AFRICA INTERCONNECTION REPORT - ANALYSIS OF SUB-SAHARAN AFRICA'S CLOUD & DATA CENTRE ECOSYSTEM
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AFRICA INTERCONNECTION REPORT ANALYSIS OF SUB-SAHARAN AFRICA’S CLOUD & DATA CENTRE ECOSYSTEM
CONTENTS
INTRODUCTION 2 OVERVIEW OF
CLOUD SERVICES 19
THE CURRENT CLOUD
SERVICES LANDSCAPE
METHODOLOGY 3 IN SUB-SAHARAN AFRICA 20
UNDERLYING CLOUD
SERVICES DYNAMICS 21
EXECUTIVE SUMMARY 4
DATA CENTRE AND
SUB-SAHARAN AFRICA’S CLOUD SERVICES USERS 22
DATA CENTRE AND DIFFERENT WAVES
CLOUD LANDSCAPE 5 OF GROWTH 23
BROADER GLOBAL AND AFRICAN
INDUSTRY TRENDS IMPACTING LOCAL EXAMPLES OF DIGITAL
GROWTH 6 TRANSFORMATION 25
FACTORS ENCOURAGING
THE DATA CENTRES AND CLOUD
SERVICES ECOSYSTEM 8 INTERCONNECTION
OPPORTUNITIES IN
SUB-SAHARAN AFRICA 30
THE GROWING NEED FOR
MAPPING SUB-SAHARAN
LOCAL INTERCONNECTION 31
AFRICA’S DATA CENTRES 10
CONSOLE CONNECT IN
EXISTING AND PLANNED
SUB-SAHARAN AFRICA 32
GROWTH OF CARRIER-NEUTRAL
DATA CENTRES 11
INTERNATIONAL PRESENCE
IN IXPS AND CARRIER-NEUTRAL
DATA CENTRES 14
FUTURE DISTRIBUTION OF
CARRIER-NEUTRAL DATA
CENTRES IN THE REGION 16
AFRICA INTERCONNECTION REPORT 1
INTRODUCTION: CLOUDS GATHERING
OVER SUB-SAHARAN AFRICA
2020 has been a significant year for Africa’s that are driving growth in data centres and
cloud ecosystem. Considerable new investment cloud services.
is going into carrier-neutral data centres across
Sub-Saharan Africa and slowly but surely the The second section focuses more closely on
adoption of cloud services is gathering pace. the region’s data centres, mapping the
growth of carrier-neutral data centres and the
The impact of the Covid-19 pandemic has led emergence of regional hubs. From there, we
many businesses to accelerate adoption of look at the arrival of hyperscale cloud providers
cloud services in order to help them operate to the region and chart the impact this will have
during these difficult times. But they are also on both local businesses and infrastructure.
looking beyond the short-term and want a
more strategic view of how cloud can drive This is followed by a profile of data centre and
efficiencies and reduce cost in the future. cloud service users in Africa; looking at the
likely growth sectors over the next 5 years and
To gain a deeper insight into these trends, showcasing some current examples of digital
Console Connect by PCCW Global recently transformation.
commissioned consultancy firm Balancing Act
to gather market research on the region’s data Finally, we look at new interconnection
centre and cloud ecosystem. opportunities in Africa and consider the role
network automation can play in enabling
The research focuses on 10 of the region’s carriers and enterprises to harness the power
largest economies, but to some lesser detail of cloud.
covers all countries across Sub-Saharan Africa.
The countries of focus in the report are: Angola, We would like to thank all those people that
Cote d’Ivoire, Djibouti, DRC, Ghana, Kenya, spoke to Balancing Act during the course of this
Nigeria, Mozambique, South Africa and Uganda. research - almost all of which was conducted on
video conferencing tools like Google Hangout,
This report is made up of five sections. The first Skype, Teams, WhatsApp and Zoom. A further
looks in detail at the current state of Africa’s illustration of the current importance of cloud-
data centre and cloud landscape, exploring based communications services to businesses
some of the broader global and local trends across the region.
About Balancing Act Research by:
Balancing Act focuses Russell Southwood,
on Africa and carries out CEO,
consultancy assignments Balancing Act
for a variety of clients. The
company helps national Email:
and global brands with their info@balancingact-africa.com
involvement in the African Tel: +44 207 582 5220
continent. Cell: +44 7973 561 987
AFRICA INTERCONNECTION REPORT 2
METHODOLOGY GLOSSARY
It is important to clarify that this study is Some common industry terms used throughout
primarily about the use of public cloud rather the report:
private cloud services. It also uses the term
hyperscalers as a shorthand for global public Data localisation: It is the act of storing data
service providers. on any device physically present within the
borders of a country. As of now, most of these
Interviews were conducted with key players data are stored, in a cloud, outside countries.
in the following countries: Angola, Benin, Cote
d’Ivoire, Djibouti, DRC, Ghana, Kenya, Nigeria , Data sovereignty: It is the idea that data is
Mozambique, Senegal, South Africa, Tanzania, subject to the laws and governance structures
Uganda, Morocco and Egypt. within the nation within which they are
collected.
Interviews were carried out in the following
industry categories: data centres, cloud service Edge computing: It is about pushing the
providers, carriers and ISPs, enterprise users frontier of computing applications, data, and
and other (investor, platform, vendor). We have services away from centralised nodes to the
used a generous definition of carrier-neutral logical extremes of a network. It enables
data centres, which includes companies that analytics and data gathering to occur at the
operate their data centres independently of source of the data.
their other activities.
Hybrid cloud: It is a computing environment
These interviews provide a good snapshot that combines a public cloud and a private
of a fast moving sector for the following cloud by allowing data and applications to be
reasons: shared between them.
1. All country markets chosen have proven Private cloud: It is defined as computing
data centre and cloud services potential. services offered either over the internet or a
private internal network and to selected users
2. Our own broader data gathering and only.
reports support the findings and insights
offered. Public cloud: It is a type of computing in which
a service provider makes resources available
3. All those interviewed were CEOs, Managing to companies and the public via the internet.
Directors or Heads responsible for data Some public cloud providers offer resources
centres and/or cloud service activities. for free, while clients pay for other resources by
subscription or a pay-per-usage model.
