Accra, Ghana. Despite the growing demand for cloud services, both African startups and global cloud orchestration firms are not capitalising on this opportunity, says the investment bank DAI Magister/Photo: AfricanCourierMedia

Companies overlooking potential of African cloud ecosystem, says DAI Magister

The African cloud ecosystem represents untapped potential of nearly $1bn, with only 17% of 6,000 companies, with over 250 employees, fully on the cloud. Despite the growing demand for cloud services, both African startups and global cloud orchestration firms are not capitalising on this opportunity.

There is a vast gulf in the rate of cloud adoption between emerging and mature markets. In Europe and North America for example, virtually every company with over 250 employees has adopted the cloud in some form, whereas only 17% of the 6,000 African companies with a headcount above 250 are fully on the cloud.

According to Oliver Warren, Associate at investment bank DAI Magister, this untapped potential represents a nearly $1bn opportunity that remains largely untouched by existing cloud orchestration players.

Warren said: “Despite the size of the industry, there are virtually no startups in Africa specifically focusing on cloud orchestration. For international cloud orchestration companies, expanding into the African market could offer several advantages, including benefitting from an underserved business ecosystem with a rapidly growing demand for cloud services and establishing a pioneering foothold in the region.

“On the other hand, native startups have a unique edge in addressing the specific needs and challenges of the African cloud space. With a deeper understanding of the cultural, economic and regulatory landscape, they can develop tailored solutions that resonate with businesses on the continent.

“Moreover, by building a strong presence in their respective bases, these startups can position themselves as leaders in their region and potentially expand to other burgeoning marketplaces in the future.”

Warren acknowledges that organisations aiming to broaden cloud adoption in Africa will have a series of barriers to overcome.

Warren continued: “Entering any emerging market is not without its challenges. The limited awareness and understanding of cloud technologies among many enterprises taking their first steps into the cloud can be a major hurdle.

“Organisations are still hesitant to migrate to the cloud due to concerns about data security, privacy, and sovereignty. Cloud orchestration companies must therefore invest in education and awareness campaigns to help enterprises understand the benefits of cloud computing and how cloud orchestration can help them overcome the associated challenges.”

Warren concluded: “Regardless of the obvious difficulties, emerging markets such as Africa present a significant opportunity for growth and innovation. As more enterprises embrace digital transformation and adopt cloud technologies, the demand for cloud orchestration solutions is likely to rise. Cloud orchestration companies that can navigate the challenges and tap into this market early on are likely to reap the benefits in the long run.”

DAI Magister is a boutique investment bank offering full advisory services for transactions within the climate tech, deep tech, B2B SaaS, fintech and communication tech sectors.

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