South Africa’s Teraco eyes data centres in Nigeria and Kenya

Banks are finding it harder to justify the cost of an in-house data centre. REUTERS/Afolabi Sotunde

Teraco Data Environments, Africa’s largest data centre provider, is considering expanding to Nigeria and Kenya, CEO Jan Hnizdo tells The Africa Report.

The company could create data centres of between 1MW and 4MW in those countries, Hnizdo says from Johannesburg. Nigeria and Kenya have the liberalised telecoms sectors that data centres need, he adds.

Growing numbers of African internet users make it harder to serve the continent’s needs via offshore data centres in Europe or the US. Local capacity means faster connections speeds, and Africa’s data centre market is set to grow at a compound annual rate of more than 12% to reach $3bn in 2025, according to Turner & Townsend.

Growth in the provision of undersea cables for Africa has meant increased use of public clouds from providers such as Amazon and Huawei, says Hnizdo.

That in turn means that African companies such as banks are finding it harder to justify having an in-house data centre, he argues.

Covid-19 has accelerated the trend towards outsourcing data centres.

In December, the US International Development Finance Corporation invested $300m to fund the expansion of Liquid Telecom’s data centres in South Africa, Kenya, Egypt, Ghana and Morocco.

Private-equity investor Actis plans to invest $250m into African data centres over three years. It started in March 2020 by buying control of Rack Centre in Nigeria. Nigeria is one of the African governments that requires data to be hosted locally for key sectors.

Education benefits

According to the Africa Data Centres Association and Xalam Analytics, more than 30 facilities have come online in Africa since 2016, doubling the region’s capacity. But that capacity is unevenly distributed, their study shows.

More than two-thirds of Africa’s capacity was in South Africa in 2020, and only a third of Africa’s 80 cities with a population of more than 1 million have their own data centre, the study says.

According to the Balancing Act consultancy, there are 15 African countries with economies and population sizes to justify data centre and cloud services ecosystems.

Boston-based private-equity firm Berkshire Partners bought a majority stake in Teraco in 2019.

This month, Teraco secured R2.5bn ($168m) in loans from lenders led by South African bank Absa for the construction of a 38MW hyperscale data centre in Ekurhuleni, east of Johannesburg.

This will be Africa’s largest data centre.

South Africa’s liberalised telecoms sector has enabled it to become a strategic location for cloud providers, says Hnizdo.

“The rest of Africa is slowly starting to catch up,” but connectivity in many countries is still too expensive, he says.

Telecoms liberalisation can have a “huge” positive impact of populations, adds Hnizdo. Online education in African can be a “massive beneficiary”.

African students will gain access to the world’s best schools and African universities will be able to draw students from anywhere, he says.  “It’s not a question of Western versus African education. Cheap connectivity is the key.”

 

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