There were many, many useful insights in
these conversations but as ever, the opinions Tiers II, III and IV: The different service level
and findings expressed in this study are entirely provisions of a data centre provided by the
from Balancing Act (except for Section 5 of Uptime Institute.
the report).
AFRICA INTERCONNECTION REPORT 3
EXECUTIVE SUMMARY
Some high-level findings from the report:
he report identifies countries with potential
T here are 28 IXPs across Sub-Saharan Africa.
T
to develop carrier-neutral data centres and In countries where they exist, international
cloud services. The more operators there players also locate themselves. The greatest
are in a country, the greater the need for concentration of international companies
interconnection, either through an IXP or and organisations is found in South Africa,
a data centre, or in nearly all cases both. followed by Kenya and Nigeria (see P14).
This point is most vividly illustrated by the
position of South Africa and Nigeria but at T
here are five major hyperscalers with an
a smaller level is also seen in Ghana and active interest in Africa. These are: Microsoft
Tanzania. Azure (which is probably currently the
largest provider), AWS, Google Cloud (which
here are 10 Sub-Saharan African countries
T has a significant presence in Kenya, Ghana
with carrier-neutral data centres (Angola, and South Africa), Whale Cloud (part of
Cote d’Ivoire, Djibouti, Ghana, Kenya, Alibaba) and Huawei Cloud (see P20).
Mauritius, Mozambique, Nigeria, South
Africa and Zambia) and 6 more are coming
African companies that are either using
on stream shortly (DRC, Ethiopia, Rwanda, carrier-neutral data centres for data recovery
Senegal, Uganda and Zimbabwe). Overall, or have replaced their in-house data centres
significant investments are being made in with an external supplier are on a journey
new facilities. towards further cloud adoption.
bout a quarter of Sub-Saharan African
A In more liberalised communications markets,
countries have an existing or planned there are local telcos and ISPs which need
carrier-neutral data centre. Of the rack a meet point function: even with a relatively
capacity in 5 key countries (South Africa, small number of players, it makes no sense
Nigeria, Kenya, Ghana and Angola), South in an IP world to have individual connections
Africa represents 89% of total capacity in to all players.
those selected countries (see P11).
Among the first wave of carrier-neutral data
he quality and operational expertise of
T centre users were banks, which are under
carrier-neutral data centres in Sub-Saharan increasing legal obligations to have their
Africa has improved a great deal over last 5 disaster recovery outside their own premises
years. Operators who were in the first wave (see P23). The second wave of users were
of launches can now point to nearly a decade multinational companies looking for cost and
or more of continuous successful operation. operational efficiencies. Several examples
Several of the planned next generation data of companies transitioning to the cloud are
centres are being built to Level IV standard. given on P25.
everal carriers – mainly mobile operators
S
The acceleration in digital transformation
– have made significant investments in data and the arrival of more data centres and
centres. These include data centres of some cloud service providers in Africa will increase
scale in the following countries: Cameroon, the overall need for local interconnection
Cote d’Ivoire, Kenya, Malawi, Mozambique, (see P21).
Nigeria and South Africa.
AFRICA INTERCONNECTION REPORT 4
1. S
UB-SAHARAN
AFRICA’S DATA CENTRE
AND CLOUD LANDSCAPE
BROADER GLOBAL AND These implementations may use things like
VMWare cloud software that can be provided
AFRICAN INDUSTRY TRENDS closer to home. Software of this kind also offers
IMPACTING GROWTH integration with all the main hyperscalers.
The findings of this study must be set in the
However, over time companies using these
context of the trends affecting the data centre
platforms will inevitably consider the often
and cloud sector, both in Africa and globally:
cheaper, large-scale cloud providers which have
a much wider customer experience to draw
I mpact of COVID-19
upon. Initial experience will make them more
This study was completed during the COVID-19
confident about shifting more decisively later in
pandemic and many of the responses given
the transition.
were based on a return to some version of
normally functioning economies. At the time
The more cautious approach to the cloud in
of writing, the full economic implications of the
Sub-Saharan African countries may reflect a
crisis were far from clear.
combination of circumstances: fears about
the adequacy and reliability of bandwidth;
However, the impact of the various national
the speed with which their customers (both
lockdowns in Sub-Saharan African countries has
enterprise and retail) are migrating online; and
reinforced the importance of the ability to have
fears about how good cloud security will be.
flexible working. This is a trend that requires the
following: access through a range of devices;
In several of the countries surveyed, there were
effective online communications platforms;
latency issues and some data centre providers
access to all the necessary work documents;
said only local hosting would work for cloud
and sufficient security to ensure that no-one
services. Those businesses that are consumer
can abuse any part of what is required.
facing are looking to raise revenues through
mobile apps and trying to work out whether
That said, major markets like South Africa
and Nigeria have been experiencing what will
almost certainly be a medium-term economic
downturn.
Hybrid implementation
Although migration to cloud applications is
accelerating in key markets in Sub-Saharan
Africa, more cautious companies are relying on
platform technologies before making everything
cloud based. This means that enterprise
customers may choose to take parts of their
services to the cloud, such as Know Your
Customer (KYC) implementations.
Hybrid implementation may also involve
companies using local, in-country cloud
solutions, which in the first wave of migration
feel “closer to home” or seem to deal more
effectively with bespoke requirements. It may
also mean before going to global hyperscalers,
transferring all or some operations to a local,
private cloud.
AFRICA INTERCONNECTION REPORT 6
they can use Artificial Intelligence (AI) and but will also take place across other domains
Machine Learning (ML). Mobile apps also allow in the economy, both for B2B and consumer
companies (particularly banks) to give their transactions. Worsening economic conditions
customers 24/7 service. will add to the pressure to innovate.
