This article was contributed to TechCabal by Seth Onyango via bird story agency.

Cloud-native startups in Africa are luring big tech firms to ramp up spending on cloud facilities as demand for cloud services that comply with data protection laws grows.

McKinsey forecasts a global cloud value of $3 trillion in 2025, with $797 billion of this value sitting in Africa and Europe.

In the same period, the International Finance Corporation (IFC) statistics forecast the continent’s e-Conomy to hit $180 billion, 5.2% of its GDP.

Google’s Cloud director, Niral Patel cited the IFC figures, highlighting the burgeoning opportunities for cloud services in Africa.

On Friday, February 2, Google Cloud announced that it has opened its first cloud region in Africa, located in Johannesburg, South Africa. The new region will offer its core cloud services, such as computing, storage, networking, and security, to customers across the continent.

Meanwhile, Oracle revealed that it plans to establish a public cloud region in Kenya’s capital city of Nairobi to meet the growing demand for Oracle Cloud Infrastructure (OCI) services across Africa. 

It will be the firm’s second on the continent, with the first one opened in January 2022 in Johannesburg, South Africa.

Both Oracle and Google are competing with other cloud providers, such as Microsoft Azure and Amazon Web Services, which have also established cloud regions in South Africa in recent years.

McKinsey notes prevalent data residency laws in Africa like those in Algeria, Gabon, Niger, and Morocco have forced these firms to set up shop on the continent.

The existing laws demand localised data, making it impossible for many firms to use the public cloud due to limited provider presence. 

Kenya, South Africa, Tunisia, and Uganda also impose restrictions on cross-border data transfer. 

A surge of cloud computing investments comes is also fuelled by factors like increased continental access to broadband internet.

Africa does not have a large installed base of legacy IT systems and hardware that need to be replaced or integrated with cloud services. 

This allows businesses to leapfrog ahead and adopt cloud-native applications and platforms that are more agile, scalable, and cost-effective.

According to some estimates, demand for cloud computing services in Africa is growing at between 25% and 30% annually

Google and Oracle are, thus honing in on the pulse of innovation—the thriving community of cloud-native startups. 

These nimble enterprises, born and bred in the cloud, have become the focal point of attention for two tech giants eager to contribute to and benefit from Africa’s expanding tech ecosystem.

In its last insights last month, McKinsey said African companies that “can make the leap stand to gain a sizeable prize. 

the consulting firm’s recent research projected a global cloud value of $3 trillion across what it categorized as the “Rejuvenate dimension (IT cost efficiencies) and the Innovate dimension (revenue uplifts and business operations savings).” 

In Africa, cloud adoption among respondents is consistent across African regions, with the highest levels, 70 to 77%, in East Africa, West Africa, and Southern Africa, according to the consulting firm.

Investors in the cloud space like Oracle and Google are also keen to develop cloud skills and talent. 

Both companies have launched initiatives to train and certify African developers, students, and educators on cloud technologies and applications.

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