Microsoft says AI could add $136 billion to Africa if data can move freely

Artificial intelligence (AI) could add as much as $136 billion in productivity gains across Africa, according to Microsoft. Unlocking that value, however, depends on whether countries can enable the secure, seamless flow of data across their borders.

“We only have about 1%or 2% of global compute power in Africa,” Akua Gyekye, Government Affairs Director for Microsoft Africa, told TechCabal in an interview on Wednesday.“If we’re serious about diffusing AI across the continent, we need infrastructure. But we also need the right policy environment.”

AI systems demand enormous computing power, yet Africa controls less than 1% of global capacity. With limited access to hyperscale infrastructure, researchers, startups, and governments struggle to deploy advanced AI tools at scale.

In response, African governments have repeatedly called on global cloud providers such as Microsoft to build local data centres. As of mid-2025, Africa has 223 data centres across 38 countries, less than 0.02% of the world’s total of more than 11,800. 

Microsoft was the first massive-scale cloud operator to launch local data centres in Africa (2019). These are organised into two primary regions: South Africa North (Johannesburg) and South Africa West (Cape Town). 

But Gyekye argues that a purely national approach may not be economically viable or strategically sound.

“A regional approach often makes more sense,” she said. “If you build a data centre in Nigeria, how can the rest of West Africa benefit? If you build in South Africa, how do neighbouring countries plug in?”

Microsoft’s existing South African cloud regions already serve customers across Southern Africa, raising a broader policy question on whether other African countries allow their citizens’ data to reside in neighbouring jurisdictions while still enforcing their own data-protection laws. 

That is where the conversation shifts from infrastructure to sovereignty.

Data sovereignty vs. data silos

Over the past decade, Africa has seen a rapid surge in data-protection regulation. In 2012, only 12 countries had data-protection laws; at least 46 have now enacted legislation or regulatory frameworks, and more than 40 now operate dedicated Data Protection Authorities. The African Union’s Convention on Cyber Security and Personal Data Protection, which came into force in 2023, has helped speed up alignment efforts across regional blocs.

Enforcement has also intensified. Regulators in countries such as Nigeria, South Africa and Kenya are issuing record fines and, in some cases, criminal penalties for violations. 

In July 2024, the Federal Competition and Consumer Protection Commission (FCCPC), in a landmark joint action with the Nigeria Data Protection Commission, fined Meta $220 million for “intrusive” data practices, unauthorised data sharing, and abusing its market dominance. 

In late 2023 and again in 2025, Kenya’s Office of the Data Protection Commissioner (ODPC) fined several digital lenders between KES 2 million ($15,500) and KES 5 million ($38,760) for “shaming” borrowers by contacting their phone contacts without permission.

Yet Gyekye warned that well-intentioned sovereignty policies can create data silos.

“Some governments feel data is safest when it is physically within their borders,” she said. “But cybersecurity threats don’t respect borders. In many cases, cloud providers can offer higher levels of protection than local hosting.”

The issue, she argued, is not about weakening sovereignty but about modernising it. If a country’s laws can travel with its data, enforced through contractual, technical and regulatory safeguards, then physical location becomes less critical.

In Ethiopia,  strict localisation requirements mandate that certain data be stored on local servers. While such measures aim to protect citizens, they also complicate regional expansion for banks, fintech startups and e-commerce firms seeking to scale across East Africa. 

Safaricom’s expansion into Ethiopia illustrates how differing national data rules complicate the “super-app” model. To launch M-Pesa, the company had to comply with Ethiopia’s strict local data-processing requirements, different from the provisions of Kenya’s Data Protection Act of 2019.

“Data silos don’t just affect Microsoft,” Gyekye noted. “They impact regional banks, small and medium enterprises, and startups that aim to expand beyond a single market.”

The African Continental Free Trade Area (AfCFTA) is designed to promote cross-border collaboration, with the African Union estimating it could boost intra-African trade by over 50%. Yet, digital trade, payments, logistics, e-commerce, and AI-driven services all depend on the seamless movement of data across borders.

“Without cross-border data collaboration, the promise of AfCFTA cannot be fully realised,” Gyekye said.

She argued that harmonisation does not require identical laws across all 54 countries. Instead, interoperability and mutual recognition frameworks could allow data to flow securely between jurisdictions with comparable standards.

