Egypt is undertaking strategic initiatives to achieve its goals of localizing the data center industry and positioning itself as a regional hub for data transfer, leveraging its strategic location to dominate this vital sector. The country’s national strategy in this regard includes increasing the number of data centers by attracting more investments and global data center operators, maximizing the benefits of 17 submarine cables passing through Egypt, which carry 90% of data traffic between the East and West. Additionally, Egypt has entered into major international alliances to establish five new submarine cables.
Efforts Pay Off
This transformation has driven the strategic vision for the industry, leading to the announcement of several high-quality data centers across the public and private sectors in recent years. Most recently, Spanish World Health Management company announced the establishment of a medical data center in Egypt to serve the Arab region, with investments totaling $1.8 billion.
This follows other strategic steps, including President Abdel Fattah El-Sisi’s inauguration of the Government Data and Cloud Computing Center in Ain Sokhna last year, the National Data Center, and the Data Exchange Center in collaboration with over 30 global specialized companies. The government also signed a land agreement to establish the Kemet Data Center in the Suez Canal Economic Zone at a cost of $1 billion, aimed at providing cloud solutions, Internet of Things (IoT), and digital transformation services.
Meanwhile, the second version of Egypt’s National Artificial Intelligence (AI) Strategy, issued last month, reflects the government’s determination to transform the country into a regional hub for advanced data centers. This initiative is part of efforts to develop AI infrastructure and provide hosting and cloud computing services, especially as Egypt accelerates its digital transformation.
The Fastest Growth in Africa
Egypt’s data center sector is experiencing the fastest growth in Africa, with a projected compound annual growth rate (CAGR) of over 12% until 2025, compared to a global average of 6.4%. The market value is expected to reach $745.6 million by 2033, up from $297.8 million in 2023. Data centers are the backbone of the digital economy, contributing approximately 15% of global GDP, according to World Bank data. This sector is expected to contribute around 30% of global GDP by 2030, creating 30 million job opportunities.
Experts emphasize that the positive outlook for this industry is well-founded, given Egypt’s strategic location, which is traversed by numerous submarine cables connecting the Middle East, Africa, and Europe. Recent digital transformation initiatives, supported by a skilled workforce and the adoption of cloud solutions by public and private institutions, further enhance Egypt’s appeal. Additionally, the anticipated increase in AI-driven applications, big data analytics, and IoT in the government sector is expected to attract international data center investments, making their entry into the Egyptian market inevitable.
Experts also highlight the need for innovative incentives to speed up Egypt’s transformation into a regional data hub, such as tax and investment privileges for major companies. They also stress the importance of addressing energy consumption challenges by expanding the use of renewable energy to power data centers, making them more sustainable and competitive. Egypt has become an attractive destination for green data centers due to its numerous renewable energy and green technology projects, which offer a lower carbon footprint compared to traditional data centers.
Key Drivers
The rapid growth of Egypt’s data center sector is attributed to several factors, including the steady increase in data demand, driven by the growing reliance on digital technology across various sectors. This has led to a surge in demand for data storage and processing capacity. The Egyptian government is also working to create an attractive investment environment for the IT sector, encouraging companies to invest in data centers. The Egyptian market benefits from advanced telecommunications infrastructure, facilitating the establishment and operation of data centers.
The data center sector in Egypt is expected to continue growing in the coming years, driven by accelerated digital transformation and increased investments in the sector. The emergence of new technologies such as AI and IoT is also expected to open new avenues for growth.
Regional Data Transfer Hub
IT expert Mohamed Elharti stated that Egypt is striving to solidify its position as a regional data transfer hub, supported by major investments such as the $1.8 billion medical data center project by Spanish company World Health Management. He emphasized Egypt’s strong qualifications, including its strategic geographic location, expansion of fiber-optic cables, and growing digital economy.
However, the expert noted that challenges remain, such as high energy costs, the need to strengthen data protection laws, and strong competition from Gulf countries offering attractive investment incentives. To accelerate Egypt’s transformation into a regional data hub, Elharti stressed the importance of stimulating investment through tax and investment privileges for major companies, as well as addressing energy consumption challenges by expanding renewable energy use for data centers, making them more sustainable and competitive.
He also suggested that Egypt could enhance its position by establishing sector-specific data centers for finance, healthcare, and e-commerce, rather than relying solely on large-scale data centers. Additionally, he emphasized the importance of developing local skills through specialized training programs and fostering partnerships with global companies to transfer technology and expertise.
Consistent With Egypt Vision 2030
Ashraf Darwish, a communications professor at Helwan University, highlighted the importance of Egypt’s recent moves to establish data centers, which align with the country’s Vision 2030 and its digital transformation goals.
He noted that these centers support decision-making in various fields, such as healthcare, and improve government performance. Darwish also emphasized the need for significant investments in these centers and called for creating an attractive environment for major companies to invest, alongside supporting private sector collaboration with the government.
Adoption of AI
In the same vein, Hamdy Ellaithy , CEO of Linatel for Telecommunications, pointed out that data centers are at the forefront of global technological innovation, driven by the expanding adoption of AI across economic and service sectors.
He highlighted the massive opportunities and challenges posed by the energy consumption of these centers, stressing the need for sustainable solutions. Ellaithy also emphasized the importance of partnerships between local, regional, and global companies, as well as government incentives, to position Egypt as a regional data center hub.
He noted that Egypt’s investment in data centers since 2018 has seen significant expansion, supported by a strategic vision and strong government backing, reinforcing its position as a regional leader in this industry.