On security, companies may feel more An example taken from India illustrates how
confident that an external provider can handle this might happen to the payments ecosystem
all of the business of security, such as automatic for telecoms. Vodafone Idea, a player in India’s
back-up, intrusion detection, SSL encryption hotly contested telecoms space, is moving to a
and vulnerability tests. The estimated number cloud-native charging solution delivered using
of security professionals on the continent its own private cloud. The pilot is managing over
(around 10,000) is about the same size as, for 4 million live subscribers and serves up more
example, Oracle’s security team. than 1,000 transaction units per second (TPS)
traffic for online data charging. The purpose
Over the medium-term, the advantages of cost of the pilot is a two-step process: firstly, to
savings, more efficient processes, only paying roll-out the private cloud option across India
for what you use as demand scales up and and secondly, as a step towards a public cloud
down and the ability to make service changes platform.
more quickly will begin to be more persuasive
as the first cohort of major cloud users Data sovereignty and localisation:
demonstrate that the technology works. Data centres and cloud services raise particular
challenges for regulators. For example, a
One of the key cost savings is shifting from Kenyan’s individual data might be stored in any
time spent on manual processes (in say, payroll one of a number of data centres globally, some
payments) to automating processes and being on the continent and some not.
able to understand more easily the meaning of
a company’s own data. Therefore how can national law protect
the individual from abuse in non-national
Digital disruption jurisdictions? What right does that Kenyan
Whether globally or in Sub-Saharan Africa, individual have to see the data that has been
there is an increasing level of digital disruption. collected on him or her? Data sovereignty
According to Weetracker, US$679 million was covers legislation that information which is
invested in African start-ups in the Fintech stored in the cloud is subject to the laws of the
sector in 2019. Most of this investment was country in which it is physically stored.
made in Kenya and Nigeria. There are now
significant pan-continental operators in In 2016, the European Union passed the
this space. General Data Protection Regulation (GDPR),
which had five key provisions:
Alongside the newcomers, there has been a
steady transformation in the digital offerings • Requiring the consent of subjects for data
of African banks, particularly in Nigeria. For processing
example, the country’s largest retail bank, First • Anonymising collected data to protect
Bank of Nigeria, has over one million downloads privacy
of its Android app. The same is also true for • Providing data breach notifications
Kenya’s largest retail bank KCB. • Safely handling the transfer of data across
border
The combination of start-up and existing • Requiring certain companies to appoint a
enterprise innovation is creating new data protection officer to oversee GDPR
transaction ecosystems. This migration can compliance
be seen most clearly in the financial sector
AFRICA INTERCONNECTION REPORT 7
Because a large number of multinational Likewise in Tanzania, circular number
companies are based or operate in Europe this FA.56/293/01/54 (dated 23 August 2019)
has had the effect of ‘exporting’ many of these from the Bank of Tanzania specifies that banks
requirements to other countries. locate their primary or secondary data centres
in Tanzania.
According to a Lexology report in 2019, 16
African countries had passed data protection Furthermore, in 2011, Nigeria’s Central Bank
legislation with a further 8 due to do so. introduced a measure that required all point-
According to a 2017 Personal Data Protection of-sale and ATM transactions to be processed
report from Deloitte, 13 African countries locally.
require notifications of personal data breaches.
Another example globally would be India
Data localisation means that there is legislation where the Reserve Bank of India insisted on
(or guidelines) that requires companies to store data localisation of financial transactions in
a copy of the data locally, requiring companies 2018. Whether right or wrong, these kinds of
to process data locally, and mandating legislation (or guidelines) will lead to growth in
individual or government consent for data local data centre and cloud activity.
transfers.
The most obvious example in Africa is
Nigeria. The 2014 Guidelines for Nigerian FACTORS ENCOURAGING THE
Content Development in Information and DATA CENTRES AND CLOUD
Communications Technology (ICT) mandated
that all subscriber, government, and consumer
SERVICES ECOSYSTEMS
data be stored locally.
There are three key factors that encourage
the development of a data centre and cloud
Map indicating size of African economies services ecosystems in Sub-Saharan Africa:
verall size of economy and population
O
Taking GDP (PPP) US$ and GDP per capita (PPP),
there is a clear ‘first division’ in Sub-Saharan
African economies, comprising the 9 following
countries (in descending scale): Nigeria, South
Africa, Ethiopia, Angola, Sudan, Kenya, Tanzania,
Ghana and DRC.
This is followed by smaller but nonetheless
relatively larger economies that make up a
‘second division’, of the following six countries
(in descending scale): Cote d’Ivoire, Cameroon,
Uganda, Zambia, Senegal and Mali.
Although there is some political risk in a
number of these countries – Ethiopia, Sudan,
‘First division’ DRC and Mali – they are all in the main
Economies economies with growth potential. The June
outlook from the IMF predicts that Sub-Saharan
‘Second divison’ African growth will recover to 3.4% in 2021.
Economies Source: Balancing Act Population size matters: the more people in
AFRICA INTERCONNECTION REPORT 8
a country as its economy is expanding, the country’s IXP has 65 members, including 19
greater the level of economic activity. All the drawn from Abuja, Kano and Port Harcourt.
‘first division’ countries have a 2020 estimated
population of over 30 million except for Ghana, Two other countries make the same point
which has 29 million. All the ‘second division’ at a smaller level. Tanzania has four mobile
countries have populations of above 15 million operators and 14 members of its ISP
and below 30 million. association TISPA. TIX, the country’s IXP has 35
members and there are smaller IXPs in Arusha
On this basis, there are fifteen countries (AIX), Mwanza (MIXP) and Zanzibar (ZIXP). Ghana
that have economies and population sizes has three mobile operators and 18 members
that give them the potential to develop data of the country’s ISP association, GISPA. GIX, the
centre and cloud services ecosystems. There country’s IXP has 22 members.
are two exceptions: Cape Verde and Djibouti.
The former has higher wealth levels based on Regulatory climate
tourism but in the short to medium term this The development of a data centre and cloud
may prove problematic in terms of the impact services ecosystem requires an ‘open market’
of COVID-19. Djibouti’s key position as a data attitude to regulation and an understanding of
centre is defined by its geographic positioning how the data ecosystem operates elsewhere in
as a crossroads for several important cables. the world.
Number of operators On this basis, Ethiopia is entering new territory,
The more operators there are in a country, the as it both liberalises its market and privatises
greater the need for interconnection, either its incumbent, Ethio Telecom. However, these
through an IXP or a data centre, or in nearly all are both developments that have taken time to
cases both. This point is most vividly illustrated work through in other countries.
by the position of South Africa and Nigeria.
