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A Look at the African Cloud Computing Market

A Look at the African Cloud Computing Market

Cloud computing has emerged as one of the biggest technology trends in recent years. The biggest cloud vendors operate in up to 60 regions globally, enabling a staggering 94 percent of organizations to pursue cloud adoption as part of their digital transformation strategies. However, as cloud availability has grown in North America, Europe, and Asia, Africa – which accounts for nearly one-fifth of the global population – has been notably barren when it comes to these services.

Until now.

Africa’s cloud services industry may still be in its infancy, but it’s already beginning to show signs of growth. According to Xalam Analytics’ The Rise of the African Cloud report, only five African countries were considered “cloud ready” in 2018. However, another 11 of the 20 remaining nations were “on the cusp” of being ready to adopt the cloud.

Even so, interest in cloud computing services has risen dramatically among African markets in recent years. Fewer than half of all medium and large organizations in Africa utilized the cloud in 2013. This number more than doubled by 2018, according to World Wide Worx’s Cloud Africa 2018 report. Companies in Nigeria, South Africa, and Kenya are ramping up their cloud spending to capitalize on this emerging technology.

There is no doubting that the African cloud is here – and one thing is already certain: the African cloud market is a space to watch over the next several years.

The cloud is already making a big impact

cloud computing

Although the African cloud sector remains small relative to other global markets, local entities are already feeling the positive effects of the cloud services that are available to them. Companies in the three African markets highlighted in the Cloud Africa 2018 study reported that the use of cloud services is making a big impact on their market shares. Nigerian companies saw the most significant change, with just under half of respondents experiencing “high or very high” impact. Even South Africa, which experienced the least change, saw 66 percent of its businesses garner positive effects from cloud adoption. More recent reports have identified that, by increasing the use of public cloud services, South African businesses are also expediting their digital transformations and ramping up innovation.

The impact of the cloud is even notable on a case-by-case basis. Companies across Africa are using cloud services to achieve various goals and yielding impressive results in the process. For instance, banking institutions like HSBC are leveraging cloud services to crack down on money laundering schemes. Technology firm Tencent Africa is looking to the cloud as a means of expanding its infrastructure and expediting its speed of service. HealthQ Technologies, a South African company, has built its LifeQ platform in the cloud to collect data that will promote healthier lifestyles among African communities.

Adoption challenges persist

Though cloud adoption rates may be rising across Africa, the continent still has a myriad of obstacles to overcome to enable the widespread use of cloud technology. Lack of infrastructure is perhaps the biggest challenge to the adoption of cloud services in Africa. Several of the continent’s countries are without their own broadband infrastructure. Moreover, the Internet is slow and, in many cases, unaffordable for those who could otherwise benefit from cloud services. In some areas, utility providers have been unable to provide the energy needed to power cloud data centers, resulting in higher costs for users and more headaches for cloud vendors.

The issues surrounding Africa’s cloud infrastructure go even deeper, however. They have left many enterprises distrusting of third-party providers, which can’t offer worthwhile service level agreements or keep the promises they make to their customers. Fortunately, third-party providers are already starting to build bridges by making key improvements to African infrastructure. Liquid Telecom introduced fiber technology in its service region. Other providers like Main One and Etix Everywhere are scaling infrastructure across Africa, thereby creating a more promising future for cloud services.

Regulations are also hindering many African companies’ paths to the cloud. Several countries in Africa have unveiled data sovereignty and compliance regulations that inhibit the sharing of data beyond borders. Cloud providers that want to bring their services to Africa would therefore have to develop different offerings for all the countries they want to serve. Changes to these policies will be critical in promoting cloud adoption across the continent.

But Africa’s cloud landscape is improving

Despite the challenges it faces, the African cloud computing market is already on a promising path to success. Numerous global cloud entities have noticed the sector’s growth and taken steps to bolster it. Most notably, Amazon Web Services announced plans to increase its African cloud investments by establishing a new infrastructure region in South Africa with three “Availability Zones.” In early 2020, Huawei unveiled its own public cloud services, which it is launching out of Johannesburg and Cape Town. The South African cloud computing sector will see additional growth thanks to a recent partnership between Berkshire Partners, a private equity firm in Boston, and Africa’s Teraco Data Environments. Berkshire has plans to increase Teraco’s data center capacity to 60MW over the next several years.

This increased interest from international entities has verified the potential of the African cloud market. It suggests that regional demand for the cloud is growing large enough to warrant economic investment from the biggest cloud providers. Accelerating activity in the local cloud computing sector is also providing the foundation that businesses need to start moving to the cloud more rapidly. Xalam Analytics estimates that Africa’s ICT industry will see its revenues surge to $2 billion by 2023, with the cloud leading this growth.