Data centres and digital finance in Africa: the state of play

Details: Vaughan O'Grady; Category: Data Centres & Networks; 28 May 2026; 667 views

During 2025, Balancing Act, a consultancy and research practice focused, among other areas, on telecommunications in Africa, carried out independent research into sub-Saharan Africa’s data centre and cloud market to produce the fifth edition of its African Interconnection Report.

But it didn’t only focus on data centres and the cloud. Russell Southwood, CEO of Balancing Act, who researched the report, explains this year’s approach. “We've always looked at data centres and cloud and connectivity,” he says, “but every year we also take a focus on a particular area. This year we've looked at the financial sector – usually the next layer down of customers for data centres.”

The simple message of the first part of the report, available here, is that 2025 has seen both growth and consolidation among sub-Saharan Africa’s data centres. There is continued investment – particularly in the larger markets – but the pace of new country rollouts has stalled. The second part of the report is based on a survey of the finance sector (banks, insurance companies and fintechs). Based on information gleaned from 11 countries in sub-Saharan Africa, it examines how and why this sector is at the cutting edge of digital change.

In the context of this very thorough examination much is explained and assessed – but one area that remains difficult to assess is artificial intelligence. As Southwood notes: “I've called it in the report ‘the wild card of demand’”. As the report puts it: “It might be huge immediately or it might be a long, slow slog through the foothills to get there.”

Hence, perhaps, the report’s detailed look at the demand side, which asks, among other questions: Who will want to build their own large language models and how will they want to use them? Here, as Southwood says, “you can look at the telcos, large mobile operators, banks [and] financial organisations like insurance companies. I think they are going to be the people who are first in.”

There are good reasons for this. Organising data to go into a large language model, processing it and making sense of it takes time – and money. “Those are not trivial investments. You have to be very intentional about wanting to do it and knowing what you are going to find it producing for you.”

But, among those producing such data, who are Africa’s everyday users of digital financial services? Smartphone use is helping to drive this. However, it isn’t universal. As Southwood notes: “The young with smartphones in cities are beginning to be quite trusting of digital transactions; they see their own generation creating apps and creating startups for savings or loans, so they're more trusting than people who are older.”

It’s true that a majority of people who actually use banks (still not the norm in most countries) are moving towards using the digital app of the bank rather than physical banking. It’s also true that some utilities (in Tanzania for example) are succeeding, gradually, in moving people to mobile money to pay bills, meaning they can operate fewer physical outlets. However, this has been a slow process. “Behavioural changes are much more slow-moving than the pace of the changes in technology,” Southwood points out.

But, you may ask, surely widespread use of mobile money is moving user behaviours towards digital finance? Not exactly. Even now many people are still using USSD versions of mobile money on very basic phones, in which mobile money is merely an easy way of getting cash from one place to another.

As Southwood explains, widespread digital finance change won’t come quickly unless smartphones are much cheaper. Other basic issues, like technical literacy, income, and even reading literacy, also need to be addressed.

And even if digital finance does take off, some governments are hindering the data centre investment that could use the information it provides. As Southwood says: “In places like Cameroon you still have a wholesale monopoly [via the state-owned telco Cantel]. As a result the cost of bandwidth to move stuff around like cloud data is still really too high to encourage the kind of cloud development and data centre development that should happen in a country as large as Cameroon.”

Even in more promising markets data centre development is far from straightforward. When companies build data centres in Africa, suggests Southwood, they have – very broadly – one of two attitudes: meet demand and add capacity as necessary (though this can take time), or build big.

Southwood notes that IXAfrica “built large on the basis of ‘build it and they will come’. As everybody else filled up they did have the space to be able to do quite a large deal with Safaricom in Kenya, and then they came into their own.”

However, the success of either strategy may depend on the patience, or faith, of investors. Southwood suggests: “In the short to medium term you will see some degree of consolidation”.

At the moment, data centre and cloud investors in sub-Saharan Africa are mainly interested in the leading markets: South Africa, Nigeria and Kenya. As Southwood says: “If you are a much smaller country you have to work much harder to convince those people to come to you, both because your markets are small and also because if you have barriers in those countries then they're going to be much less inclined to come and invest.” He adds: “Essentially the smaller countries are slightly behind where they ought to be.”

On the positive side, he notes that a number of African governments have been supportive of technological change. Some have instituted fintech sandboxes. Rwanda and Ghana have even signed a passporting agreement for fintechs. Southwood explains: “If that passporting of regulations takes off then you begin to move towards a single market in terms of regulation and that would make a huge difference.”

But with growth will come cyberthreats, as his report makes clear. How governments provide clear education on such threats without scaring off innovation is going to be key.

He is, however, optimistic about the high level of fintech activity, saying “that will lead to some significant sets of changes”. But the study also looks at MNOs and banks and fintechs jostling for position. By themselves, it says, neither the banks, nor the mobile operators nor the fintechs have the power or the market muscle to change the payments landscape for the better. He explains: “Banks and MNOs really have to come to terms with each other – and the fintechs need to be given more space to innovate in a way that will produce business.”

The report also takes in numerous other related areas, such as bandwidth demand, regional and international cables, the cloud market, the role of third-party APIs, and co-location in the fragmented payments landscape as well as consumer behaviour and the different channels consumers are using.

Things are certainly changing in the region, though it’s hard not to notice one very important finding: in most countries outside the big three the majority of people do not have bank accounts. As the report says: “Based on IMF work with mid-2010s data, between 25-65% of GDP by country comes from the informal economy.”

This means, however, “many African governments have initiatives to shrink the size of the informal economy and digital payment is often central to them”, though recent news in these pages relating to mobile money taxation may not help this process.

Nevertheless change does appear to be happening, albeit slowly. As Southwood notes in the case of the Tanzanian electricity utility, “it started accepting mobile money payments, but it took six years for that transition from people paying primarily in the outlets. They've closed down all but one of the outlets now.”

Will that process accelerate in Africa? Will AI take off? Will data centre growth happen in smaller countries? Will smartphones become affordable? These are all are questions that are central to this report and, one suspects, future Balancing Act reports for at least a few more years to come.