Cameroon has a de-facto monopoly over
In South Africa there are four mobile operators, significant parts of its infrastructure and a
11 MVNOs, 160 or more ISPs and many other dominant player that fights hard to maintain
companies involved in connectivity. As a result, its privileges. In Senegal, there is also a de-
there are two IXPs and the Teraco operated facto dominant player but in recent years the
exchange point, NAPAfrica, which has 430 government and regulator have opened up the
peering partners. telecoms and internet service provider sector to
new players. Nevertheless, Orange has invested
The numbers are not so large in Nigeria but still in new data centres in both countries and
show the same point: four mobile operators, will undoubtedly become a key player in the
more than 30 ISPs and again many other ecosystem.
companies involved in connectivity. IXPN, the
AFRICA INTERCONNECTION REPORT 92. M
APPING SUB-SAHARAN
AFRICA’S DATA CENTRESEXISTING AND PLANNED
GROWTH OF CARRIER-NEUTRAL
DATA CENTRES
There are 10 Sub-Saharan African countries
with carrier-neutral data centres (Angola, Cote
d’Ivoire, Djibouti, Ghana, Kenya, Mauritius,
Mozambique, Nigeria, South Africa and Zambia)
and 5 more are coming on stream shortly (DRC,
Ethiopia, Rwanda, Uganda and Zimbabwe).
Overall, significant investments are being made
in new facilities. On this basis, about a quarter
of Sub-Saharan African countries have an
existing or planned carrier neutral data centre.
The chart below shows the rack capacity in 5
key countries. Of these, South Africa represents
89% of total capacity in the countries shown.
Chart 1: Number of racks in
carrier-neutral data centres in 5 key
countries in 2020
South Africa (24,487)
Nigeria (1475)
Kenya (1080)
Ghana (232)
Angola (200)
Source: Balancing Act
AFRICA INTERCONNECTION REPORT 11The chart below shows the geographic
distribution of carrier-neutral data centres
(20) and a full list of planned new facilities (15)
- some of which are in countries that already
have one or more carrier-neutral data centres.
There are also a number of “under-the-radar”
projects that have not yet come to fruition and
are therefore not included in these figures.
Chart 2: Number of existing and planned
carrier-neutral data centres in Sub-Saharan
Africa by country
Existing Planned
7
6
5
4
3
2
1
0
Nigeria
Kenya
Cote d’Ivoire
Mozambique
Zambia
Senegal
Rwanda
Uganda
Zimbzbwe
South Africa
Ghana
Angola
Mauritius
Djbouti
DRC
Ethiopia
Source: Balancing Act
AFRICA INTERCONNECTION REPORT 12On the basis of the criteria outlined in section It estimates that South Africa is currently
1 (See P8), there are another six countries that 70% of the market but that will change over
may see the opening of a carrier-neutral data the next 5-10 years as 85% of what it defines
centre: Benin, Cameroon (if telecoms regulation as broadband connections are outside South
changes), Cape Verde, Madagascar, Namibia Africa.
and Zambia.
In a sign of the times, in May 2020, Liquid
The quality and operational expertise of Telecom-owned Africa Data Centres received
carrier-neutral data centres in Sub-Saharan approval from the South African Competition
Africa has improved a great deal over last 5 Tribunal to buy Standard Bank’s data centre
years. Operators who were in the first wave (and the land on which it sits) in Samrand,
of launches can now point to nearly a decade north of Johannesburg. According to Africa Data
or more of continuous successful operation. Centres, the Samrand facility was purpose-built
Several of the planned next generation data as a Tier IV data centre to provide maximum
centres are being built to Level IV standard. levels of security and reliability for banking IT
systems.
In a summary of the data centre landscape for
the African Data Centres Association, Xalam Several companies (for example, icolo, Main
Analytics said that there were 100 data centres One, PAIX, Rack Centre and Raxio) have regional
of Tier III and above and that there were a expansion plans and will either buy or build
further 20 planned facilities. These figures facilities in a range of countries. The countries
relate to all types of data centres, not just involved might include: DRC, Mozambique and
carrier-neutral data centres. Namibia.
AFRICAN DATA CENTRES ASSOCIATION: A TRADE BODY TO DEVELOP GROWTH
At the 2017 Data Cloud Tunisia, South Africa, infrastructure ecosystem,
Monaco event, there was an Kenya, Ghana, Ivory Coast that will be a catalyst for
Africa Day that included a and Zimbabwe – and its economic transformation of
panel session with 5 African members include both the continent.
colocation companies from carrier-neutral and carrier
all over the continent. data centres. The Chair of ADCA
Fatoumata Sarr, who is also
During the discussion, it The Africa Data Centres CEO of Orange Services
showed that they were Association (ADCA) is the Group, said: ”The amount of
not connected to each trade organisation for data data centre area in square
other, while sharing similar centres in Africa. It provides metres on the African
challenges. a platform for data centres continent is similar to the
actors in Africa to get Paris or Amsterdam Area,
Out of this discussion, together, with the aim of with an economy of 12
the Africa Data Centre promoting and developing million people. That means
Association was launched in growth for the industry, as there is a 1 for 100 ratio and
Marrakech on September, well as being a catalyst for shows the room for growth
2018. Africa digital development. in Africa. To enable our
members to benefit from
The current board members Its mission is to create a this opportunity, the ADCA
represent a diversity of thriving, world class African helps its members navigate
African countries - Senegal, data centres and cloud the different challenges.”
AFRICA INTERCONNECTION REPORT 13Several carriers – mainly mobile operators There are 28 IXPs across Sub-Saharan Africa. In
– have made significant investments in data countries where they exist, international players
centres. These include data centres of some also locate themselves. For example, in Ethiopia
scale in the following countries: Cameroon, Cote there is no IXP because at the moment there
d’Ivoire, Kenya, Malawi, Mozambique, Nigeria is only one incumbent carrier in the market,
and South Africa. EthioTelecom. But with liberalisation coming
and bringing more carriers into the market, the
There is a clear difference between the planned Raxio carrier-neutral data centre has
level of investment planned by key carrier- the potential to become both a meet point and
neutral centres companies and the pattern of the place to host the country’s IXP.
investment by carriers. In March 2020, Actis
announced that it would invest US$250 million The greatest concentration of international
to create an African data centre platform. In companies and organisations is found in South
May 2020 Teraco announced that it would be Africa, followed by Kenya and Nigeria. For
investing US$220 million in its next stage of example, Kenya’s KIXP hosts Amazon, Facebook,
growth. That said, not all neutral carrier Google, Microsoft, VeriSign, Cloudflare,
data centres are investing at this level: for Multichoice, BICS, China Telecom, China Mobile,
example, PAIX’s investment in Ghana and Kenya Hurricane Electric and Swisscom.
was 2 million euros.
