South Africa’s economy shrank again in the second quarter of 2026 – down 0.2%, after growing 0.4% in the first. Mining, manufacturing and trade all fell. That is the backdrop against which the country is now arguing about data centres and artificial intelligence, and it is worth asking whether the argument matches the moment.
South Africa already hosts about 70% of Africa’s data centre capacity, with Amazon, Microsoft and Equinix all expanding locally. That means investment, construction jobs, technical jobs and tax revenue. AI, already built into everyday tools from fraud checks to farming advice, adds a further layer of opportunity. SA’s AI market was worth $3.18 billion in 2024 and could reach $8.74 billion by 2030, according to GSMA. PwC puts the potential upside at six percentage points of GDP by 2035. Globally, data centre and AI investment drove roughly 80% of US private-demand growth in early 2025, a sense of how large this prize actually is.
None of this is to say concerns about water and power use are illegitimate. But legitimate scrutiny of resource use is not the same thing as reflexive opposition to investment, and treating every application as suspect by default is its own kind of dogma.
A country where 42% of people are without work cannot afford to treat every large investment as an elite argument about principle, conducted mostly among people who already have jobs, about whether other people should get them. That risk is real, and it is worth naming plainly.
That is not an argument for waving through every project without scrutiny. It is an argument for balance: transparent conditions on water and power use, clear disclosure requirements, and a genuine stake for South Africa in the value being created, not a blanket brake on investment the economy cannot spare.
Business, for its part, needs to make that case loudly and directly, not leave it to government alone. If data centres and AI are genuinely the growth opportunity the numbers suggest, industry cannot expect the state to defend that case while staying quiet itself on the conditions it is willing to meet. The alternative is a standoff between developers who won’t disclose and campaigners who won’t engage. That serves nobody, least of all the 42% of South Africans waiting for the jobs this investment could bring.
The question is not whether data centres are coming. It is whether South Africa negotiates the terms now, while it still has leverage, or loses the investment the country so desperately needs to lift millions of South Africans out of poverty.
– Sashni Pather
Account Manager