The AI and Big Tech rout in the US last week, fuelled by concerns that the Democrats’ victory in the congressional mid-term elections could threaten much-needed data centre development, comes amid growing investor scrutiny of the financial viability of the global infrastructure boom, according to the Development Bank of Southern Africa (DBSA).
But rather than signalling a need to pull back, the uncertainty reinforces the importance of South Africa investing in its own digital infrastructure to meet growing demand and strengthen its position as a regional data centre hub.
In its latest report – South Africa’s Digital Infrastructure Investment Study 2025 – the DBSA says local data centre power demand is expected to almost double over the next five years on the back of demand for more computing capacity.
In power generation terms, this means that installed IT load capacity is forecast to grow from 435MW in 2024 to 829MW by 2029, an additional 394MW.
“DBSA’s study attributes the increased demand to organisations migrating workloads to the public cloud, growing adoption of digital services, increased use of AI technologies, and rising demand for data storage and processing,” says Dr Jannie Zaaiman, CEO of the South Africa Information and Communication Technology Association.
Growing AI adoption adds to these requirements, with applications needing increasingly powerful computing infrastructure.
“South Africa is making progress in adopting artificial intelligence, but it remains some way behind the leading global markets, a situation that will change rapidly, but does require data centre capacity,” says Zaaiman. “AI use is already increasing among individuals and businesses even though much of the corporate market is still moving from experimentation to implementation. This leaves significant scope for growth as organisations begin integrating the technology into their operations.”
The DBSA estimates the country will need four to five new regional data centres, each with around 1MW of IT capacity – enough to support about 200 server racks – plus 20 to 30 edge data centres in underserved areas over the next five years.
Zaaiman says this will involve substantial investment – and that South Africa will need infrastructure beyond its existing hyperscale facilities in Johannesburg, Cape Town and Durban.
The DBSA expects investment in local data centre infrastructure to rise from more than R39-billion in 2023 to R68-billion by 2029, with global hyperscale operators including Amazon Web Services, Google, Huawei and Microsoft investing alongside local operators.
Zaaiman says this may prove to be insufficient.
“The projected expansion in South Africa’s data centre capacity will need to keep pace with demand that is expected to continue growing beyond 2029,” he says.
There is also an economic factor given South Africa’s position as a regional data centre hub, he adds.
“Our facilities serve businesses beyond our borders, while the expansion of cloud services and demand for locally hosted data create opportunities to attract further regional workloads. Without continued investment, capacity constraints could limit South Africa’s ability to accommodate this growth and compete for regional business.”
Zaaiman also makes a data sovereignty argument for expanding local capacity.
As more government, financial, healthcare and business information is digitised, the ability to store and process sensitive data within the country’s borders becomes increasingly important. “Reliance on infrastructure hosted elsewhere can expose organisations to foreign jurisdictions, regulatory requirements and geopolitical developments beyond South Africa’s control,” he says.
Local data centre capacity gives government and businesses greater choice over where their information is stored, who operates the infrastructure, and which legal and regulatory frameworks govern access to it, says Zaaiman.
“Expanding locally owned and operated infrastructure would strengthen South Africa’s ability to control its digital assets, protect sensitive information and develop its own technological capabilities,” says Zaaiman. “It would also support the country’s ability to meet data residency requirements while reducing reliance on infrastructure in other jurisdictions.”