As streaming services develop, CDNs start
hosting locally. For example, Neflix has a local
presence in Nigeria, while Apple Music has a
INTERNATIONAL PRESENCE IN local presence in South Africa.
IXPS AND CARRIER-NEUTRAL
The table on P15 shows international
DATA CENTRES companies and organisations hosted at NAP
Africa (part of Teraco in South Africa), which has
The Executive Chairman of global data
the largest number of peering connections on
centre operator Equinix, Peter Van Camp,
the continent. It shows how as markets develop
has compared data centres to “international
– both in size and complexity – that increasing
airports where passengers from many different
numbers of companies need to use its ‘airport’
airlines make connections to get to their final
function. It also demonstrates that the larger
destinations”. In Sub-Saharan Africa, this
the number of peering connections at a data
‘airport’ function was initially played by national
centre, the more incentive there is for nearby
Internet Exchange Points (IXPs) that were set
countries to use it as their regional hub.
up to ensure local traffic stayed local. Nearly all
have been successful in attracting the majority
There are 15 African countries represented
of carriers and ISPs in their respective countries
there: the majority are sub-regional but
and in doing so, have created a “meet point”
two (Burkina Faso and Kenya) are some
function.
considerable distance away. One of the major
limitations on this kind of regional peering is
The earliest international presence in Sub-
latency, an issue that will be touched on in
Saharan Africa was to be found in IXPs and
section 4 of the report (see P23).
in many countries even now, the number of
international players is greater in IXPs than
carrier-neutral data centres where they exist.
Not all IXPs and data centres declare all of their
hosting parties so what follows is based on
publicly available information.
AFRICA INTERCONNECTION REPORT 14Table 1: Categories of international hosting partners at NAPAfrica
GLOBAL REGIONAL CDNS AND CLOUD
OTHER
CARRIERS CARRIERS HOSTING PROVIDERS
Alban
Africa Cloud
Airtel India Communications Amazon Broadcom
Exchange
(BW)
BICS Angola Cables Akami Alibaba Cloud Cisco
BT Aptus (TZ) Cachefly AWS SITA
Rogers Capital
China Telecom Avoxi Cloudflare G-Core Labs Technology
Services (DC in MU)
CM Telecom BTC (BW) Facebook Google Cloud Route Views
CMC Networks Canal+ Telecom Fastly Microsoft Azure The Packet House
Dialpad Congo Telecom FFG Connection Tiggee
G8 Liquid Telecom GVA Canalbox Ubuntunet
Mahanagar
Hurricane Electric I3D.net Epsilon
Telecom (MU)
IPTP Networks Mauritius Telecom Misaka Network
Layer3 Telecom OPQNet (BW) NSOne
Netnod Orange Tunisie Psychz Networks
Netovate Paratus Africa Reunicable
Orange Business
Safaricom Showmax
Services
Packet Clearing
SEACOM Tysflo
House
PCCW Global Skyband (MW) Valve
Saudi Telecom Swaziland PTC VeriSign
SG.GS Telecom Nambia
Siliconsky TNM (MW)
Swisscom Telone (ZW)
Togo Telecom
Utande (ZW)
Virtual
Technologies and
Solutions (BF)
Webmasters (MZ)
WIOCC
Source: Balancing Act
AFRICA INTERCONNECTION REPORT 15FUTURE DISTRIBUTION This regional hub effect is a combination of
three things:
OF CARRIER-NEUTRAL
DATA CENTRES • Good fibre links to neighboring countries,
particularly those inland.
The major carrier-neutral data centres in
• Good onward fibre links across several
Europe are clustered in a number of different
countries.
countries. For example, Telehouse London sits
• An advantageous position on the
on the crossroads of several major international
crossroads of several international cables.
fibre routes and as a result is host to 530
carriers. Likewise Altice Portugal’s data centre
With a favorable combination of all three,
is relatively close to the Sessimbra landing
a country can act as a regional data centre and
stations crossroads, albeit for a much smaller
cloud services ecosystem.
number of cables. The presence of a large,
regional or global financial centre also seems
So for example access to one of the planned
to play a role in scale and diversity of
international cables emphasises this
companies hosted.
connection. Access to the 2Africa cable will
either be through carrier-neutral data centres
So the key question in the longer-term is where
or through an Open Access landing station.
will Sub-Saharan Africa’s regional carrier neutral
data centres be located? The data centre and
The table on P17 identifies countries with either
cloud services ecosystems in some countries
actual or potential regional hub status through
acts as a sub-regional hub, for more than one
looking at their international and regional
country.
fibre links.
Map indicating potential regional hubs
Existing regional
hubs
Potential regional
hubs
International
hub
Source: Balancing Act
AFRICA INTERCONNECTION REPORT 16Table 2: Potential regional hubs (based on international and cross-border fibre links) Source: Balancing Act
EXISTING
INTERNATIONAL CROSS-BORDER FIBRE
REGIONAL ADDITIONAL COMMENTS
SUBSEA CABLES LINKS
HUBS
Existing: EaSSy, SAT3/WASC/ Lesotho, Mozambique,
SAFE, SEACOM, WACS Namibia, Swaziland, • Also an international hub
South Africa
Under construction: Zimbabwe (and good • JSE is a large regional stock exchange
A2Africa, Equiano, PEACE links further north)
Existing: EASSy, LION 2, Ethiopia, South Sudan • Strong East African trading links
SEACOM, TEAMS (via Uganda) Tanzania, • Nairobi is a regional
Kenya Uganda and on- business centre
Under construction: connections to Burundi, • Nairobi Stock Exchange is the fourth
A2Africa, PEACE Rwanda, DRC (Gombe) largest on the continent
Existing: ACE, • Abidjan is a regional business centre
Main One, SAT3, Maroc and has significant percentage
Telecom international cable Burkina Faso, Ghana,
Cote d’Ivoire of its export trade within West Africa
Liberia, Mali
Under construction: • Home to West Africa’s BRVM; the
A2Africa region’s sixth largest stock exchange
Existing: ACE,
Main One, SAT3 Gambia, Mauritania,
Senegal Mali (and on to Guin-
Under construction: ea-Bissau and Guinea)
A2Africa
POTENTIAL REGIONAL HUBS
CAR, Chad, Republic of
Existing ACE, NCSCS, SAIL,
Cameroon Congo, Equatorial Guin-
SAT3, WACS
ea (and on to Gabon)
Eritrea (planned),
Existing: SEACOM (via
Ethiopia Kenya, Somalia, South
Djibouti)
Sudan, Sudan
Existing: ACE, GLO 1,
Main One, SAT3, WACS Benin, Burkina Faso, • Ghana Stock Exchange is
Ghana
Under construction: Cote d’Ivoire, Togo the fifth largest on the continent
A2Africa
Existing: ACE, GLO 1,
Main One, SAT3, WACS Benin, Burkina Faso,
• NSE is the region’s third largest stock
Nigeria Cameroon, Ghana,
Under construction: exchange exchange, the NSE.
