Data centres are getting investments both locally and internationally because of the increase in demand for services they offer as well as Nigeria’s huge market size, experts say.
Between the months of January to April 2022, over five Data centres were launched in Nigeria by companies including Airtel, MainOne, Kasi and others.
A Data Centre is a facility that centralizes organisations shared IT operations and equipment for the purpose of storing, processing and disseminating data and applications.
Citing research conducted by Arizton Advisory and Intelligence, Nigeria Data Centre Market Size by Investment is expected to reach $218 Million by 2026.
The research shows that Data Centres will grow at a Compound Annual Growth Rate (CAGR) of 17 per cent during the period.
BusinessDay reached out to experts and they gave reasons behind the increased launch of Data Centres in the Nigerian market.
Ayotunde Coker, the Managing Director of Rack Centre, pointed out that Nigeria has the most resources necessary for the establishment, ranging from population to connectivity, among others.
“Nigeria has some fundamentals that suit the growth of data centres. The internet-connected population is over 150 million, MSME population of over 40 million and growing average broadband penetration of over 45 percent. These are fundamental to driving growth in consumption of content and cloud services which required data centres located with proximity to the point of use, reducing latency and improved user experience of consuming internet services,” Coker said
The MD also explained that Nigeria is one of the best-served locations by undersea cables on the Atlantic coast of Africa and a great geophysical location to connect to Europe and the USA.
“The arrival of the Equiano cables only reinforces that increase in demand for these services increases demand for data centre space. There has been a sea change in attitudes as corporates no longer build data centres, but colocate their IT assets with high-quality data centres and with the growth of availability of cloud services, are adopting hybrid own IT and cloud solutions,” he said.
He disclosed that Lagos in particular is about the 5th or 6th largest GDP in Africa and the key landing point for undersea cables with a very high broadband penetration of over 70 per cent and over 20m population which is driving increased investment.
Funke Opeke, the CEO of MainOne explained that the growing demand for Data services is primarily responsible for the establishment of more data centres in Nigeria.
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“As more Nigerians access the internet with smartphones and faster networks and use more cloud applications, the need to house data in a secured and reliable environment with minimal latency is what is attracting investment in the Nigeria data Centre industry,” Funke said.
The CEO disclosed that MainOne, who recently launched a new expansion of their Data centre, recognizes the potential of Nigeria to become a digital infrastructure hub, which informed their decision to pioneer the first private open-access submarine cable launch and build an extensive Data Center ecosystem, in West Africa.
However, she stated that MainOne as an Equinix company will connect its data centres to the Equinix fabric of Interconnected Data Centers for greater integration of West Africa into the global economy.
Meanwhile, Coker noted that Data centres are significant to economic activities and GDP growth of Nigeria. He said, “Studies have shown that for every $10m spent on data centre development economic impact can be $30m to $100m economic impact given the impact of initial capital spent on construction, and ongoing operational expenditures. Each 10 percent increase in broadband penetration has also been proven to add up to 2.5 percent to GDP growth, given efficiency impacts on the surrounding economy.”
On the side of the Data centres being launched majorly in Lagos, the Rack Centre MD explained that the Lagos economic fundamentals are significant and compelling, underpinned by its location at the coast to undersea cables, adding that It will be the anchor point for data centre capacity.
Similarly, he stated that there will be increased growth of data centres at other key locations in economic concentrations in the country, to support expected growth from 5G penetration, and location of services close to point of consumption.
He disclosed that the Government doesn’t have more direct participation in Data centre investment, as long as indirect policies that continue to improve ease of doing business, growth of broadband and telecommunications penetration and policies that drive local and international investment are established.
Coker added that most of the Data Centres are launched by Nigerian companies, adding that there have been increasing international investors and global companies investing in the industry for over three years.
“Some are actually a mix of international and local investors. Actis Colo West Africa investment platform is invested in Rack Centre, in conjunction with Jagal a highly respected Nigerian conglomerate holding. We have seen foreign investment from Digital Realty Trust in Medallion, and Equinix in Main One, companies with original Nigeria investors. This sends an excellent signal about the potential of the market. Other local and international investors will come. We have seen WIOCC and Kasi Cloud with recent announcements,” he said.
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