Africa’s data demands grow but there are some challenges and issues regarding the investment in data centers.
The Africa continent is home to over 50 countries and has a population of more than one billion people. The population in the continent continues to increase with youth people. At the same time, technology-driven solutions have been adopted far more broadly than in more developed nations to encourage people not to leave.
Opportunity for reducing network latency
There are opportunities presented by the African multitenant data center market (MTDC) to overseas investors. For example, they allow a data center service provider to reduce network latency. It means to have quicker cloud-based services and applications to be provided.
For augmenting investments in Africa, data center businesses must be more informed about local knowledge of the key issues affecting the relevant African market. Although the African market seems to be one market, with cultural nuances, and a range of disparate civil and common law legal systems, it behaves like more than one market. There are some issues that investors in MTDC businesses and infrastructure will need to consider.
Uninterruptible access to the main power
According to some analysts’ predictions, the data center sector could be using 20% of all available electricity globally by 2025. Therefore, African-based or not, for a successful data center operation should have uninterruptible access both to mains power and backup power supplies. They must check the proposed site has access to the necessary networks’ grids and efficient energy supplies. Potential investors in MTDCs should consider what environmental protection measures they may need to comply with. Moreover, many jurisdictions in Africa provide optimal conditions for renewable energy production.
Aside from land rights, South Africa had a policy of government expropriation of land from private individuals. Lenders will also need to be satisfied that security over land is available in the relevant jurisdiction. While security over land is generally available in the continent, this will need to be determined on a country-by-country basis. In addition, potential purchasers of an existing MTDC business will need to check that the seller has good title to the land or a requisite, transferable leasehold interest.
Capable local presence to manage local risks
To manage investment and political risk in Africa, investors have a relevant and capable local presence. It’s important to provide insight as to local business and political considerations. Also, potential investors in MTDC businesses should procure local advice. It is needed to know how disputes are typically settled; and the efficacy of the process for enforcing a judgment locally.