Niger, Togo
A2Africa, Equiano
Existing: SAS-1 Chad (planned),
Ethiopia, Kenya
Sudan Under construction: (planned 2021), South
A2Africa Sudan, Uganda
INTERNATIONAL HUB
Existing: SEA-ME-WE 3 & 4,
I-ME-WE, EIG • Djibouti could be become
Djibouti
Under construction: the Horn of Africa hub
A2Africa, PEACE
AFRICA INTERCONNECTION REPORT 17On a rational basis, the most likely regional However, there are a number of factors
carrier-neutral data centre locations would be that may affect the rational simplicity of the
South Africa, Nigeria and Kenya. view expressed above. As already identified
in section 1 (see P7), data sovereignty and
South Africa is well connected to its localisation laws and regulations may lead to
Southern African sub-region and has good some countries insisting that their citizens’
links to countries further up the continent. data is held on national soil. Although
Furthermore, Teraco has the largest group of many countries in Sub-Saharan Africa have
data centres in a single Sub-Saharan African passed data protection laws – some to bring
country. Its IXP NAPAfrica is the 7th largest in themselves in line with Europe’s GDPR – the
the world and it hosts 250 carriers. situation is still far from clear.
As a regional data centre hub, Nigeria is still Furthermore, the differences between
very much a work in progress. There is no Anglophone and Francophone business areas
single company that looks like a leading player may lead to two very different regional entry
yet; the corporate market is still transitioning points. Likewise, there is a complicated set
into external data centres; and connections to of regional policy considerations in the Horn
Francophone Africa are weak (both in terms of of Africa that could lead to several countries
trade and fibre links). That said, Rack Centre has bidding to be a regional hub there.
35 carrier connections making it and MDX-i with
26 carrier connections the strongest current
contenders.
Kenya is already a regional hub for connectivity
but it has not yet become the place to host
regionally. Carrier-neutral data centres have
been relatively slow to develop and there is
no clear leader yet, although East Africa Data
Centre is currently the largest.
AFRICA INTERCONNECTION REPORT 183. O
VERVIEW OF
CLOUD SERVICESTHE CURRENT CLOUD CLOUD in the next year. Microsoft says it has seen
110% growth over the last year and has quite
SERVICES LANDSCAPE advanced plans for a number of new services
including SAP on Azure and Machine Learning.
There are five major hyperscalers with an active
interest in Africa:
At the AWS Online Summit Europe, Middle East
and Africa in June 2020, the company said it had
• Microsoft (which is probably currently
tens of thousands of customers, including Old
the largest provider)
Mutual, Standard Bank, South Africa’s National
• AWS
Department of Health and Apex Innovation.
• Google Cloud (which has a significant
presence in Kenya, Ghana and South Africa)
According to the company, customers choose it
• Whale Cloud (part of Alibaba)
for four reasons: flexibility, global reach, security
• Huawei Cloud
and product innovation.
The table below summarises the local cloud
Although Huawei Cloud launched last year
presence of the five major players. Both AWS
in South Africa, it does not yet appear to
and Microsoft have expanded beyond South
have made much market impact outside of
Africa and Alibaba plans to expand from there
Government contracts in South Africa and with
into other Sub-Saharan African countries
its core customer base, telcos.
over the next 12-18 months. It is also scaling
up overall, recruiting 5,000 people globally
Table 3: Hyperscaler and local presence by country Source: Balancing Act (estimates)
LOCAL CLOUD
COUNTRY PRESENCE
PROVIDERS
• Microsoft
Nigeria • VMWare Cloud Provider 3-5
• Google Cloud
• AWS (Cape Town and Johannesburg)
• Google Cloud
• Huawei Cloud
South Africa • Microsoft Azure 40-50
• VMWare Cloud Provider
• Whale Cloud Services
• Teraco’s neutral cloud platform
• AWS
Kenya • Microsoft Azure 2-4
• Google Cloud
Angola • Microsoft Azure 1
Ethiopia 2
Uganda 3
Cote d’Ivoire 1
Mozambique 2
Multi-location SEACOM (offers hybrid cloud)
AFRICA INTERCONNECTION REPORT 20In addition to the local presences noted in For others, like African TV broadcasters, they
Table 3, Microsoft has over 10 PoPs in countries have had suddenly to patch together cloud
along the coastline of Africa and can offer cloud working for production and news-gathering
capability in countries in which there is not a from a standing start with publicly available
Microsoft local presence. In revenue terms, tools to survive. Going forward, they will
Microsoft’s cloud business revenues come 75% undoubtedly be creating more considered
from South Africa and 25% from the rest of approaches to cloud working.
Sub-Saharan Africa.
For some, like banks, the COVID-19 crisis
According to IDC, annual cloud computing has been a moment to focus tactically on
subscriptions in South Africa will grow from providing cloud based digital services to offer
US$370 million in 2019 to US$1.7 billion in convenience to their home-bound customers.
