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Research
August 11, 2025
Wingu News
East African businesses are ditching their own server rooms. What was once seen as a necessity is now being replaced by colocation services, where companies rent space in professional data centres instead of managing their own IT infrastructure. This isn't just a passing trend, it's a practical response to real problems that East African enterprises face every day, particularly around power supply and infrastructure costs.
Power Problems Plague the Region
The biggest challenge with running your own server room in East Africa is electricity. Power and cooling costs make up 30 to 70% of total data centre expenses1, and reliable power supply remains a major obstacle across the region.
The statistics are stark. Eastern Africa has some of the lowest electricity access rates in the world, with Uganda at 41%, Tanzania at 38%, and DR Congo at just 19%2. Even where electricity is available, businesses deal with frequent blackouts and forced load shedding.
Companies end up spending huge amounts on backup generators, batteries, and redundant systems just to keep their servers running. Meanwhile, professional colocation facilities have already made these investments at scale, spreading the costs across multiple clients and providing the reliable power infrastructure that individual companies simply can't afford.
The Economics Don't Add Up
Beyond power challenges, the financial burden of owning server rooms has become unsustainable. The average cost of developing a 1 MW data centre is around USD $10 million per MW, which can increase to USD $15 million per MW in some African countries3. Beyond these upfront costs for servers, cooling systems, and security equipment, the ongoing expenses keep mounting.
When you calculate the total cost over several years, colocation makes financial sense. Professional providers achieve economies of scale that individual companies can't match, while handling maintenance, security, and compliance issues that would otherwise require dedicated staff that many East African businesses struggle to find and retain.
Connectivity That Actually Works
East Africa sits at the crossroads of major submarine cables landing in Mombasa and Djibouti, providing direct links to Europe, Asia, and the Middle East. However, accessing this connectivity infrastructure as an individual company is complex and expensive.
Most businesses struggle with fragmented, unreliable internet connections. Colocation facilities act as connectivity hubs. They house multiple ISPs, cloud providers, and content networks in the same building. Companies can connect to this ecosystem through simple cross-connects, getting enterprise-grade connectivity without the complexity or costs of building it themselves.
For a Kenyan fintech serving customers across the region, this means users in rural areas get the same performance as those in Nairobi - a competitive advantage that would be nearly impossible to achieve independently.
Bridging the Skills Gap
Running a modern data centre requires specialised engineers who understand power systems, cooling technology, network management, and physical security. These professionals are rare in East Africa and expensive when you can find them.
It's not just about technical skills. You need people who can handle both international standards and local conditions - someone who can optimise cooling systems for different climate zones or manage power systems during frequent outages.
Most companies face an impossible choice: pay premium salaries for scarce talent or operate with skills gaps that could compromise their entire infrastructure. Professional colocation providers have already assembled teams of specialists whose full-time job is maintaining this infrastructure to international standards.
Meeting Market Demands
East Africa's economic performance is creating demand for better IT infrastructure. With projected growth acceleration of 1.6% points in 2024 from 3.5% in 2023, East African countries have positive forecasts. Four economies: Ethiopia, Kenya, Tanzania and Uganda, already account for around 84% of the region's output.4
This growth drives digital transformation across sectors, from mobile banking in Kenya to agricultural technology in Uganda and Tanzania. Traditional server rooms cannot deliver the flexibility businesses need. Expanding capacity requires months of planning and significant investment, slowing business growth in volatile economic conditions.
The regional data centre market is part of broader African growth projections, with forecasts predicting around $7 billion in investments at a CAGR of around 7% over the 2024-2028 period.5
Strategic Advantages of Professional Colocation
Enhanced Security and Compliance
Modern East African businesses face increasingly sophisticated cyber threats that require professional security infrastructure to handle properly. Banking regulations in Kenya, government data requirements in Ethiopia, and international compliance standards for businesses trading across borders create complex security and compliance requirements.
Professional colocation facilities offer security measures that individual companies can't afford to replicate. This includes physical security like biometric access controls and 24/7 monitoring, plus cybersecurity protocols and compliance frameworks that meet both regional and international standards.
Scalability for Rapid Growth
Businesses need infrastructure that can expand quickly without massive capital investments, especially given the rapid pace of digital adoption across the region.
Traditional server rooms struggle with scaling. Expanding capacity requires planning, capital investment, and often physical modifications that take months to complete. In markets where business can grow rapidly, this inflexibility becomes a competitive disadvantage.
Professional colocation facilities allow businesses scale resources up or down based on actual needs, providing flexibility that's essential in volatile economic conditions. Technology changes quickly too, and professional providers can invest in new infrastructure while spreading costs across multiple clients.
Strategic Positioning
East Africa's position as a connectivity hub makes colocation particularly attractive. Professional data centres have access to carrier networks across Kenya, long distance fibre routes to Uganda, Tanzania, Rwanda, Burundi, Ethiopia and Somalia, as well as diverse fibre routes to the cable landing stations in Mombasa.
In addition to Mombasa, Djibouti has also emerged as a key East African connectivity hub, hosting multiple major submarine cable landings, including SEA-ME-WE 5, AAE-1, and DARE1, that link the region directly to Europe, the Middle East, and Asia. This strategic positioning enhances regional network resilience and offers redundant international routes for faster, more reliable internet.
The Path Forward
The move to colocation represents more than a technology choice, it demonstrates better understanding of how East African businesses can position themselves for success in a digital economy. Power challenges, costs, security requirements, and scaling needs have created a compelling case for professional services.
Growing investment from various providers expanding their regional presence is driving innovation and improving service offerings while reducing costs. International expertise combined with local knowledge is creating solutions designed specifically for regional conditions and business needs.
The question for East African enterprises isn't whether to build or colocate anymore, but how quickly they can transition to professional infrastructure services that will support long-term success. Companies that make this transition early will be better positioned to capitalize on East Africa's digital opportunities, while those maintaining outdated infrastructure models may find it increasingly difficult to compete.
For a region facing significant power and infrastructure challenges, professional colocation offers a practical path to reliable, scalable IT infrastructure that enables businesses to focus on what they do best.
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