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2 Feb 2023

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Teraco Secures $700 Million Loan for Development in South Africa

CAPE TOWN - Digital Realty's South African company Teraco has secured R11.8 billion (almost $700 million) in loans, about half of which will go to expand company hubs in Isando and Bredell in Gauteng Province, and in Cape Town. The company says the projects will sync with its long-term ESG goals and “put sustainability first, minimize water consumption, reduce water consumption, and minimize (overall) environmental impact.”

Teraco cited growing demand by enterprises and cloud providers in acquiring and targeting the funding. “Organizations working to accelerate their digital transformation use Teraco to dynamically scale their IT infrastructure, adopt hybrid multi-cloud architectures, and interconnect with strategic business partners within the Platform Teraco ecosystem of global and local clients,” according to the company.

The loan is syndicated and led by South African financial-services group, led Absa (originally known as the Amalgamated Banks of South Africa).

Recent Economic Decline
South Africa has experienced some economic calamity over the past five years, with the Rand losing 30% of its value against the US dollar, along with per capita income. The former economic leader in Africa has also fallen well behind Nigeria in the size of its overall economy.

South Africa sits in the middle of the pack among 37 African nations covered in the IDCA EESG Digital Readiness Index of Nations. It has the highest level of income disparity in the world, and faces formidable environmental challenges. Its GHG emissions are equal to the rest of the continent combined. Its economic efficiency in producing emissions is lower than all but four nations among the index's 147 nations.

Strong Digital Foundation
Better news is found in the country's existing digital infrastructure, which features the continent's strongest mobile environment, third-fastest average bandwidth (trailing Kenya and Rwanda), and by far the strongest server infrastructure.

South Africa's server and data center industry has traditionally been propelled by the financial services and government activities in the Johannesburg-to-Pretoria corridor, with traditional strength in Cape Town as well. Its server infrastructure is at least a couple of magnitudes higher than the rest of Africa, on a par with that of Russia and other Central and Eastern European nations.

The EESG rankings are not a competition, but rather, a way to focus on each country's relative strengths and development areas and priorities. The planned Teraco developments will provide a foundation for improvement in South Africa's digital readiness and the improved prospects that go with it.

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