Africa has no shortage of appetite or capital for data centre investment, but very few projects are reaching financial close, delegates heard during the “Financing the Digital Backbone: Capital, Risk and Bankability” session at the Data Centre Summit, held alongside Enlit Africa.
Presenting the session, Luyanda Matlala, who leads client coverage for energy, environment and ICT at the Development Bank of Southern Africa (DBSA), argued that the continent’s real constraint is structural rather than financial.
“Africa doesn’t have a data centre opportunity problem, it has a bankability problem.”
Matlala said the quality of a data centre’s anchor tenant, ideally a hyperscaler, remains the single most important factor DBSA considers when assessing bankability. But the contract terms attached to that tenant matter just as much.
Funders scrutinise how and when contracts can be cancelled, how pricing adjusts to changing economic conditions, and how force majeure clauses are drafted, lessons drawn from disruptions ranging from COVID-19 to more recent geopolitical shocks.
Power reliability was described as an equally critical test. Inconsistent power can damage sensitive equipment, while the choice of power technology, whether hybrid, renewable or grid-based, feeds directly into how offtakers are able to price and fund their side of the deal.
A recurring theme was the premium funders place on proven delivery. Matlala said DBSA regularly encounters developers who inflate project size on the assumption that bigger numbers attract more serious attention, only to lack any track record of execution.
Clear allocation of engineering, procurement and construction (EPC) risk, and of operations and maintenance risk, to the parties best placed to manage them was described as central to making a project financeable.
“The bankability overall depends on the ecosystem and not so much on the technology.”
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DBSA typically looks for equity participation of between 30% and 50%, with mezzanine finance used to bridge gaps where sponsors cannot meet that threshold. Matlala was direct about the cost implications of unstructured risk.
“There is no cheap capital available for unstructured risk.”
He identified three factors capable of derailing a transaction outright: power availability, policy and regulatory uncertainty, and execution risk.
Regulatory unpredictability in particular raises financing costs by forcing investors to price in insurance against political risk, often to the point where a project stops making commercial sense.
Matlala shared several hard-won lessons from DBSA’s experience in the sector. Projects without a hyperscaler are rarely able to access cheaper project finance.
Delays in securing power are consistently the single biggest cause of failed deals, and regulatory uncertainty, once priced in, tends to push otherwise viable projects out of reach.
He also challenged a common assumption in the sector, arguing that additional capacity built alongside an anchor project can generate stronger long-term returns than a series of smaller, standalone developments.
“Overbuilt capacity is strategic, not inefficient.”
Looking ahead, Matlala said value creation would increasingly sit at the intersection of energy and data infrastructure, with regional platforms outperforming single, isolated assets as developers gain efficiencies across multiple markets.
Continued government investment in transmission and fibre infrastructure was described as essential to that shift.
Audience questions turned repeatedly to the earliest, riskiest stage of project development, before feasibility studies are complete. One delegate, working in utility-scale project funding across Zambia, Botswana and Zimbabwe, described the search for seed capital as “looking for a needle in a haystack”.
Matlala confirmed that DBSA’s project preparation facility can support this stage, but typically only once a pre-feasibility study is already in place, with sponsors expected to fund roughly half the remaining preparation costs themselves.
He characterised the gap as a capital problem rather than a policy one, noting that under-capitalised projects are often sold off cheaply to opportunistic buyers long before they reach bankability.
Asked how a state utility, rather than a commercial hyperscaler, might qualify as an anchor tenant, Matlala said the principle still applies: citizens paying for public services represent a consistent, revenue-generating customer base.
“We’re happy for governments to be our anchor customers.”
The session closed on Matlala’s central message: Africa’s question is not whether it will build data centres, but whether it can structure enough of them to be financed and rolled out at the pace the continent needs.
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