Irish construction and engineering firms have established a leadership position internationally in the delivery of complex data centre projects. Indeed, it has become increasingly difficult to find a major data centre project in the UK, western Europe, and the Nordic countries that doesn't feature strong Irish involvement.
The Irish industry's expertise in data centre construction has its roots in the growth of the sector in Ireland over the past two decades. Irish firms took the expertise gained through building facilities for global leaders at home and used it to win contracts in the international marketplace.
A growing market with vast potential is seeing increased activity from those firms in sub-Saharan Africa.
With South Africa, Kenya and Nigeria at the forefront of the evolving digital economy, the data centre market in Africa is on the brink of a period of a huge acceleration in growth. This is being driven by several factors including soaring demand for cloud services, pressure by regulators to bring African content back to Africa, a surge in media content markets and improved broadband around the continent.
Market size is expected to exceed $3bn (€2.5bn) by 2025, with market intelligence platform Reportlinker estimating a compound annual growth rate of over 12pc. It is little surprise in this context that the African data centre sector has seen increasing interest from major global cloud service providers such as Amazon Web Services (AWS) and Microsoft, along with Huawei over the past five years.
"Sub-Saharan Africa is home to over 1.2 billion people, half of whom will be under 25 years old by 2050," says Nicola Kelly, Senior Market Advisor Africa with Enterprise Ireland. "This youthful continent is already a keen innovator and adopter of technology, as well as an avid consumer of digital content. Across Africa, technology-driven solutions have been adopted far more broadly than in many other developed nations. Just look at the rise and rise of mobile wallet service M-Pesa in East Africa. During the pandemic, many African governments have deemed mobile wallets as 'essential services' and banned transfer fees for a period."
Mobile and internet penetration continues to grow across the continent which drives demand for data and networking, Kelly said.
"Having an African data centre presence allows providers to reduce latency, but there are also significant regulatory discussions under way around keeping African data on the African continent, and within national borders - the Kenya Data Protection Act (2019), for example."
South Africa continues to dominate the data centre construction market in Africa, with Kenya and Nigeria also seeing increased investment levels during 2019. The aggressive investments being made in data centre infrastructure in South Africa in anticipation of increased demand in cloud services will likely continue in 2021, with service providers expecting an increase in data traffic as a result of more submarine communications cables coming to Africa.
Mobile network operators and local companies have dominated the African data centre market to date. However, global hyperscale cloud providers like Amazon, Microsoft Azure, Oracle and Google are challenging the status quo, as they require more Africa-based data centres to grow their offerings on the continent.
Microsoft Azure set up data centres in Cape Town and Johannesburg in 2019, giving South Africa faster access to Azure Cloud. These are Microsoft's first data centre investments in Africa. Chinese telecommunications giant Huawei has also started offering its cloud services in South Africa and is leasing a data centre in Johannesburg from a partner pending the development of two data centres of its own. Oracle is also active in the market and in September 2020 announced plans to launch new data centres in South Africa later this year.
Amazon's cloud computing division, AWS, started data centre operations in Cape Town in early 2020. The company also plans to establish a facility in Nairobi. In March 2020, emerging markets investor Actis bought the Rack Centre in Lagos and has plans to invest $250m to buy and build African data centres.
The opportunity for Irish firms still exists despite the pandemic. Construction projects in African countries were not completely halted after the outbreak of Covid-19 and used a reduced workforce following government-imposed restrictions.
"The pandemic has severely constrained the ability of Irish exporters to visit the market, but the demand is still here," Kelly said.
"Until a semblance of normality has returned to business travel, Enterprise Ireland in sub-Saharan Africa will continue to profile the Irish capability in the data centre and high-tech construction segment, as well as use virtual tools to keep Irish companies connected to key stakeholders and opportunities on this vibrant continent."