Africa's Digital Economy and Digital Transformation

Digital Realty’s role in Africa’s digital economy

With rich resources like a growing physical infrastructure and subsea cable network, Africa is uniquely positioned to emerge as a leader among today’s developing economies.

A key factor in this potential is improving the internet connection in Africa, which is central to facilitating the continent's digital transformation. The African Union commits to growing Africa’s already burgeoning digital economy through The Digital Transformation Strategy for Africa (2020-2030), stating:

“Innovations and digitalization are stimulating job creation and contributing to addressing poverty, reducing inequality, facilitating the delivery of goods and services, and contributing to the achievement of Agenda 2063 and the Sustainable Development Goals”¹

Additionally, the continent is young with a median age of 20 years and experiencing population growth with its 1.4 billion inhabitants making up 15% of the global population. This bodes well for growth in market size, GDP, and a population of digitally fluent consumers.

Public and private sector efforts to boost Africa’s digital economy

Global public and private institutions recognize Africa’s position as an emerging digital economy on the world stage. For instance, the U.S., European Union (EU), China, and India all have strategic programs in place for a solid digital infrastructure on the African continent.

The foreign direct investment (FDI) sector financed $30 billion in sustainability projects, often referred to as “global greenfield megaprojects,” according to the UN’s latest World Investment Report.

Barriers to Africa’s digital transformation

In the near term, Africa’s land-based (terrestrial) infrastructure can hinder the strides forward many see on the horizon for the continent. For data center capacity to spread to more regions of Africa, there will need to be a major effort to create structure for overland routes. Additionally, Africa needs 500,000 kilometers of fiber-optic cable construction to connect the continent, says the International Finance Corporation (IFC).

For enterprises to leap over these boundaries, they need partners with knowledge, sophistication, and a keen understanding of how business works from both a continental and a regional perspective, such as those offering specialized services like colocation in Africa.

The future of greater digital access to the African economy

In this article, we’ll provide an overview of Digital Realty’s capabilities to connect enterprises to the opportunities on the African continent, touching on topics such as:

• The growth of the digital economy in Africa
• Africa’s digital infrastructure both now and in the future
• Digital Realty’s unique positioning as a digital transformation leader in Africa
• Potential challenges and opportunities for leading enterprises expanding to the African continent

First, we’ll highlight interesting developments and results from efforts to provide greater digital access to the African economy.

The growth of the digital economy in Africa

Since 2020, the African Union (AU) has partnered with public and private institutions to fund its goal of uniting the continent through universal internet access. This attracted billions of dollars for digital infrastructure investments in Africa. Here’s a summary of the results so far as researched by the World Bank:

• 115% - Between 2016 and 2021 internet users increased by 115% in Sub-Saharan Africa
• 160 million - The amount of Africans who gained broadband access between 2019 and 2022
• 191 million - New recipients or senders of digital payments between 2014 and 2022

The African Union enacted a 10-year strategy to enhance Africa’s digital economy in February 2020. The release of the Digital Transformation Strategy for Africa attracted financial support from the World Bank which set off a series of funding initiatives spanning the globe and the public and private sectors.

Government investment leads to growth of Africa’s digital economy

1. AU efforts lead to World Bank investment. One year after the AU’s digital transformation strategy, the World Bank launched the All Africa Digital Economy Moonshot. This initiative aims to “digitally connect every individual, business, and government in Africa by 2030.”
   
   Results: By January 2024, World Bank closed on $731.8 million in financial commitments across 11 digital transformation projects across Sub-Saharan Africa. The organization also secured $2.8 billion for 24 more digital development projects since 2014.
   
2. The EU launched the EU-Africa Global Gateway Investment Package of €150 billion in investments. In addition to sustainability, climate resilience, and biodiversity projects, the Global Gateway aims to fast-track universal access to reliable internet in Africa by 2030.
   
   Progress: The Global Gateway project features the AU-EU Digital4Development (D4D) Hub, connecting North Africa to EU countries with an extension into West Africa via Dakar, Senegal. (European Commission)
   
3. The U.S. launched the Digital Transformation with Africa Initiative (DTA) in December 2022, committing $800 million to the continent’s digital transformation journey. (Carnegie Endowment for International Peace)
   
   Results: In its first year, the DTA funded $82 million in four all-Africa initiatives and more than 20 regional projects focused on country-specific goals. (Carnegie Africa analysis)
   
   Of particular interest is the investment in:

• Digital trade alliances
• Funding infrastructure of information and communications technology (ICT)
• Feasibility studies to expand Internet access to rural parts of Africa

These efforts have also led to a cascade of private investments from some of the world’s largest technology enterprises.

Future impact of public and private digital infrastructure investment in Africa

One purpose of these investments is to leverage Africa’s unique status as the fastest growing continent by population and gross domestic product (GDP), according to United Nations (UN) and African Development Bank figures.

The ultimate payoff will be Africa’s contribution of $180 billion in GDP to the global economy by 2025 and a potential $712 billion by 2050.

Leading enterprises know the time is now to partner with experts with an established presence in Africa’s digital infrastructure transformation.

