Digital Infrastructure - Network Dynamics Associates

Building AI-Ready Infrastructure: Balancing National Sovereignty and Cloud Adoption

Compute and data sovereignty have become strategic imperatives as governments seek to control their destiny in the era of AI. Governments worldwide are racing to build AI-ready digital infrastructure that safeguards national security, fosters competitiveness, and aligns with sustainable energy goals. With data sovereignty and local ecosystems becoming key priorities, achieving a scalable, secure foundation for AI-driven innovation has never been more urgent. However, the soaring compute, data management, and analytic demands of modern governance are leaving legacy IT approaches struggling to adapt.

Cloud-based AI compute surged by over 35% in 2024. For the poorest countries, participating in this wave of demand will require not only investment in infrastructure but also the creation of policies that incentivize innovation and collaboration. Striking the right balance between local capacity and global cloud platforms is critical to creating a resilient, AI-ready future.

For emerging markets, cloud represents a paradigm shift. It enables a transition from siloed systems to a common platform for digital transformation and better citizen services. However, embracing cloud across government departments requires reimagining foundational processes – including business practices, organizational management, procurement, and taxation. This is not just a technical evolution; it demands comprehensive reform across administrative and operational structures.

While public cloud platforms provide unmatched scalability, security, and service flexibility, a simple “lift and shift” of legacy IT to the cloud is rarely practical. Barriers include not only technical challenges but also non-technical concerns, such as costs, fears of vendor lock-in, legacy investments, skills shortages, bureaucratic inertia, and – critically – lack of political awareness and vision. To overcome these hurdles, governments must adopt hybrid strategies, combining local infrastructure with cloud services supported by clear objectives and phased migration plans.

National sovereignty, once seen as a constraint, is now a driving force behind investment decisions. Governments are asserting greater control over sensitive data and transborder data flows, expressing concerns about foreign cloud providers and privacy legislation. Hyperscale cloud providers have developed robust solutions for data localization, yet governments worldwide are aggressively expanding national data center capacity. Data centers are now increasingly recognized as critical infrastructure – essential to economic resilience, national security, and fostering local innovation. The strategic challenge is to balance investments in national computing and private clouds while leveraging the scalability and flexibility of public cloud platforms.

Africa’s Digital Infrastructure Challenges

African emerging markets face unique constraints. Acute underinvestment in digital infrastructure, discretionary policies that hinder cloud adoption, and geopolitical competition (e.g., Chinese vs. Western investments) are significant obstacles. Additionally, data nationalization policies and weak harmonization of standards complicate cross-border data flows and limit regional interoperability.

Africa’s total data center capacity in 2024 serving a population of 1.4 billion people is estimated at just 685 MW – less than 2.5% of global capacity. This equates to 1 megawatt (MW) per million people, dwarfed by comparison to:
While data center capacity on the continent is projected to nearly double by 2029 to 1,227 MW (CAGR 12.34%), more than 60% of the capacity is concentrated in South Africa. Making systemic improvements to power infrastructure takes time, and public cloud computing can provide immediate resources to accelerate digital reforms.

Solutions and Way Forward

Public-private partnerships, improved policies, and targeted incentives are urgently required to stimulate investment in local digital infrastructure and accelerate the transition to cloud-based solutions. Governments must also acknowledge that the era of entirely in-house IT operations is over – even with data center capacity expansion. Collaboration with the private sector is essential to address today’s complex technology, financial, and risk management challenges.

For countries without hyperscale cloud regions – the vast majority of low- and middle-income economies – the future remains uncertain. Key questions include:
Building AI-ready infrastructure requires navigating the delicate balance between national sovereignty and cloud adoption. Governments must embrace hybrid strategies, foster public-private collaboration, and develop forward-looking policies. By doing so, they can ensure a resilient, scalable digital ecosystem that supports AI-driven innovation and economic growth.