Amazon pledges further R30bn SA investment as group cloud computing growth slows

Amazon’s cloud service, Amazon Web Services (AWS), has announced plans to invest a further R30.4-billion in its cloud infrastructure in South Africa by 2029. It has already invested R15.6-billion in the country.

In a new economic impact study outlining Amazon’s investment in its AWS Africa (Cape Town) region since 2018, the group estimates its total investment of R46-billion between 2018 and 2029 will add at least R80-billion in gross domestic product to the South African economy. It will also help to support about 5,700 full-time equivalent (FTE) jobs at local vendors each year.

The FTE jobs are supported across the data centre supply chain, such as telecommunications, non-residential construction, electricity generation, facilities maintenance and data centre operations.

AWS provides cloud computing – or on-demand delivery of IT resources over the internet – which allows customers to access computing power, data storage and other services with pay-as-you-go pricing, as opposed to the traditional contract-based IT model.

Many of South Africa’s public sector institutions make use of AWS.

GovChat, SA’s largest citizen-government engagement platform, provides a conversational interface that integrates voice and text into applications and provides a unified platform that citizens can use to connect with the government. 

Wits University, SA’s largest research university, has adopted a cloud-first approach to its IT strategy, using technology to enhance all its core processes. 

Other AWS clients include Absa, Investec, Medscheme, MiX Telematics, Old Mutual Limited, Pick n Pay, Standard Bank, Pineapple and Travelstart.

Amazon is also steaming ahead with its retail marketplace in South Africa, with an expected launch towards the end of the year.

On 28 April 2023, Bloomberg reported that Amazon had warned that growth in its cloud computing business was continuing to cool.  

AWS revenue rose 16% to $21.4-billion in the first quarter, as Amazon reported stronger-than-expected profits and sales in the period.

Last week, Amazon executives jolted investors by admitting that sales growth in the cloud computing unit had slowed. Some analysts have speculated that as companies seek to trim technology costs, AWS growth could sink to single digits, according to the report.

Amazon’s chief financial officer, Brian Olsavsky, told reporters that AWS was less profitable now than it was a year ago, partly owing to discounts offered in exchange for longer-term contracts. BM/DM