Africa’s digital future depends on closing the infrastructure gap

Africa’s economic narrative is often framed by reform, policy evolution and investment commitments – but tangible progress is determined by the reliability of the systems that underpin daily life.

When infrastructure functions smoothly, confidence grows, investment increases and momentum builds across sectors. Conversely, inadequate infrastructure raises the cost of doing business, slows execution, and diverts opportunities to regions that are better prepared.

This dependence on reliable infrastructure is increasingly visible in digital practices across the continent.

Retailers reconcile payments on mobile devices before opening for business, governments are digitising services to reach citizens more efficiently, and developers are creating artificial intelligence (AI) models that understand local languages and address agricultural challenges.

Although these changes may appear incremental, they depend on a foundation of computing power, storage and network capacity that remains limited across much of the continent.

Gaps and imbalances

Africa currently accounts for less than 1% of global data centre infrastructure.

For a region characterised by a young population, rising connectivity and rapid cloud adoption, this gap carries consequences well beyond the technology sector.

Limited local supply affects costs, compliance requirements, and latency.

It also affects the competitiveness of businesses that depend on digital infrastructure.

Installed data centre supply is estimated at roughly 0.4 gigawatts, while projected demand could reach as much as 2.2 by 2030, requiring investment of up to $20 billion.

Infrastructure across the continent also remains unevenly distributed, with nearly half of Africa’s data centres located in just four markets: South Africa, Kenya, Nigeria and Egypt.

While these markets have emerged as digital hubs, the concentration of infrastructure leaves many other countries dependent on remote processing capacity.

When data must travel long distances to be processed, costs increase, speeds decline and local innovators face greater barriers to building digital solutions. Therefore, the systems needed to support new services remain distant from many of the communities that need them the most.

Patrick Ndebele is an associate in Digital Infrastructure and Technology, Media and Telecommunications, at Nedbank CIB. Image: Supplied

Coordination pivotal

Addressing this imbalance will require a more coordinated approach to digital infrastructure development and a stronger pipeline of bankable projects that can attract long-term capital.

Shared digital infrastructure models offer a practical pathway forward, allowing markets to pool resources and build scale collectively.

Cross-border data centres and cooperative cloud platforms could reduce entry costs for smaller economies while creating commercially viable, regional digital ecosystems.

Alignment and certainty

Regulatory alignment will also play an important role in encouraging investment.

Greater consistency in data protection, localisation requirements and licensing frameworks could give operators greater certainty when deploying capital across multiple jurisdictions.

Targeted incentives, including favourable zoning, reduced tariffs and improved access to clean energy, could encourage expansion into emerging markets rather than concentrate investment into existing hubs.

Power supply

Energy reliability is another defining constraint for digital infrastructure development. Hyperscale data centres require stable and continuous power supply, yet many electricity systems across the continent remain constrained.

Africa possesses abundant renewable energy resources, but the challenge lies less in availability than in coordination and scale.

Reliable power systems will ultimately determine whether the continent can fully participate in the global cloud and artificial intelligence economy.

Gary Galolo is head of Technology, Media and Telecommunications, and Digital Infrastructure Finance at Nedbank CIB.

Connectivity

Connectivity presents a similar structural challenge. New subsea cables have expanded Africa’s international internet connectivity, but much of that bandwidth fails to reach inland markets.

Long distance fibre networks remain incomplete, and rural areas continue to face persistent last-mile connectivity gaps.

Without stronger terrestrial networks, digital services remain concentrated in major urban centres, and data centres can serve only limited geographic markets.

Demand for digital services continues to accelerate across both the public and private sectors.

More than 40 African countries have introduced data protection legislation requiring local storage and processing of sensitive information.

Businesses are speedily adopting cloud services, governments are digitising public services, and AI is beginning to reshape sectors from agriculture to healthcare.

Estimates suggest that AI alone could contribute as much as $1 trillion to Africa’s gross domestic product by 2035.

Despite this opportunity, investment in African digital infrastructure has slowed in recent years as currency volatility, regulatory fragmentation, rising energy costs and declining foreign direct investment weigh on capital deployment.

Unlocking capital will require clearer project pipelines and credible investment frameworks that allow long-term investors to commit capital with confidence.

Beyond financing

Financial institutions also have an important role to play. Beyond providing capital, banks can help structure infrastructure projects, manage financial risks and mobilise funding from a wider pool of investors.

Financing surrounding systems such as power networks, fibre backbones, telecommunications towers and edge facilities will ensure that data centres operate within resilient digital ecosystems.

The investments made over the next five years will shape Africa’s digital future. Expanding connectivity, computing infrastructure and reliable energy systems will help unlock productivity across sectors while supporting the growth of digital services and skilled employment.

Ultimately, the choices made in this decade will determine where Africa’s data resides, who governs it and how much of the digital economy’s value remains on the continent.

Patrick Ndebele is an associate in Digital Infrastructure and Technology, Media and Telecommunications, at Nedbank CIB.

Gary Galolo is head of Technology, Media and Telecommunications, and Digital Infrastructure Finance at Nedbank CIB

Brought to you by Nedbank CIB.

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