Game On: Datacentre Revolution in Nigeria
It’s been about 20 years since the Telecoms (GSM) revolution which saw a major transformation in the Nigerian economy — all thanks to the then entrants. Today, nearly a generation after, we are seeing another major revolution in the Datacentre space in Nigeria albeit in its novel stages. The phenomenal increase in the adoption of smartphones, mobile subscriptions, social media and fintech apps have contributed in no small measure in fostering the dependence on internet services in Africa generally and Nigeria in particular. Although, in advanced economies, the drivers include but not limited to Internet Of Things (IoT) and Artificial Intelligence (A.I.) COVID-19 also necessitated significant online presence for most employees and companies.
Housing The Gamut of Information
According to Statista, there were 104m active internet users in Nigeria as at January 2021. As the demand for data continues to witness a geometric rise, providers are faced with a huge challenge to meet the demand without compromising quality of service. This of course requires a significant investment in infrastructure (real estate, fibre network, power, cooling and storage capacity). A datacentre provides an answer to the challenges of quality of service because it houses the gamut of information and makes access to data easier in an often secure, reliable and scalable manner.
Nigeria: The Destination Hub for Datacentre Investors
Most foreign IT investors who come to Africa, more often than not, pick South Africa as the first investment destination, then they run off to Kenya in the East to replicate their business model. Often, the third point of the investment triangle is Nigeria in the West Coast on account of economy size and population (but Ghana is currently stealing some gigs because of a more conducive investment climate and her proximity to Nigeria. Twitter and Google are good examples).
Between 2020 and 2021 alone, Nigeria saw four new entrants in the Datacentre space comprising established global and continental players. Three out of the four new entrants were brownfield acquisitions; only one was a greenfield investment. It’s no longer news that Actis acquired a majority stake in Rackcentre and are investing in a $250m datacentre platform; Equinix acquired MainOne for $320m and Digital Realty acquired a controlling interest in Medallion for $29m and pledged a $500m investment in the continent over a decade. Only Africa Datacentre (ADC) ploughed a fresh soil boasting a 10MW capacity. Equinix is the world’s largest provider of datacentre infrastructure; Digital Realty is second. Actis are no pushovers while ADC’s philosophy to keep Africa’s data in Africa and nowhere else makes them an enviable model and a formidable force to reckon with. All the players boast carrier and cloud neutrality.
In the wake of these developments, one is tempted to ask what these players see and what might be their strategic calculations in a country fraught with intractable challenges of insecurity, poverty, institutional policy somersaults yawning infrastructure gaps and a hazy economic and political climate? If, despite these very limiting circumstances, they still prefer to flood Nigeria, then there must be more than meets the eye.
The composite reality is that the Nigerian demographic has a resilient youth bulge who are talented and extremely resourceful. This demographic has the highest internet population in sub-saharan Africa. Added to this, is the explosive (figuratively) demand for internet services mainly due to COVID-19, fintech, edutech, insurtech, healthtech and agritech platforms etc. Thirdly, most Nigerian companies are now realizing the need to be lean and focussed on their areas of core competence. They understand that they need to re-think how they manage rising hardware and infrastructure costs and that a smart way to do so is to look to the cloud. It would therefore be safe to conclude that the datacentre entrants have seen a potential high growth market for data demand in the near to medium term and have assumed a strategic position in order to profit from a prime mover’s advantage.
According to Technext, Nigerians consume over 80 million gigabytes of data per month; second only to South Africa with 269 million gigabytes. Kenya and Ghana are a distant third and fourth with 22,400 gigabytes and 8,100 gigabytes respectively.
Furthermore, a 2020 global study of 85 countries conducted by Surfshark (a VPN and cyber security company) on the digital quality of life index ranked Nigeria as the 80th country with the slowest and least stable internet. This too is a very strong case in favour of the datacentre infrastructure providers.
Drawing A Parallel — The Game of 4’s
While not a numerologist, it is said that the numeral 4 symbolizes stability. If we believed this hypothesis, then it could be okay to draw an interesting parallel from the Nigerian Telco sector. During the era of GSM revolution in Nigeria, there were three prominent telcos — MTN, Airtel and Glo; then later a fourth — 9Mobile. Those four led the transformation from analogue to digital mobile communication. In the current Datacentre revolution era, the stage is set also with four major players — ADC, Digital Realty, Actis and Equinix. A scenario I reckon could be quite attractive to the hyperscalers (the big techs). These four players hopefully, would lead the charge in transforming data connectivity experience and content provisioning in Nigeria; thus ushering a new era of IT inclusion and digital connectivity where no Nigerian (or indeed African) is left behind.
Comments are welcome!
