By Wiaan Vermaak, Group Chief Commercial Officer at Digital Parks Africa
In 2026, Africa’s data centre industry stands at a critical point, driven by regional growth, evolving regulations, and an urgent push for data sovereignty. South Africa remains the continent’s digital hub, yet it is approaching capacity limits as infrastructure and power constraints intensify.
While its mature market is well positioned to expand, particularly with the arrival of hyperscalers, operating costs and energy capacity constraints continue to impact large-scale development.
Africa still lags behind in the global data centre market, while the US and Europe lead with much stronger economies, more advanced infrastructure, and higher enterprise demand. Markets in other regions are significantly larger, and their data centre capacity tends to be much greater, reflecting a more mature operating environment. This gap emphasises both the current constraints and the potential for rapid growth in Africa.
Energy remains the defining requirement.
Energy has become the primary requirement for data centre expansion, as space is no longer the main factor. Power efficiency influences both power availability and growth, with renewables such as wind and solar gaining momentum, although challenges persist. Meanwhile, innovations like small modular nuclear reactors are being explored and are emerging as potential long-term solutions.
At the same time, digital continuity and data sovereignty are key focus areas. In the US and Europe, data is stored and processed locally to comply with strict standards for security and compliance. Africa, by contrast, still exports a significant portion of its data due to limited local infrastructure. However, momentum towards genuine sovereignty is growing across the continent, with a greater focus on demonstrable controls around data residency, governance, and operational accountability rather than just policy intent. As local capacity develops, the ability to demonstrate compliance, resilience, and trusted operational practices will be crucial to maintaining data value within regional economies.
Scalability and smart investment are crucial for fostering development. Overbuilding without demand wastes capital, whereas targeted growth promotes sustainable progress. Connectivity is equally important, with submarine cables, satellites, and terrestrial fibre transforming facilities into operational and interconnected data centres. Ultimately, success relies on uptime, compliance, and robust operating standards that ensure an “always-on” environment.
High cost of development
Across the continent, every country aspires to build its own data centre ecosystem. Yet local demand often cannot justify the high development costs, averaging $12+ million per megawatt, excluding civil works, especially where power is constrained. As a result, South Africa, Kenya, Nigeria, Egypt and Morocco are emerging as regional data centre hubs.
The future lies in cross-border collaboration. Shared digital infrastructure could allow countries to access compute, storage, and cloud services while still meeting sovereignty requirements. Concepts like “digital embassies” could enable data to be stored or processed abroad while still being treated as local, satisfying regulatory requirements at lower cost.
Examples from around the world demonstrate this interdependence. The “digital embassy” operating model, pioneered by Estonia, is a system where a nation stores its vital government data and information systems in secure data centres outside its physical territory. The key aspect of this model is that these data centres are granted diplomatic immunity and legal protection through bilateral agreements with the host country, ensuring data sovereignty and the continuity of state functions in the event of a crisis, such as cyberattacks, natural disasters, or war.
Estonia stores vital government data in “data embassies”, which are secure, offshore data centres mainly located in Luxembourg. These serve as digital backups, ensuring national digital continuity and security by granting the data the same diplomatic immunity as traditional embassies, enabling Estonia to retain control and access to essential services even during severe crises like cyberattacks or natural disasters.
The hosting country’s data centre staff would be responsible for infrastructure operations, maintenance, connectivity, and physical security, while the home country’s data centre personnel are responsible for data control, storage, and processing.
South Africa’s challenges
South Africa’s data centre industry faces several challenges. Power grid instability and capacity remain the greatest concerns for investors, making a dependable energy supply vital for expansion. Data centres are capital-intensive, and achieving efficiencies such as Power Usage Effectiveness (PUE) below 1.5 depends on local skills and compliance with international standards.
The skills shortages increase pressure, with engineers increasingly relocating abroad for better opportunities. Regulatory and permitting processes also require improvement, while the sector remains heavily reliant on foreign investment, with few local players. To maintain growth, South Africa must improve power reliability, enforce efficiency standards, retain talent, and simplify regulation.
Africa’s data centre sector faces both opportunities and risks from consolidation and outsourcing. Regional hubs can boost efficiency and provide shared access to computing, storage, and cloud services, but focusing too much on one location risks creating single points of failure and losing independence. Outsourcing without transferring skills offers little local benefit, whereas insourcing helps build domestic capacity and creates jobs.
Putting the fundamentals in place
Success relies on getting the fundamentals right, such as affordable land and permits, reliable and scalable power, local skills to build and operate facilities, and secure connectivity through cables, fibre, and non-terrestrial networks. Weakness in any of these factors undermines the ecosystem.
The way forward involves balancing regional cooperation with local control, ensuring efficiency whilst strengthening sovereignty and resilience.
Ultimately, Africa’s potential lies in developing data centres backed by African skills and infrastructure, while mitigating risks through diversification, robust legislation, and effective capital deployment.
