{"id":663021,"date":"2025-03-26T00:00:00","date_gmt":"2025-03-26T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/why-are-we-falling-behind-the-emerging-market-data-center-boom\/"},"modified":"2025-03-26T00:00:00","modified_gmt":"2025-03-26T00:00:00","slug":"why-are-we-falling-behind-the-emerging-market-data-center-boom","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/why-are-we-falling-behind-the-emerging-market-data-center-boom\/","title":{"rendered":"Why are we falling behind the emerging market data center boom?"},"content":{"rendered":"

The AI boom is driv<\/strong>ing dat<\/strong>a center investme<\/strong>nt in emerging markets, but Egypt is yet to <\/strong>see a real uptick in interest. <\/strong>The global demand for data centers is surging due to the expansion of data-intensive industries, such as AI, cloud computing, big data, and IoT, BMI Digital Infrastructure Analyst Niccol\u00f2 Lombatti said in a webinar<\/a> hosted by Fitch Solutions\u2019 research unit BMI and attended by EnterpriseAM. This is pushing investors to explore emerging markets as attractive places to open up data centres, with the global cloud market projected to grow from USD 743.5 bn in 2024 to over USD 2 tn by 2030. But despite Egypt\u2019s enviable location at the crossroads of Africa, Asia, and Europe, Egypt is yet to put itself on the map as an important data center player, despite making some progress early on.<\/p>\n

(Tap or click the headline above to read this story with all of the links <\/strong>to our background as well as external sources.)<\/p>\n

Egypt is currently home to only 5.5% of the <\/strong>region\u2019s data centres<\/a><\/strong>, with the country listed as having only 14 by the Data Center Map. Leading the Arab world is Saudi Arabia with 36 data centres and the UAE in second place with 32. Egypt even trails the tiny Gulf nation of Oman, which boasts 15 data centres to its name, despite its significantly smaller population. Egypt also trails many of its African neighbours, with South Africa leading the continent with 47 data centres, followed by Kenya with 18. <\/p>\n

But why? On paper, the fundamentals look promising. <\/strong>Egypt has the potential to be a major data center hub due to its location at the crossroads of Africa, Asia, and Europe, strong subsea cable connectivity, ample land to use, but the sector has been slow to take off due to infrastructure gaps, high operational costs, and other challenges that have put off some investors.<\/p>\n

While some have been put off, there is still considerable interest in Egypt.<\/strong> Among the big-ticket projects in the pipeline is Intro Group subsidiary Intro Technology and Omani data center leader Oman Data Park\u2019s Kemet Data Center project that is set to launch its first phase<\/a> of a wider USD 1 bn project next year. Last month, we also heard news that Spanish medical consultancy WHM is looking into setting up<\/a> a USD 1.8 bn healthcare data center in Egypt. Dubai-based Khazna Data Centers was also reported to be closing in on the location<\/a> for a USD 250 mn data center in set for completion in 2026. <\/p>\n

Infrastructure gaps remain key in investors decisions to commit to Egypt <\/strong>and our domestic fiber network still needs improvement to support large-scale data center growth. The country\u2019s data center growth depends on stable, high-speed connectivity, but bandwidth constraints remain an issue, Lombatti said in response to a question from EnterpriseAM. Suitable industrial parks with the right infrastructure is also what investors are looking for in emerging markets.<\/p>\n

Unlike other emerging markets, Egypt\u2019s power supply may not be as reliable as <\/strong>investors are looking for<\/strong>, especially considering the serious problems that can result from power outages. Even if the days of power outages are firmly in the rear-view mirror, interested investors will be well aware that the country had suffered rolling blackouts<\/a> as recently as July \u2014 and for some, no amount of reassurances that the lights will be kept on for certain projects will ever be persuasive. <\/p>\n

To address this energy demand and the environmental impact of data centres, there\u2019s <\/strong>been a green data centre push<\/strong>, with a consortium including Swicorp Infra Capital, Income Egypt, and Record Digital Asset Venture inking an MoU last year<\/a> to build, own, and operate a green data center in Egypt. The data center will gain its green status through 200 MWs of solar and wind energy that will be used to power it.<\/p>\n

We\u2019re also not ready for data centers\u2019 heavy water consumption.<\/strong> Data centers require significant water resources for cooling, especially when in hot climates like Egypt. Although still a relatively small sector, industry insiders estimated<\/a> in 2023 that the industry already accounts for 2% of global water usage. While this presents a challenge to any country, for a country like Egypt with a 7 bn cbm annual water deficit<\/a> coupled with a rising population and the threat of the Grand Ethiopian Renaissance Dam, the calculation is somewhat more serious.<\/p>\n

We can learn a lot from Saudi Arabia\u2019s success in the sector<\/strong>, with the country now leading the Arab world having attracted USD 8 bn pledged for data center expansion since the start of 2025, according to Lombatti. The Kingdom\u2019s drive to become an AI hub is fueled by government policies, tax incentives, and economic free zones. The push has attracted major firms like Microsoft, Amazon Web Services, and Equinix to invest in data center capacity, alongside a USD 1.5 bn Groq-Aramco partnership<\/a> for the world\u2019s largest AI inference node. <\/p>\n

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