The launch of Azure came just one day after Huawei announced that its African cloud region was now operational, also from South Africa.

 Last year, Amazon Web Services (AWS) announced that its first Africa cloud “availability zone” will become operational in the first half of 2020.

Africa has been something of a last frontier for hyperscale cloud providers. While public cloud services have long been available, Africa-based users had to connect to servers in Ireland, the United Kingdom or France to access them, with all the attendant issues around latency or data sovereignty. Relative to global levels, the African public cloud market is still small.

According to “The Rise of the African Cloud”, a new report by Xalam Analytics, less than 1% of estimated global public cloud services revenue was generated in Africa as of 2018. For indicative purposes, revenues from public cloud services are still lower than mobile operators generate on SMS.

Africa is a tricky place for cloud services. Many countries don’t have broadband speeds adequate, and affordable enough to support reliable cloud service usage.

Where cloud services are built upon a reliance on third party providers, provider distrust is deeply ingrained in many African enterprises, having been nurtured by decades of failing underlying infrastructure and promises not kept. Where the public cloud thrives on an open, decentralized Internet, many African governments profess a preference for a more centralized, monitored model – and some are prone to shutting down the Internet altogether.

So what is all the jostling about?

As is typically the case in Africa, shortcomings as above also point to considerable opportunity. Look beyond the obstacles, and the picture emerges of a unique occasion to build the foundations for Africa’s ability to enter the fourth industrial revolution.

While the cloud services sector is in its early stages of development, the impact of cloud services is already far-reaching. African banks are making investments in machine learning and artificial intelligence tools to improve the customer experience and credit risk; new “digital banks” are emerging, that are, at least in part, cloud-based.

They are using the African Cloud.

In Kenya, government-managed Huduma centers are using VMWare’s virtualized infrastructure to enhance public service delivery.

Large retail firms are using compute capabilities and AWS databases to transform how they reach a predominantly mobile and digital customer base. And scores of African cloud-native startups are leveraging the cloud to disrupt entire industry sectors.

 The African cloud may be small, but it is already here, and it is growing fast. For African markets, cloud, virtualization and the broader evolution towards serverless computing are the most disruptive technology developments since the advent of the mobile payment revolution.

The upside is considerable. By Xalam Analytics’ estimates, the African cloud market has been growing at a rate of ~30% a year over the past three years – more than 25 percentage points higher than African average GDP growth and well ahead of low single digit enterprise ICT market growth.

Likewise, Xalam Analytics projects top line revenue from cloud services to double over the 2018-23 period, to nearly $4bn. In particular, revenue from African public cloud services are projected to triple over that same period.

 Few other segments in the African ICT space are as likely to generate an incremental $2bn in top line revenue over the next five years, and at least as much in adjacent enabling ecosystem revenue.

And in true African fashion, market dynamics are not uniform. At the same time AWS and Huawei were announcing cloud services to be offered from South Africa, French cloud services provider OVH was closing its Dakar-based West Africa office, citing low service take-up.

But the broader upside is unmistakable, and the battle for the African cloud is only beginning.

See The Rise of the African Cloud – A Xalam Investor Report, March 2019.

www.xalamanalytics.com