World Bank supports Africa’s digital infrastructure expansion
Raxio Group, the leading operator of regional data centres in sub-Saharan Africa, has secured USD 100 million in financing from the World Bank’s private investment arm, the International Finance Corporation (IFC), the company announced on Thursday. This is the IFC’s largest investment in Africa’s digital infrastructure to date and is expected to drive the expansion across the continent.
Raxio, which opened its first facility in Uganda in 2021, now operates in Angola, Ethiopia, Côte d’Ivoire, the Democratic Republic of Congo (DRC), Mozambique and Tanzania. A new data hub is currently being built in Kinshasa, the capital of the DRC, to meet the growing demand for data services in one of the continent’s largest and fastest-growing urban centres. Raxio is also building a digital centre in Côte d’Ivoire to connect Francophone West Africa and facilitate cross-border trade.
With the debt financing from IFC, Raxio now plans to double the number of its data centres on the continent within three years. The company intends to build high-quality, Tier III-certified and carrier-neutral data centres – i.e. facilities that offer a particularly high level of resilience and can remain in continuous operation even during maintenance work. These are to be deployed using renewable energies, energy-efficient equipment and resource-saving cooling technologies in order to reduce the centres’ electricity and water consumption. The IFC financing includes concessional funds from the GROW Facility, an initiative aimed in particular at promoting economic opportunities for women in rural areas, as well as funds from the IDA Private Sector Window, which supports private investments in fragile markets that are often considered too risky. According to IFC Regional Director for Infrastructure and Natural Resources in Africa, Sarvesh Suri, and Raxio Managing Director Robert Skjødt, the expansion of data centres on the African continent is intended to open up previously underserved markets, reduce local data storage costs and latency times, increase network speeds and also strengthen state sovereignty in the area of cyber security and regulation.
There is a great need to expand the digital infrastructure on the African continent: Africa currently accounts for less than one percent of global data centre capacity, while mobile data usage is growing significantly faster than the global average at around 40 percent per year, according to the US Internet Society. At the same time, cloud computing and technology giants such as Amazon Web Services, Microsoft Azure and Huawei are showing growing interest in African markets and have recently massively expanded their partnerships and presence on the continent. However, most of them currently operate their hosting in Europe and South Africa. IFC and Raxio now want to change this. Improved digital connectivity is intended to boost economic growth in the region while reducing dependence on server locations outside the continent. According to experts, the announcement of the expansion comes at a time when technology companies are increasingly seeking to diversify their activities. The background to this is the 54 percent increase in tariffs on Chinese goods imposed by US President Donald Trump, which is also significantly increasing costs for technology manufacturers and cloud operators.
South African parliament passes budget framework
On Wednesday, the South African parliament passed the controversial fiscal framework for the budget with a narrow majority of 194 to 182 votes. While the African National Congress (ANC), currently the largest party in the ruling coalition of ten parties, described the budget adoption as a necessary step towards economic stabilisation, the coalition partners Democratic Alliance (DA) and Freedom Front Plus rejected the draft. The opposition parties Economic Freedom Fighters (EFF) and uMkhonto we Sizwe (MK) also voted against the bill. Representatives of both the liberal centre-right DA and the left-wing populist EFF criticised the budget for being a burden on poorer sections of the population. With the support of the opposition party ActionSA, which holds six seats in parliament, the fiscal framework was passed despite the votes against from the DA, the second strongest party in the Government of National Unity (GNU) coalition.
After the end of the vote, DA leader John Steenhuisen announced that he would challenge the adoption of the budget’s financial framework in court. This is based on procedural errors. During the debate, not all comments from the represented parties were heard in full. The DA’s decision to go to court and to vote against the proposed budget framework of its grand coalition partner is fuelling the conflict between the DA and ANC, which has been going on publicly for weeks. This puts the GNU, which was formed less than a year ago, to the test. Mdumiseni Ntuli, leader of the ANC parliamentary group, accused the DA of destabilising the ruling coalition and betraying its partners. In a further statement, he questioned whether the DA was still part of the governing alliance, but at the same time emphasised that the other coalition partners would remain part of the GNU. Cyril Ramaphosa’s government spokesperson, Vincent Magwenya, was also critical of the DA’s negative stance and emphasised that one cannot be part of a government whose budget plans one rejects.
The main point of criticism in the budget dispute is the planned gradual increase in VAT by 0.5 percent per year for the next two years, which will raise the VAT rate to 16 percent by the 2026/2027 financial year. The ANC’s concession in the version of the financial framework that has now been adopted, which also contains a non-binding recommendation to the Ministry of Finance to examine other ways of generating tax revenue, did not go far enough for the DA. The lack of tax relief for low-income households and the failure to adjust income tax rates to inflation also caused further controversy. While the DA shared the criticism of the EFF and MK party that an increase in VAT would primarily burden the poorest section of the population, the ANC argued that the majority of income tax was borne by the top three income brackets. A potential burden would also be offset by the increase in VAT-exempt product groups and higher expenditure on social services such as health and education. Another sticking point in the budget dispute is the DA’s demand to cut expenditure in all areas of government, which the ANC rejected as an austerity budget. While it is questionable whether the two largest coalition partners can overcome their dispute and prevent a rift within the GNU, South Africa is facing major economic challenges. According to the latest budget data, 32 percent of people in South Africa are affected by unemployment. In total, more than 20 million people require welfare state assistance to finance their livelihoods. As a result of the budget dispute, the South African rand also plummeted by 2.3% on Wednesday – the sharpest single fall since 2023. In addition, the tariffs now introduced by the Trump administration, which impose 30 percent on all South African imports, are further exacerbating the economic situation.
In other news
The fasting month of Ramadan ended on Saturday. Around the world, Muslim women and men celebrated Eid al-Fitr – the Festival of Breaking the Fast – one of the most important holidays in Islam and a day of joy, gratitude, and togetherness, marked by diverse traditions. Impressive celebrations also took place in many African countries. In Nigeria, the city of Dutse was transformed into a colourful spectacle: the traditional Durbar, a multi-day horse parade in honour of the Emir, accompanied by riders in magnificent traditional costumes, attracted thousands of visitors. In Cape Town, South Africa, people gathered in the historic Bo-Kaap district in particular, where around 90 percent of the population is Muslim, to view the new moon together and break the fast. In Senegal, on the other hand, young people gathered in many neighbourhoods to prepare for the breaking of the fast, known as ‘ndogou’ in Wolof. The carefully prepared meals were then distributed to those in need – an expression of compassion and community spirit.
Event information
Next Tuesday, 8 April 2025, the Dresden International Forum 2025 will take place in Dresden’s Frauenkirche from 19:15 to 20:45. Under the title ‘From Conflicts to Cooperation: The Resource Nexus as a Pathway to Peace and Prosperity in Africa’, the event is dedicated to the question of how sustainable resource management can contribute to peacebuilding and development in Africa. Among the panellists are high-ranking guests from politics, science and international organisations, including Prof. Tshilidzi Marwala, Rector of the United Nations University and UN Under-Secretary-General. The event, which marks the tenth anniversary of the Forum, is part of the Dresden Nexus Conference 2025 ‘The Future of Resources – Resources for the Future’ (8-10 April 2025), organised by the Development and Peace Foundation (SEF) in cooperation with UNU-Flores, the Frauenkirche Foundation and the Centre for International Studies (ZIS) of the Technische Universität Dresden. The discussion will be held in English. Participation in the event is free of charge, prior registration is not necessary. You can find the detailed programme here.