African AI Startups Face Risks from Cloud Dependence

Oluwaseyi Ayodeji, a senior programme leader in AI and cloud infrastructure and founder of Regal Stack, stated that African AI startups are at risk from their dependence on cloud computing providers. He explained that while renting computing capacity is common, it exposes startups to the terms set by these providers.

Ayodeji noted that nearly all African startups rely on rented infrastructure, as owning it involves significant costs, estimated between $600,000 and over $10 million for a single megawatt of AI-ready capacity in Africa. He advised investors to assess how much of a startup's computing expenditure is concentrated with one provider, as this can give the provider leverage over costs.

Ayodeji also recommended that investors inquire about the percentage of computing spend with a single vendor and the impact of a potential 20% price increase. His comments come as Nigeria aims to enhance its domestic cloud infrastructure, with 25 data-centre facilities, making it Africa's second-largest market by facility count.