2024. There is little or no data on the turnover For example, many of the big lenders in Kenya,
of cloud services outside of South Africa. like Equity Bank, were offering free bank to
Analysys Mason estimates that revenue from mobile wallet transfers to their customers.
public cloud services delivered to businesses
in South Africa will reach US$170 million by Research company IDC has predicted as a
2023, accounting for more than half of all such result of the pandemic, cloud spending will rise
revenue across Sub-Saharan Africa as a whole. across Middle East, Turkey and Africa to US$2.8
billion a year. It sees online collaboration tools,
cloud-based platforms, and secure remote
access as all being central to this process, as will
UNDERLYING CLOUD also improvements in infrastructure resiliency
SERVICES DYNAMICS and disaster recovery. The sectors it highlights
are: education, media and communications,
There is no doubt that COVID-19 has government, healthcare and retail.
accelerated the uptake of cloud services in
Sub-Saharan Africa. Companies that might not Beyond these COVID-19 changes, there were
have considered these services before have already several dynamics producing a migration
gone through lockdown periods where they to the cloud. When a carrier-neutral data centre
needed to provide hassle-free home working opens in a country there is an accompanying
and communications. growth in local cloud suppliers. Over time, many
of them become consultants who bridge the
For some, especially outside South Africa, gaps between legacy systems and hyperscaler
this requirement had already been on their offers. This is particularly true in South Africa
roadmap in the form of things like future where there are large numbers of companies
Bring-Your-Own-Device strategies for multi- supplying cloud software expertise rather than
location companies and COVID-19 has simply products and services.
accelerated their implementation.
As one oil and gas company in Nigeria told us:
”The (COVID-19) lockdown has increased the
need for data to be accessed from here. Office
365 can’t supply everything. The future is fully
cloud.”
AFRICA INTERCONNECTION REPORT 214. CARRIER-NEUTRAL
DATA CENTRE AND
CLOUD SERVICES USERSDIFFERENT WAVES OF GROWTH
The third wave, which has begun to happen in
Naturally there is a significant overlap between larger markets includes: international telcos,
data centre and cloud service users. African Content Delivery Networks (CDNs), large local
companies that are either using carrier-neutral or regional companies, payment processors,
data centres for data recovery or have replaced manufacturing companies, online start-ups
their in-house data centres with an external and larger private hospital companies. In due
supplier are on a journey towards further cloud course, it may begin (as is already the case in
adoption. South Africa) to include the public sector.
This journey actually starts with quite a narrow The number of potential customers and rack
initial group of users. In more liberalised use strongly correlates with the size of the
communications markets, there are local telcos economy. In the bigger economies, like South
and ISPs who need a meet point function: Africa, Nigeria and Kenya, there is a larger
even with a relatively small number of players, number of racks per customer but in smaller
it makes no sense in an IP world to have countries, like Cote d’Ivoire and Ghana, there is
individual connections to all players. Later with usually only one rack per customer (or less).
smartphones, telcos needed the capacity to
service a growing number of handset apps. In some countries, the number of likely data
centre or cloud services users is relatively small
The other group of African companies in the and most are already in data centres, if not using
first wave of carrier-neutral data centre users cloud services. As one data centre operator said:
were banks, who were increasing under legal ”The economy here is not so stratified. There
obligations to have their disaster recovery are some industrial companies but there’s not
outside their own premises. enough quality of IP in their space.”
The second wave of users were multinational or Some Francophone countries like Cote d’Ivoire
multi-location companies looking for cost and seem ready for cloud services (“All realise the
operational efficiencies. This category includes importance of the cloud with the current crisis,”
a long list of potential business categories said one local ISP) but smaller countries like
including: Benin may be much slower to transition (“Local
companies don’t make many changes. It will be
• Oil and natural gas three years before it happens,” said a local ISP).
• FMCG
• Automotive
• Power distribution
• Retail
• Mining
• Fertilizers
• Betting companies
• International NGOs
• Insurance
• Conglomerates
This second wave of growth in individual
countries is by no means complete and relies
on improvements in bandwidth and power
supply and regulatory changes to create a
trusted environment.
AFRICA INTERCONNECTION REPORT 23For some categories, like international NGOs, The latency issue was identified as key by one
the speed of moving towards cloud on their of the hyperscalers: ”It’s not just about the
roadmap is much slower. They may have public cloud. It’s going to be hybrid cloud for
cloud services in Europe, the US and some quite some time because of the distances from
parts of Asia but for Africa, one executive told data centres”. At its worst, latency from regional
us that: “The IT people are still very concerned locations can be between 120-150 milliseconds
about losing control. In normal times in Nairobi and the upper end of this range causes
the bandwidth would be fine to deliver these problems for the customer.
services.”
However, in one West African country, latency
The kind of migration experienced can best was 300 milliseconds to neighboring countries
be illustrated by a Kenyan company spoken and 50 milliseconds in the country itself.
to for this study, which was an early cloud Sometimes the latency experienced by a
adopter in 2012. Initially it used a local MNO for customer can be laid at the door of network
putting its customer data on a cloud service. optimisation. One cloud service provider
It experienced issues around storage and told us of a customer in Botswana who was
scalability before moving it to Microsoft Azure. experiencing a 125 millisecond delay. With
There were no issues of latency on its database network optimisation, it was able to halve this
function. However, it tried to move its call level of latency. MyBroadband’s 2019 Cloud
centre (taking 10,000 calls a day) to the cloud Survey of gathered responses from 386 South
but at that time experienced latency issues as African companies of different scales, of which
it was being served from South Africa. A second 77% used cloud services and 23% did not. 31%
attempt (using a hybrid cloud) has been made of those surveyed use telecoms cloud services.
to move it to the cloud but again the service
was not of good enough quality and it has The main uses of cloud services in South Africa
remained locally hosted. are summarised in the table below.
Table 5: Type of cloud services used by percentage in South Africa
% OF COMPANIES USING SERVICE
TYPE OF SERVICE
IN SOUTH AFRICA
Backup-as-a-Service 53.24%
Software-as-a-Service 42.16%
Infrastructure-as-a-Service 26.76%
Platform-as-a-Service 26.22%
Recovery-as-a-Service 20.54%
Other 0.81%
Source: MyBroadband, 2019
AFRICA INTERCONNECTION REPORT 24EXAMPLES OF DIGITAL platform from which it can oversee its business
operations from end-to-end. It has also seen
TRANSFORMATION USING a “huge” reduction in capex on its server
DATA CENTRE AND CLOUD infrastructure and IT resources.
SERVICES
Example 1: A regional conglomerate
Mukwano Industries is an East African
conglomerate with interests that include
manufacturing, agriculture and property
development. Its products, ranging from
petroleum jelly and detergents to cooking oil
and soap; from drinking water to household
and commercial plastics; can be found in many
homes across Uganda.
