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Nigeria set to attract over $600 million investments through data centers – Ayotunde Coker 

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Ayotunde Coker

Despite the unresolved issue of power that could be a major setback for this type of business, Nigeria has in recent years witnessed a flurry of activities in the data centre space. Different companies, mostly foreign, have announced commitments to build data centre facilities in the country while a number of them are already in operation. 

In this interview with ThePressNG, the Chief Executive Officer of Open Access Data Centers (OADC), Dr. Ayotunde Coker delves into the economy of this business, its expected impacts on the Nigerian economy and why investors are interested in setting up such facilities in in the country. 

Coker also speaks on the strategic shift towards local data hosting, spurred by the availability of hyperscale data centres and the increasing enforcement of data sovereignty laws. This shift is expected to bring back data workloads to Africa from Europe, a move also motivated by the limited space and resources in European data centres. Excerpts:

Ayotunde Coker: Well, it shows that Nigeria has a good geophysical location coupled with scale. Nigeria has half the latency between South Africa and Europe, and the country has a 220 million population. Lagos alone has about 23 million population, and Lagos itself is sort of the fifth-largest economy in Africa. 

The content we produce is significant. We have an increasing broadband penetration which is over 40% now according to NCC’s statistics.

You might think oh, some countries have 60, 70%, but over 40% is a lot, that’s about 100 million people connected to broadband. That’s a lot of consumptive capacity. 

Also, we’re now seeing a significant decline in 2G connectivity, which is what the mobile operators started with. We are seeing an increase in 3G that gives some element of broadband capacity, but 4G significantly is now bringing what you’d call meaningful broadband to people, and also smartphone affordability is now becoming a key thing that is being addressed.  

So, combining all of these things, consumptive capacity is significant. And if you don’t build these data centers, you won’t take advantage of it, I mean the right type of data centers.

So, we are starting to see quite a few of these right types of data centers being built. 

ThePressNG: Can you put some value to what has been invested in data centers in Nigeria and what is likely to come based on the announcements made so far? 

Ayotunde Coker: Oh, it keeps growing because, you know, if you look at Rack Centre, right now, it’s 1.5 megawatts of IT load. And it’s building 12 megawatts, right? Typically, in a rough estimate, you can go with plus or minus, you can minus some percentage from it, but you can go upwards of many percentages from $10 million per megawatt. So, it’s a significant amount of investment. 

And also when you’re building out to capacity, there’s a lot of operational sort of costs that you also have to incur. So, you know, that’s a reference point. MainOne has also grown to about the same point. It’s about 2 megawatts to 2.5 megawatts before putting together the expansion. So do the math again, tens of millions. 

And then suddenly, we’re now having the hyperscales coming. Rack Centre is building I think about 12 megawatts. At OADC, we are building 24 megawatts in two stages of 12 megawatts, two buildings of 12 each. Airtel has now announced its own. Digital Realty has also announced its intent for a 10-megawatt capacity, African Data Centre as well. 

So, if you total that up, immediately you have tens of millions coming in. And then now we have Rack Centre 12, we are 24, that’s 36. Then you’ve got approximately another 15, that’s about 50 megawatts of capacity plus Digital Realty’s 10 megawatts, making 60 megawatts of capacity.

If you look at it as $10 million roughly per megawatt, that is $600 million, that would have come in by the time these facilities come into play fully over the next 18 to 36 months. 

That gives you a view of the potential of the investments that are coming into Lagos actually because these data centers are in Lagos.

Now there’s another statistic, research has shown that for every $10 million you put into data centers, the actual systemic benefit in the environment could be anything 50 times to 100 times.

Why? First of all, you pay for expensive professional services to do your design and all of that stuff. And then when you do that, you build so you have building companies that have contracts, and that feeds into people’s employment and all of that. 

You buy a lot of your mechanical and electrical from companies that would employ people even if you employ them, they would employ people.

And then you go live and you start operating, which means you’re connected to the power company and you are paying. People work for the power company, they’ll get the benefit of that because they’re growing. 

You have all your operational support staff well-paid people, middle class, and highly educated. And then you have your security staff and so on. So you can see where that sort of 50 to 100-fold comes from. 

Now if you say there’s $100 million being spent on a data center, say for 10 megawatts, that means you can get a billion-dollar impact on the economy. So, you can imagine the impact many data centers have on the Nigerian economy. 

You know, data centers underpin the digital world, the networks are sitting in a data center. The assets that provide the computing sit in a data center on top of the network. And then this builds fiber up to the point of use, or connectivity, and then drives the GDP growth. So it’s very, very systemic. 

 

Ayotunde Coker: Yes, once hyperscale data centers become available, those cloud companies will come with their equipment into Nigeria. If we didn’t have the scale of the capacity, they wouldn’t come. Once you have the mega-scale, then you start to see the shift in capacity that is coming back over here. 

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