Diversification  : Data – The New Diamonds

Let us wean our economy away from natural resource dependency and grasp, with both hands, the digital age

 

DOUGLAS RASBASH

Special Correspondent

 

This is another item on the vital topic of economic diversification. As political manifestos roll off the shelf in this election season, one sees an all too familiar pattern of massive spending on development and dependency on the traditional stalwarts of mining, agriculture and tourism.

As is often stated, if you ride the same path, you’ll get to the same place. Contextually, Africa is changing from being a commodity breadbasket for the rest of the world to a massive and self-reliant continental market. This scenario is undoubtedly more sophisticated and difficult to evolve, requiring, above all, good governance, data and information. The article aims to build awareness, provide information and analysis to influence decision makers on taking this new pathway. As the future unfolds, it is apparent that data will be the new diamonds.

Data as the New Frontier

The digital economy is transforming the way countries create value. Data is the lifeblood of modern technologies like artificial intelligence (AI), the Internet of Things (IoT), and cloud computing. Africa cannot afford to be left behind. The global demand for faster processing and real-time access to data is driving trends like edge computing, which processes data closer to where it is generated rather than in distant, centralised data centres.

This shift reduces latency and is critical for emerging technologies like autonomous vehicles and IoT devices. For Botswana, this means processing its own data locally rather than outsourcing it to countries like the USA or India.

The global push towards sustainability is also influencing the development of “green” data centres, which rely on renewable energy sources and innovative cooling systems. As climate change becomes an urgent concern, the demand for these sustainable facilities will only increase. Botswana, with its abundant solar energy potential, is uniquely positioned to become a leader in green data storage.

The Global Data Centre Landscape

Data processing today relies on a vast network of data centres, often referred to as “server farms,” operated by major cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. These data centres are strategically placed to optimise latency, redundancy, and regulatory compliance. For example, data centres are typically located near major population centres to minimise the time it takes for data to travel between users and servers, enhancing service speed and responsiveness.

Energy consumption is another critical factor. Data centres are incredibly energy-intensive, requiring vast amounts of electricity not only to power servers but also to cool them. Data centres located in cooler climates or those powered by renewable energy, such as hydroelectric power in the Nordic countries, have a lower environmental footprint. By contrast, centres in regions dependent on fossil fuels tend to have higher carbon emissions. This highlights an opportunity for Botswana: with its vast solar potential, the country could host data centres that are both environmentally-sustainable and economically-profitable.

Regulatory compliance also plays a significant role in data centre location. Different countries have different regulations regarding data sovereignty, which dictates where data must be stored and processed. For example, the European Union’s General Data Protection Regulation (GDPR) imposes strict rules on the storage and processing of EU citizens’ data. This has led to the establishment of localized data centres to meet regulatory demands. For Botswana, creating a business-friendly regulatory environment that respects data sovereignty could attract significant investment in this burgeoning sector.

Botswana’s Opportunity: Becoming a Data Hub

Botswana is ideally situated to become the data centre hub of Sub-Saharan Africa. The country’s geographical location, coupled with its political stability, renewable energy potential, and robust infrastructure, makes it a prime candidate for data centre investments. By fostering a conducive regulatory environment and investing in the necessary infrastructure, Botswana could become a magnet for global and regional tech companies looking to establish data centres in Africa.

The growing demand for data storage across Africa further strengthens Botswana’s case. As internet penetration continues to rise, mobile technology expands, and digital transformation accelerates, the need for secure, reliable data storage solutions is becoming critical. Digital services – from e-commerce to mobile banking and online education – are booming across the continent. To support this growth, Africa needs local data storage capabilities.

Countries like Egypt, Kenya and Nigeria are already home to some of Africa’s most advanced data centres. Major global players like AWS, Microsoft Azure, and Google Cloud have set up shop in South Africa, which hosts the most developed data infrastructure on the continent. However, there remains a significant gap between Africa’s data centre capacity and its growing digital demands. This gap represents a golden opportunity for countries like Botswana.

Leveraging Renewable Energy for Data Storage

Data centres require massive amounts of energy. Botswana could choose to follow a conventional route by exporting its coal, a raw material for energy production. However, a far more forward-looking strategy would be to harness the country’s abundant solar resources to power data centres locally. By doing so, Botswana could add significant value to its energy resources while promoting sustainability.

Data storage can be seen as a high-value use of energy. Rather than simply exporting raw materials, Botswana could create a value-added industry by using its renewable energy to power data centres. This approach aligns with global trends toward energy efficiency and sustainability, and it positions Botswana as a competitive player in the digital economy.

The Economics of Data Centres

The profitability of data centres is driven by several factors, including economies of scale, energy efficiency, the growing demand for cloud services, and strategic locations with access to low-cost or renewable energy. Companies like AWS, Microsoft and Google benefit from large-scale operations, which reduce costs and improve operational efficiency. Botswana, with its favourable conditions for solar energy and a stable political environment, could attract such companies to set up data centres within its borders.

Future demand for data storage in Sub-Saharan Africa (SSA) presents an immense opportunity. By 2050, the population of SSA is expected to reach 2.1 billion, with internet penetration projected to rise from 40% to 75%. Data usage is expected to increase dramatically – from 5 GB to 40 GB per person per month – driven by advancements in 5G and digital services. This surge in data demand translates into a need for 800 petabytes (PB) of storage capacity.

The potential financial returns from investing in data centres in Botswana are substantial. Managing 800 PB of data storage in SSA could generate approximately $200 million per year, with an estimated net annual profit of $150 million after accounting for operational expenses. This results in a return on investment (ROI) of 37%, with a payback period of less than three years. The multiplier impact for IT investment is very high too.

A New Path Forward

Botswana’s journey toward economic diversification has long been centred around traditional industries like mining, agriculture, tourism and most recently, energy. However, the global economy is evolving rapidly, and Botswana must adapt if it is to thrive in the 21st century. By positioning itself as a data hub for Africa, Botswana can tap into the lucrative and rapidly expanding digital economy. Think of it as adding value to energy.

Data is the new frontier, and Botswana has the resources, location, and infrastructure to lead Africa’s charge into this new era. Diversification into other minerals is not diversification but business as usual. Let us wean our economy away from natural resource dependency and grasp with both hands the digital age.