Foreign capital floods South Africa's data centre boom; human rights probe questions who b

Billions of rand in foreign capital have flowed into Johannesburg and Cape Town’s data centre market, making South Africa the continent’s leading destination for this class of infrastructure investment. Now, a formal inquiry by the South African Human Rights Commission is forcing a reckoning over who pays the costs and who captures the returns.

The commission’s inquiry has crystallized a sharp disagreement between technology industry representatives and civil society organizations. At its core: whether the electricity and water consumed by data centres is effectively subsidised by the public, with economic gains concentrated among a small group of predominantly foreign-owned operators.

The Climate Justice Coalition, representing more than 80 civil society, labour and community organizations, argues that “profit accumulation must not be prioritised over the human rights and dignity of people.” The coalition’s submission contends that as data centres expand globally, driven by pressure on artificial intelligence companies to demonstrate profitability and utility, the financial benefits flow to a concentrated elite while host communities absorb the environmental burden.

The numbers are significant. Electricity consumption for data centres is projected to double by 2030, or triple for facilities focused on artificial intelligence. The CJC argues that data centres frequently do not pay the full cost of electricity, shifting that burden to local residents through higher prices. South Africa currently hosts approximately 55 data centres, with about 10 more planned across multiple cities.

The African Centre for Biodiversity takes a broader view of the infrastructure footprint. Rather than assessing data centres as individual buildings, the ACB argues they should be evaluated as part of an extended supply chain: on-site renewable energy projects, power-purchase agreements, wheeling arrangements, grid connections, backup systems, land-use approvals, water implications, electronic waste streams, data governance and corporate ownership structures. Communities already experiencing unreliable municipal services, the ACB warns, could absorb environmental costs while economic benefits accrue disproportionately to multinational technology companies and wealthier consumers.

The Internet Service Providers’ Association pushes back hard. ISPA rejects what it characterises as misinformation about data centre impacts, arguing the facilities represent essential infrastructure for a modern economy and are not responsible for South Africa’s electricity constraints. The association’s position is that Eskom’s central problem is not excessive demand but declining electricity consumption caused by deindustrialisation and rapid private solar adoption. ISPA also cautions against importing concerns from markets such as the United States and Ireland without accounting for local circumstances, noting that all South Africans rely on data centres for communications, bank transactions and government services.

Meanwhile, the Association for Computing Machinery has staked out a middle position. The ACM acknowledges that data centres are critical to South Africa’s digital transformation and artificial intelligence ambitions, but questions whether publicly shared resources such as electricity and water should effectively subsidise private infrastructure when some of the value generated could ultimately flow offshore. The organisation has proposed a “digital inclusion dividend,” under which major data centre projects would be required to deliver measurable benefits to ordinary South Africans, including community networks, affordable connectivity programmes, skills development, local procurement and access to computing capacity for universities, researchers and small businesses. The ACM has separately raised concerns about data sovereignty and privacy implications of concentrated foreign ownership of critical digital infrastructure.

The ownership question is not unique to South Africa. In the United States, rapid expansion of artificial intelligence data centres has triggered community opposition focused on electricity consumption, water use and environmental effects, with surveys showing rising resistance to new facilities and state governments introducing greater scrutiny of proposed projects.

For investors and operators already committed to the South African market, the inquiry’s outcome matters. The country’s position as a preferred continental destination for data centre capital depends partly on regulatory predictability. Whether the commission’s process produces binding requirements, voluntary frameworks or simply a clearer public record of competing claims, the terms on which future projects are approved and priced could shift. The question of who ultimately funds the infrastructure costs, and who books the returns, remains open.