“There isn’t a one-size-fits-all model,” she said. “Countries can maintain their sovereignty and self-determination. But there must be pathways for data to move.”

The sovereign cloud model

To bridge the gap between sovereignty and scale, Microsoft is advocating a “sovereign cloud” model, which allows data to be hosted outside a country’s physical borders while remaining subject to that country’s laws and regulatory controls.

In practice, this often involves encryption safeguards, local key management, strict access controls, and contractual guarantees ensuring that only authorised entities can access sensitive information. For example, a major South African tier-one bank such as Standard Bank or FirstRand may run large-scale data workloads on Microsoft Azure while relying on Thales CipherTrust to manage encryption keys locally.

“The question becomes: who holds the keys?” Gyekye explains. “Not Microsoft. The customer or the government.”

The approach reflects a broader industry trend toward modular cloud architectures. Sensitive personal data may remain locally stored, while anonymised or aggregated data can be processed regionally or globally for analytics and AI training. 

Amazon Web Services (AWS) uses a modular approach called AWS Outposts, which brings cloud hardware into the customer’s data centre. In January 2026, AWS announced the expansion of its 2nd-generation Outposts racks to Nigeria, Morocco, and Senegal.

For policymakers, the model offers a compromise: maintain legal oversight while accessing larger pools of compute power.

Still, Gyekye insists that infrastructure alone will not unlock Africa’s AI dividend.

Microsoft’s strategy on the continent also focuses heavily on skills development and connectivity. Through its Airband initiative, a global program aimed at expanding internet access to underserved and rural communities, the tech giant says it has connected more than 117 million Africans to broadband, surpassing its initial targets. It is also investing in AI skilling programmes for students, developers and policymakers.

“Technology is just a tool,” she said. “If people don’t know how to use it, or don’t trust it, the economic benefits won’t materialise.”

Language accessibility remains a significant barrier to AI adoption. On February 4, 2026, Microsoft unveiled expanded AI capabilities in 39 African languages through Paza—Swahili for “to project” or “to raise your voice.” The initiative aims to close the “AI divide” by ensuring that AI tools are locally relevant and usable.

“If AI doesn’t speak your language, you won’t use it,” Gyekye noted.

Big Tech and the African agency

Concerns remain that the deep involvement of global technology firms could weaken African digital sovereignty. Much of this worry stems from the power imbalance between trillion-dollar multinational companies and developing digital economies. 

The U.S. CLOUD Act allows American authorities to compel U.S.-based tech companies to hand over data they control, even if that data is stored abroad. In practice, this means a Nigerian citizen’s information held in a Lagos data centre operated by a U.S. firm could, in theory, be accessed by Washington without the Nigerian government’s approval.

Gyekye acknowledges the concern but emphasises multi-stakeholder governance.

When Kenya launched its national AI strategy in  March 2025 at the Kenyatta International Convention Centre in Nairobi, she said, it invited local startups, researchers, civil society groups and international companies, including Microsoft, to the decision-making process where these groups helped define the six key pillars of the strategy.

“You can’t regulate what you don’t understand,” she said. “Governments must lead, but they need input from industry, academia and civil society.”

In her view, it is African governments, rather than foreign firms, that must set the direction because they have the deepest understanding of how these decisions affect their people.

“It has to be government-led,” she said. “Only governments know the specific priorities of their citizens.”

The $136 billion question

If Africa can align infrastructure, governance and skills, Microsoft’s estimate of $136 billion in productivity gains may prove conservative. AI applications in agriculture, healthcare, logistics and education could dramatically improve efficiency and inclusion.

Imagine satellite data helping farmers predict crop yields across East Africa. Or AI-powered diagnostics supporting overstretched rural clinics. Or cross-border fintech platforms scaling seamlessly under AfCFTA rules.

But if restrictive data localisation rules proliferate without interoperability mechanisms, the continent risks fragmentation. The result could be duplicated infrastructure, higher costs and slower innovation.

For Gyekye, success would mean removing unnecessary data silos while respecting national sovereignty.

“Data can flow, keeping sovereignty top of mind,” she said. “That’s how we build digital economies that benefit everyone, from small businesses to multinationals, from policymakers to the man on the street.”