and investors on African data centre strategy, from market assessment through transaction execution and operational optimisation.
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References
[1] Africa Data Centres Association (2024). African Data Centre Market Report 2024. ADCA.
[2] Xalam Analytics (2024). Nigeria Data Centre Market Outlook. Xalam Analytics.
[3] Data Guidance (2024). African Data Protection Legislation Comparison. OneTrust DataGuidance.
[4] TeleGeography (2024). Submarine Cable Map and Capacity Database. TeleGeography.
[5] Uptime Institute (2024). Global Data Centre Survey 2024. Uptime Institute.
