Why a localised approach could be the key to unlocking Africa's cloud potential 

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January 22, 2025
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5 min read
Cloud servers/services

A reliance on dollar-priced technology has been identified as a major barrier preventing African businesses from adopting cloud services.

Speaking to Techpoint Africa in a recent interview, Andrew Mori, Co-founder and CEO of cloud solutions provider, Deimos, noted that despite growing awareness of the benefits of cloud services, many African businesses are reluctant to make the change.

 "In Africa, probably one of the biggest problems that we have is that we need to pay OPEX in USD, but we are earning revenue in naira or shilling or rand or Egyptian pound and our currencies don't always perform so well against the dollar,” Mori explained. 

In June 2023, the Central Bank of Nigeria (CBN) introduced a floating exchange rate which caused the naira to lose a significant portion of its value. This sharp depreciation created ripple effects across the economy, hitting businesses with operational expenses tied to the dollar particularly hard.

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Tech startups have felt the brunt of this change, as many depend on foreign-built software and cloud hosting services, which are predominantly priced in dollars. In response, many startups began exploring locally priced alternatives in a bid to control operational expenses.

Nigeria is not the only country affected by this, with African economies such as South Africa, Kenya, and Egypt also facing some form of currency devaluation over the past two years.

Beyond increased operational costs, Mori points to a technology skill gap as another barrier to adopting cloud services in Africa. According to the SoftwareOne Cloud Skills Survey, 98% of organisations around the world are grappling with a cloud skills shortage with 32% missing financial targets as a result.

Due to the gap, organisations are struggling to retain key talent. In Africa, the challenge is heightened as many businesses lack the financial resources to adequately compensate cloud engineers, thus losing them to businesses outside the continent.

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Why cloud infrastructure matters for Africa   

Cloud computing offers reliability, scalability, and access to cutting-edge tools. For African businesses, particularly fintechs and SMEs, moving to the cloud is more than a technological upgrade ensuring data redundancy and availability, a critical factor in industries like banking, where reliability is crucial for customer trust.

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Unlike on-premise infrastructure, moving to the cloud ensures resilience against natural and technical disasters. This dependability is crucial in regions where infrastructure can be unpredictable. Beyond reliability, the cloud offers advanced tools like AI integration, which are harder to replicate with local private data centres.

Addressing the challenges   

Innovative solutions are emerging to mitigate these barriers. One idea gaining traction is creating localised cloud services that charge businesses in African currencies. By de-pegging from the dollar, businesses can stabilise operational expenses and fast-track their transition to the cloud.

However, as Mori noted, the challenge lies in replicating the features of global cloud providers without the backing of trillion-dollar budgets.

“I don’t think somebody must try to build the AWS of Africa. I think we should build it slightly differently and more cost effectively.  I think there's a lot of opportunity to have independent data centres operating under a software component that acts in a way like a public cloud that offers the resilience and the redundancy and security that we are getting from these public clouds.”

The critical role of cybersecurity   

As digital transformation accelerates, so do the risks associated with cyberattacks. Yet, African businesses often underinvest in cybersecurity.

“The ROI on investing in cybersecurity isn’t measurable in the same way that, say, marketing is.  If you've never experienced a hack, a data breach, or remote code execution, you won't realise how severe it is,” Mori explained.

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This mindset leaves many companies vulnerable, only prioritising security after experiencing a breach.

For startups and SMEs, the stakes can be high. A single cyberattack can damage reputation and customer trust. This difficulty in quantifying the value of cybersecurity is further exacerbated by the scarcity of skilled cybersecurity talent.

“ Cybersecurity is a very niche environment and it's constantly evolving and it requires a specific personality.  Not only is the personality relatively scarce, the skill set required to be excellent at cybersecurity is too, and if you are highly skilled, you're in high demand,” he noted. 

In light of advancements in artificial intelligence enabling bad actors, Mori insists that companies must take cybersecurity more seriously. One solution he recommends is using independent consultants.

With many cybersecurity breaches often perpetrated by internal actors, he advises that businesses engage independent consultants to identify vulnerabilities and ensure best practices are implemented.

Building a pipeline of local talent trained in cybersecurity is also crucial, as is providing them with opportunities to get real-world experience. Additionally, businesses must leverage AI to detect and counter sophisticated attacks, such as deep fake impersonations.

Governments and industry regulators also play a crucial role. Mandating regular security audits and promoting awareness campaigns can elevate cybersecurity as a business priority. Public-private partnerships could provide resources for underfunded sectors to access essential training and tools.

Retaining talent in Africa   

Retaining skilled professionals is a pressing issue for African businesses in need of technology professionals. Many young and talented Africans leave due to better-paying opportunities and stable living conditions abroad.

Mori believes competitive remuneration and a supportive environment can help reverse this trend.

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“We need to pay better. We don't have to match the salaries in the West, but it needs to be competitive to a point. And I think a lot of people don't actually want to leave their home countries. They're looking for some stability, and they're looking to be paid well.”

Entrepreneurship also offers a solution. By building agency-style businesses that employ and train local talent, companies can provide global services while nurturing domestic expertise. Andrew’s company, Deimos, exemplifies this approach, employing African engineers to work on international cloud and cybersecurity projects.

Driving digital transformation beyond startups   

While startups often lead the charge in technology adoption, traditional businesses must also embrace digital transformation to remain competitive. Mori, however, notes that the cost of digital transformation can often seem enormous, making businesses choose to stick to old patterns.

With large-scale projects often failing due to misaligned expectations, inadequate planning, and skill deficits, he argues that industry professionals must work on reducing incidents of failure. “ The people that are responsible for implementing digital transformation strategies need to do more. I think it's very easy to sell digital transformation to a CEO. If you told a CEO that digitally transforming customer service could improve their margins and reduce wastage, what CEO is going to say no to that? So I think it’s our responsibility to figure out how we reduce failures.”

Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
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