How Data Sovereignty Will Shape Africa’s Data Centre Future

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 continue to impact large-scale development.

Africa remains a follower in the global data centre market, while the US and Europe lead with far stronger economies, more advanced infrastructure and greater enterprise demand. Markets in other regions are considerably larger, and their data centre capacity tends to be much higher, reflecting a more mature operating environment. This gap highlights both the current limitations and the potential for rapid growth in Africa.

Energy remains the defining requirement.

Energy has become the defining requirement for data centre expansion, as space is no longer the leading indicator. Power efficiency drives both power availability and expansion, as renewables such as wind and solar are gaining traction, though challenges remain. Meanwhile, innovations like small modular nuclear reactors are under investigation and emerging as potential long-term solutions.

At the same time, digital continuity and data sovereignty are important focus areas. In the US and Europe, data is stored and processed locally to meet strict compliance and security standards. Africa, by contrast, still exports a significant portion of its data due to limited local infrastructure. However, momentum toward true sovereignty is building across the continent, with increasing emphasis on demonstrable controls around data residency, governance, and operational accountability rather than policy intent alone. As local capacity expands, the ability to evidence compliance, resilience, and trusted operating practices will be critical to retaining data value within regional economies.

Scalability and smart investment are essential for driving development. Overbuilding without demand wastes capital, while targeted development ensures sustainable growth. Connectivity is equally vital with submarine cables, satellites and terrestrial fibre transforming facilities into functioning and interconnected data centres. Success ultimately depends on reliance on uptime, compliance and robust operating standards guaranteeing 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 yet treated as local, satisfying regulatory needs at lower cost.

Examples across the world illustrate this interdependence. The “digital embassy” operating model, pioneered by Estonia, is a system where a nation stores its critical government data and information systems in secure data centres outside its physical territory. The core of the model is that these data centres are granted diplomatic immunity and legal protection through bilateral agreements with the host country, ensuring data sovereignty and continuity of state functions in the event of a crisis, such as cyberattacks, natural disasters or war.

Estonia hosts critical government data in “data embassies”, which are secure, offshore data centres, primarily in Luxembourg. These act as digital backups, ensuring national digital continuity and security by granting the data the same diplomatic immunity as traditional embassies, allowing Estonia to maintain 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 biggest concern for investors, making a reliable energy supply essential for expansion. Data centres are capital-intensive, and achieving efficiencies, such as Power Usage Effectiveness (PUE) below 1.5, depends on local skills and adherence to international standards.

The skills shortages add pressure, with engineers increasingly moving abroad for better opportunities. Regulatory and permitting processes also need improvement, while the sector continues to depend heavily on foreign investment, with few local players. To sustain growth, South Africa must strengthen power reliability, enforce efficiency standards, retain talent, and streamline regulation.

Africa’s data centre industry faces both opportunities and risks in consolidation and outsourcing. Regional hubs can deliver efficiency and shared access to compute, storage, and cloud services, but concentrating too much on a single location risks single points of failure and loss of independence. Outsourcing without skills transfer adds little local value, while insourcing builds domestic capacity and supports job creation.

Putting the fundamentals in place

Success depends on getting the fundamentals right, such as affordable land and permitting, 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 undermines the ecosystem.

The path forward lies in balancing regional cooperation with local control, ensuring efficiency while strengthening sovereignty and resilience.

Ultimately, Africa’s opportunity lies in building data centres supported by African skills and infrastructure, while managing risks through diversification, strong legislation and efficient deployment of capital.

This article was written by, Wiaan Vermaak, Group Chief Commercial Officer at Digital Parks Africa