Example 2: A regional bank
Although it had implemented the SAP ECC Standard Bank has launched digital-only
6.0 platform in 2008, it still depended a great banks in Botswana, Cote d’Ivoire, Ghana,
deal on paper-based systems and Excel Kenya, Nigeria, Tanzania, Uganda, Zambia
spreadsheets. Furthermore, the system had and Zimbabwe. As African banks increasingly
been customised many times and digital come under pressure from other services like
management did not go down to operations mobile money, it has created a unified digital
and plant management. strategy across diverse markets that allows
the advantages of scale and cost-cutting as
It was in the words of its CEO Tony Gadhoke accounts are self-servicing. Having services
in a situation where it “had data everywhere, on a digital platform (rather than on legacy
but information nowhere. This meant we systems) also allows them to take new products
had low cost insights and a growing need for and services to market more quickly than their
operational efficiencies. Something had to give.” competitors.
It decided to move straight from its legacy In June 2020, the bank, which uses both AWS
systems and to move its core business and Microsoft Azure, signed an agreement with
processes to the Cloud using the SAP S/4HANA Salesforce to power the Standard Bank Group
Public Cloud platform. Gadhoke said: ”In doing Digital Platform and service its ecosystem of
so, we aimed to leverage Cloud capabilities clients and partners.
to improve technical and operational agility,
enhance real-time visibility across the business, The group has more than 53,000 employees,
harmonise data, improve reporting, and enable approximately 1,200 branches and over 9,000
future growth and innovation.” ATMs on the African continent, which enable it
to deliver a complete range of services across
In order to keep costs down, it made the personal and business banking, corporate and
changeover in five and a half months. In a first investment banking and wealth management.
for Uganda, the business put its core business
systems into the cloud by the agreed deadline, In March 2019, it migrated its production
with minimal disruption to the business. The workloads, including its customer facing
company has already seen significant gains platforms and strategic core banking
in productivity and faster time to market. It applications to the cloud. It named AWS as
has greater visibility into its operations than its preferred cloud provider to enable it to
ever before, through an intuitive, unified use data analytics and machine learning, to
AFRICA INTERCONNECTION REPORT 25automate financial operations and enhance Example 3: A regional retailer
customer facing web and mobile applications. Pick ‘n Pay is a continental retailer with shops
Subject to approvals from local regulators it will in South Africa (its largest operation), Nigeria,
take place across all business units. Zimbabwe, Namibia, Zambia, Botswana,
Swaziland and Lesotho. In South Africa it is
Sim Tshabalala, Group CEO of Standard Bank the largest supermarket group, with nearly
said: “For Standard Bank Group to remain a 1,700 stores across the country employing
leader in African financial services, we recognise approximately 85,000 people.
we need to adopt a cloud-first approach to our
business. AWS Cloud technology will create a The company has complex, multi-supplier
springboard for Standard Bank Group, helping relationships and its finance team analyses
us to rapidly roll out our digitisation and data all bills relating to its IT environment to ensure
strategy to better cater to customers whose that the correct expenses are allocated to the
needs are constantly evolving. The combination right business units and to identify any billing
of AWS’s rapid agility and high levels of security, inaccuracies. In the past, this team would
combined with Standard Bank’s customer manually enter every line item from each
obsession and desire to constantly raise the vendor invoice into its ERP software - a task that
bar, will allow us to build Africa’s financial was time consuming, inefficient and
services organization of the future and to be error prone.
positioned as more than a bank.”
In 2018 it went over to using a Microsoft
Azure-based solution called OneView to
automate the process and generate reports.
The impact has been significant: during the
March 2018–February 2019 financial year,
OneView has helped Pick ‘n Pay recover just
over ZAR 3 million in costs.
In addition, OneView has helped the
supermarket chain monitor and control mobile
device usage and costs. And because it’s built
on a secure cloud, OneView delivers the speed,
safety, and security required by Pick ‘n Pay as it
begins the journey to becoming an increasingly
technology-driven business.
AFRICA INTERCONNECTION REPORT 26Example 4: Content Distribution Network Example 5: FMCG multinational in China:
iBAKA TV was one of the first video streaming This final example is included to show what a
platforms to launch in Nigeria in 2012. Although multinational with a strong presence in Africa
it started as a YouTube Premium Channel it has is doing in another emerging market. One of
become a VoD platform, serving Nigerians at the biggest multinational consumer goods
home and in the diaspora. It was iBAKA TV that companies, Unilever has started an initiative in
organised the first global online premier for a China to carry out digital marketing campaigns
Nollywood film in June 2012 for Obi Emelonye’s using the Cloud. It believes that it will enable it
Last Flight to Abuja. to predict more precisely and respond more
quickly to changing customer buying habits
Like many Nollywood VoD platforms, it gets across multiple platforms.
90% of its revenues from the African diaspora
and currently has 70-100,000 people who have In July 2020, it went into partnership with
signed up and 40-50,000 active subscribers. Alibaba Cloud, to use its Artificial Intelligence
which means that there are probably around (AI) and cloud-based technologies to optimise
5,000 subscribers its omni-channel, online and offline demand
generation activities. These technologies
Between 2015 and 2017, the company began can help to unlock detailed insights into it’s
to experience a range of problems on the VoD customers buying patterns and behavior. The
platform it was using: ”We were partnering with data-driven business intelligence could help it
an international company based in the UK. accelerate the creation of new and precisely
There were major challenges with three issues: targeted digital marketing campaigns. The
piracy, speed and quality. We asked them to see software can follow consumers’ purchasing
how they might encrypt our content and they journey through Unilever’s online stores in
could not fully implement the technology. Our Taobao and Tmall.
subscribers in Europe were having problems
that affected access.”
“(In 2020) we decided to approach a different
company. We had used AWS before for hosting
our website. It was able to guide us through the
product and how to implement it in terms of
low pricing. It’s a far better deal financially as we
got a 40% discount. It has a storage service and
elastic load balancing and really is a cloud first
service.” The Amazon Cloudfront service claims
to deliver:”On average, up to a 50% reduction
in first-byte latency when wishing to access
watchable content.”
So what has been the impact of the COVID-19
lockdown on the company’s platform? ”It has
created more engagement on our platform with
longer watch times. People are now looking at
5-10 movies a month and we’ve had increased
subscription levels. But we haven’t had any drop
in terms of speeds or downtime.” It has future
plans to expand its service into Ghana and
Liberia.
AFRICA INTERCONNECTION REPORT 275. N
EW INTERCONNECTION
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