South Africa’s data centre industry has cautiously welcomed the government’s move to designate data centres as critical infrastructure, though key details – including what incentives will be offered and how the policy will be implemented – remain unclear.
As TechCentral reported on Wednesday, finance minister Enoch Godongwana used his budget speech to place data centre infrastructure on the same footing as electricity, ports and transport networks, saying the “use of data and artificial intelligence has become critical for the future development of economies worldwide”. Godongwana said national treasury will this year “explore options” to help data centres and related infrastructure expand investment in South Africa and solidify the country’s role as a regional technology hub.
Though the statement represented the clearest acknowledgement yet from government that data centres warrant strategic national attention, it offered no detail on what form incentives or policy measures might take. As TechCentral noted, the framing does not appear to amount to a formal legal designation under the Critical Infrastructure Protection Act, but rather a policy signal that could open the door for treasury to extend existing investment tools — such as special economic zone designations, accelerated depreciation allowances or infrastructure tax incentives — to the sector.
Minister in the presidency Khumbudzo Ntshavheni said in a post-cabinet media briefing on Thursday that the move recognises that data centres underpin every aspect of the country’s digital ambitions.
Data centres form “part of critical infrastructure we need to promote”, Ntshavheni said. “We will not develop capabilities if we do not have data centres in this country and gain that [data] sovereignty.”
She said the designation would mean “incentives for those who want to invest in data centres, to build data centres in Africa”, though specifics have yet to be announced.
‘Uniquely positioned’
South Africa is already the continent’s most advanced data centre market. According to a 2025 market analysis by Digital Council Africa, the country has between 300MW and 350MW of live critical IT capacity, with a further 120MW to 200MW announced or under construction. The market is anchored by Johannesburg and Cape Town, with major operators including Teraco, Africa Data Centres, Vantage Data Centers, Equinix and NTT Data.
Hyperscale demand from the likes of AWS, Microsoft and Google continues to fuel expansion, with operators developing AI-ready facilities and investing in renewable energy projects. But grid instability remains the sector’s dominant operational risk, driving significant investment in solar, battery storage and hybrid power systems.
Read: South Africa puts data centres on par with energy, ports in big policy shift
It is this energy question that Teraco CEO Jan Hnizdo zeroed in on following Godongwana’s speech. He told TechCentral that South Africa is “uniquely positioned” as a data centre location for the broader Southern African region, with solar and wind resources providing a meaningful competitive advantage.
“Key to ongoing investment in the sector is a frictionless renewable energy wheeling framework between Eskom, municipalities and data centre operators,” Hnizdo said. “This would unlock huge investment in new renewable energy production by the private sector and allow Eskom to invest significantly in the transmission infrastructure required to expand the national grid.”
Hnizdo noted that South African data centres compete against facilities in other African and Middle Eastern jurisdictions to host digital services, making the regulatory and energy environment critical to sustaining investment.
Greg Hatfield, MD at NTT Data Infrastructure Solutions, said the classification rightly places data centres alongside electricity and transport as essential national assets.
“It is important to note that they are not standalone facilities, as they rely on reliable power, water, fibre networks, cloud platforms and specialised expertise across the digital ecosystem,” Hatfield said. “Because so many services depend on them, any disruption to data centres, or the supporting infrastructure they depend on, can have wide-ranging economic effects.”
Sandile Dube, CEO of Equinix, said he “welcomes the government recognising the critical nature of data centres and digital infrastructure to the economy and society”.
“The digital infrastructure that powers modern life has become as fundamental as water, gas, and electricity, and is now a service that people and the economy can no longer live without,” Dube said.
The Digital Council Africa report underscores this interconnectedness. South Africa’s data centre sector sits atop a dense connectivity layer that includes more than 250 000km of national fibre routes, multi-terabit metro rings and peering traffic at NAPAfrica and other internet exchange points. The country’s dual-ocean submarine cable access — including high-capacity systems like Equiano (144Tbit/s design capacity) and 2Africa (180Tbit/s) — gives it unmatched latency and peering depth on the continent.
But operational risks persist. Cable theft and vandalism cost the industry approximately R283-million in 2024, according to the report, while load shedding continues to inflate operating costs across the digital infrastructure value chain.
Read: South Africa’s data centre market ripe for consolidation
The critical infrastructure designation could, in theory, help address some of these challenges — if it translates into concrete policy. The digital infrastructure sector will be watching closely for details on what incentives the government plans to offer, whether these extend to the broader digital ecosystem that data centres depend on and how quickly the framework moves from announcement to implementation. — (c) 2026 NewsCentral Media
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