finance minister Enoch Godongwana puts data center infrastructure on the same level as electricity, ports and transport networks for the first time, signaling a significant policy shift as South Africa attracts tens of billions of rand of investment from global hyperscalers to build cloud computing capacity.
In his budget speech on Wednesday, Godongwana said that “the use of data and artificial intelligence has become vital to the future growth of economies around the world”, adding that “data infrastructure should be considered as important as power, ports and transport networks”.
He said National treasure This year we will “explore options to support data centers and related infrastructure to expand these investments in South Africa and strengthen our role as a regional hub for these technologies”.
Although the minister did not provide any details on what form these incentives or policy measures might take, the statement represents the clearest acknowledgment yet from the government that data centers – long treated as an elite segment of the property and technology sectors – now require the same strategic attention as the backbone of the country's physical infrastructure.
Time is important. South Africa is in the midst of an unprecedented data center construction boom.
Goldman Sachs estimates that total “hyperscale” data center capital spending from 2025 to 2027 will reach $1.15 trillion, more than double the $477 billion spent from 2022 to 2024. McKinsey estimates that companies will need to invest $5.2 trillion in data center infrastructure by 2030 to meet worldwide demand for AI.
billions of investments
Some of that capital is flowing into South Africa. President Cyril Ramaphosa Said in his address to the nation Earlier this month, 55 data centers have already been built in the country, with an investment of over Rs 50 billion expected over the next three years.
Microsoft has been a major investor, with its chairman Brad Smith announcing in March 2025 that the company would Invest R5.4 billion in new data center infrastructure In South Africa, the capability for AI workloads is also included with Nvidia GPUs. Smith said at the time that Microsoft had already spent more than R20 billion on its Azure data centers in the country. Google launches its first African cloud region in Johannesburg in 2025, while Amazon Web Services is building large facilities in Cape Town.
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On the colocation side, Digital Realty-owned Teraco – the country's largest data center operator with about 190MW IT load – plans to launch four new data centers in 2025-2026, backed by a cumulative investment of about $877 million.
US-headquartered Vantage Data Centers is building a massive data center campus in Waterfall near Midrand in Africa with an investment of $1 billion. Several other providers are building facilities – mostly in Gauteng and the Western Cape.
And in a sign of market maturity, consolidation is accelerating. Open Access Data Centers, a subsidiary of Wiocc Group, recently completed the acquisition of seven NTT data facilities across the country with Joshua Smithwood, Wiocc's chief strategist and M&A officer. telling techcentral The digital infrastructure market is “entering a phase of consolidation”.
If all announced projects are completed, South Africa's data center IT power load could result in hundreds of megawatts more than the capacity available today.
But the sheer scale of building a global AI infrastructure dwarfs even these ambitious local plans. Teraco's Isando campus is South Africa's largest data centre. 70 MW IT load. The capacity of OpenAI's Project Stargate in the US will be measured in gigawatts.
Godongwana's determination does not appear to amount to any formal legal designation – South Africa's Critical Infrastructure Protection Act, which replaced the National Key Points Act in 2022, deals with physical security obligations under the police service rather than economic incentives. But as a policy signal from the fiscus, it is important.
This appears to open the door for the national treasury to extend existing investment instruments to the data center sector. These may include special economic zone designations, which offer a lower corporate tax rate of 15% compared to the standard 27%, accelerated depreciation allowances on buildings and VAT relief on imported equipment. The Department for Trade, Industry and Competition's Critical Infrastructure Program already provides cost-sharing grants for essential infrastructure to unlock investment.
Electricity
Perhaps most critically for an industry that consumes huge amounts of power, framing could support priority grid connections, streamlined approvals for self-generation, and wheeling arrangements and dedicated power allocations – possibly the biggest constraint on data center expansion in South Africa.
The industry will be watching closely to see what specific measures emerge when the Treasury begins its investigation this year.
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TechCentral is reaching out to major data center operators for comment on Godongwana's announcement and its importance to their investments and operations. — (c) 2026 NewsCentral Media
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