Market News

BY Colleen Goko

Key Points

• Africa data centre capacity makes up less than 1% of global total
• Raxio aims to operate in 10 African countries
• Development finance institutions help de-risk early investments

LONDON, April 3 (Reuters) – The World Bank’s private investment arm is backing the rush into digital data in Africa with a $100 million investment in regional data centre developer and operator Raxio Group, funding centres from Ethiopia to Angola.

Digital demand on the continent is surging, but infrastructure remains scarce. Africa accounts for less than 1% of the world’s data centre capacity even as mobile data usage grows by around 40% annually – nearly double the global average, according to U.S. advocacy group Internet Society.

The debt funding by the World Bank’s International Finance Corporation (IFC) – its largest such investment to date in Africa – reflects rising interest from global institutions in the continent’s digital economy, where mobile money, AI-driven services and cloud-based platforms are rapidly expanding. Hosting data locally reduces costs, improves speeds and gives governments more control over cybersecurity and regulation.

“Data centres as such and overall digital connectivity is an important area of focus for the IFC,” said Sarvesh Suri, IFC regional industry director, infrastructure and natural resources in Africa.

Improving digital connectivity and building the backbones of digital infrastructure are of key importance to support economic growth in Africa, Suri added.

After launching its first facility in Uganda in 2021, Raxio is building a network of top standard data centres, including one in Ivory Coast with construction underway in Mozambique, Ethiopia and Democratic Republic of Congo.

The expansion comes as global tech giants and infrastructure investors view Africa as the next battleground for cloud services. Cloud computing and tech giants such as Amazon Web Services AMZN.O, Microsoft Azure MSFT.O and Huawei are ramping up partnerships and presence on the continent, but many still rely on Europe or South Africa for hosting.

“We see the interest, the support, the engagement, the collaboration we are getting from the governments where we operate, who really want this to happen,” said Raxio Group CEO Robert Skjodt.

Building data centres in frontier markets isn’t without risk. Unreliable power supply, complex regulation and political instability can deter commercial players.

Development finance institutions play a crucial role by de-risking early investments that can unlock long-term private capital, said Suri.

“We bring in the right kind of instruments to help support investors to reduce the risk over all this, to make sure that these investments continue to be long-term, sustainable, and profitable, but also economically beneficial for the countries,” said Suri.

(Reporting by Colleen Goko; Editing by Karin Strohecker)