Private Capital Emerges as Preferred Funding Source for Africa’s Data Centres

Africa’s data centre industry is increasingly turning to private capital and development finance to fuel its next phase of growth, as operators seek more flexible and long-term funding solutions to overcome infrastructure and operational bottlenecks.

According to the Africa Data Centres Association (ADCA) Insider Survey 2025, 52.4 percent of respondents identified private equity as their preferred source of capital for expansion. This was followed by development finance institutions (DFIs), which attracted 26.2 percent of preferences. In contrast, traditional financial instruments such as bank loans, bonds, and public listings garnered minimal interest.

The findings suggest a strong appetite among operators for patient capital that can absorb the high upfront costs and extended timelines typically associated with data centre investments in emerging markets. Unlike debt financing, which often comes with shorter repayment windows and rigid conditions, equity-based funding offers more flexibility and alignment with long-term growth strategies.

The sector’s cautious stance on conventional debt also reflects broader challenges in accessing affordable financing in markets where currency volatility, interest rate risk, and limited financial infrastructure can complicate borrowing. Operators in key markets such as Nigeria and South Africa cited financing constraints as a significant barrier to scaling infrastructure, particularly when seeking to expand into underserved regions.

The preference for DFIs is rooted in the strategic value these institutions bring beyond capital. In addition to funding, DFIs often support environmental, social, and governance (ESG) compliance, technical assistance, and policy dialogue with host governments. This makes them attractive partners for operators looking to build sustainable and regionally aligned data infrastructure.

Despite moderate profitability, surveyed operators rated overall returns at 3.3 out of 5, confidence in the sector’s long-term value remains high. With rising demand for cloud services, digital content, and AI-ready infrastructure, the need for capital investment is growing. Over 77 percent of respondents indicated they are either “very likely” or “likely” to make significant investments over the next 12 months.

The capital landscape highlighted in the survey reveals a maturing market that is increasingly selective about the sources and structures of funding. As digital demand accelerates and geopolitical interest in Africa’s digital future intensifies, private equity and DFI-backed capital are expected to remain central to the continent’s data infrastructure buildout.

To attract sustained investment, industry leaders are calling for regulatory reforms, better power infrastructure, and targeted skills development to improve project bankability. Without these enabling conditions, access to capital, even from preferred sources, could face limits that slow progress on critical digital infrastructure projects.

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