Digital infrastructure critical to Africa’s data sovereignty

Currently, Africa represents two percent of the world’s data center footprint which greatly affects the continent’s data sovereignty efforts.²

The data regulations landscape on the continent remains fluid, but it’s also a top priority within established data economies in Africa. For example, in 2023 the Data Protection Act became law in Nigeria, which provides data protection guardrails that previously did not exist.

Africa’s data center landscape
This push for data sovereignty and more stringent data regulation calls for enterprises to establish partnerships with an experienced multi-tenant data center (MTDC) operator with a wide variety of connectivity hubs designed to help companies meet data protection standards and ensure secure data storage in Africa.

Digital Realty’s role in Africa’s digital transformation

The impact of Digital Realty on the African continent can’t be understated. Our presence combines the largest interconnection hubs, cloud providers, and internet exchanges in Africa.

We know the opportunity IT leaders in enterprises face when considering expansion into Africa:

Connectivity: Subsea cable network with landings in Digital Realty data centers across Africa, serve as a source of redundancy and as a portal to international markets. The strength of our connectivity can be summed up in two words:

• Investment: Digital Realty’s investment in Africa’s digital infrastructure remains unmatched, enhancing our ability to serve growing customer demand.
• Reach: With the largest and most interconnected data center platform in Africa, Digital Realty offers something others simply can’t; extensive reach into continental and global markets.

Redundancy and Resiliency: We’ve built the largest open and protected neutral connectivity hub that spans the African continent. Our data centers are the place where subsea cable connections and terrestrial fiber meet, creating a robust infrastructure that enhances Africa’s internet connectivity. By integrating these elements, we ensure that Africa internet fiber remains resilient and efficient, supporting the continent’s digital growth and connectivity needs.

• Geopolitical resilience: It’s important to note Digital Realty has a deep understanding of the geo-political challenges the continent of Africa faces today. We defend our data centers as the critical global assets we’ve built them to be, ensuring secure and at-the-ready access to your data. This stance helps us provide you with five 9s of availability to your connections.

Global reach with local expertise: Our data center footprint in Africa allows our customers to connect wherever their growth leads them. Our hubs on the continent include Nigeria, Kenya, Mozambique, Ghana, and South Africa linking to our Mediterranean hub which brings together Marseille, Athens, Madrid, and Zagreb with expansions planned in Crete, Rome, Barcelona, and Tel Aviv. Additionally, undersea cables link to South America, which then link to the U.S. More than half of Africa’s top companies trust their digital infrastructure with our data center platform.

Regulatory compliance: As more governments enact their own data protection legislation, it takes partnership with a well-connected leader positioned to seamlessly keep customers in compliance with data residency requirements.

Sustainability: Digital Realty shows our commitment to sustainability of our world’s natural resources with solar energy projects in Kenya and South Africa. Our investments extend to lessening the impact our data centers have on the environment.

Global cloud, data, and AI-ready infrastructure: As enterprises expand AI capabilities, cloud computing assets, and data architectures, Digital Realty’s PlatformDIGITAL® offers flexibility to test, grow, and scale globally all with one, dependable partner. This approach integrates enterprises with suppliers, partners, and customers anywhere at any time in support of AI infrastructure.

The meeting place for companies, technologies, and data

With the emergence of its digital economy, Africa is on the cusp of a major transformation. IT leaders with an interest in expansion into new markets now have access to a partner with intimate knowledge of Africa’s digital architecture. Leveraging expertise across the continent, we have expanded our reach to match our customer’s demands.

With data centers in Kenya, Mozambique, Nigeria, Ghana, and South Africa, Digital Realty forms a vital part of the African internet backbone and is well-equipped to support the rapidly increasing demand for digital infrastructure, essential for the growth of modern enterprises.

To discuss your African digital infrastructure strategy, please reach out to us here.

1 African Union “The Digital Transformation Strategy for Africa (2020-2030), February 9, 2020
2 United Nations Economic Commission for Africa, “Digital Infrastructure in Africa”, December 2023

FAQs about Africa's Digital Economy & Transformation

1. How big is Africa's digital economy?

Africa's digital economy grew from 1.1% of GDP in 2012 to 4.5% in 2020 and is expected to reach 5.2% by 2025 and 8.5% by 2050. This growth is due to better internet access, vibrant startups, more tech talent, and improved policies. Initiatives like the African Continental Free Trade Area are also helping.

2. What is the digital economy Initiative for Africa?

The Digital Economy for Africa (DE4A) initiative supports Africa's digital transformation strategy created by the African Union. It aims to accelerate economic growth, innovation, and job creation by improving digital infrastructure, services, skills, and entrepreneurship. The DE4A initiative also focuses on achieving the UN Sustainable Development Goals and the World Bank Group’s goals.

3. What is unlocking the digital economy in Africa?

Unlocking the digital economy in Africa involves closing the infrastructure gap, expanding internet access, and reducing connectivity costs. Collaboration between governments and the private sector is crucial for expanding and sharing digital infrastructure. The Connected Africa Summit aims to tackle policy, infrastructure, and investment challenges to bridge the digital divide.

4. What are the challenges of digitalization in Africa?

Sub-Saharan Africa faces challenges in digital development, including poor infrastructure, expensive connectivity, a digital gender gap, limited skills, and inadequate policies. Despite these issues, the region has made significant progress in the past decade, with millions gaining internet access and using digital services like mobile payments and online learning.