By Martin Ekpeke
The call for data hosting in Nigeria is primarily propelled by factors such as digitalization, advancements in technology, the presence of major operators, internet penetration and government initiatives in Nigeria, where its data centre market stands out as one of the fastest-growing in Africa.
Federal government agencies like the Nigeria Data Protection Commission (NDPC) and the National Information Technology Development Agency (NITDA) have advocated for data domestication, emphasizing the importance of keeping data within the country’s borders. This push is contributing to a growing awareness among stakeholders regarding the benefits of leveraging local data centres for various purposes.
However, there are challenges such as power and connectivity. To overcome these challenges and unlock the benefits of data domestication, Nigeria can adopt a multi-pronged approach, which includes the following:
- Government Leadership: The government needs to play a proactive role by enacting data residency regulations, investing in data infrastructure, and providing incentives for data localization. Public-private partnerships can be instrumental in driving these initiatives.
- Infrastructure Development: Investments in reliable power grids, high-bandwidth internet connectivity, and secure data centers are crucial. Exploring alternative energy sources and fostering innovation in data storage technologies can contribute to a sustainable data infrastructure.
- Education and Training: Nigeria needs to prioritize STEM education and develop specialized training programs in data science, cybersecurity, and data center management. Collaborations with universities, tech companies, and international institutions can accelerate skill development.
- Incentivizing Data Localization: The government can offer tax breaks, subsidies, and other incentives to businesses that store and process data locally. This will encourage data repatriation and investment in domestic data infrastructure.
- Harmonization with Regional Regulations: Nigeria should work with regional partners like the Economic Community of West African States (ECOWAS) to develop harmonized data governance frameworks that facilitate cross-border data flows within the region.
- Public Awareness: Building public awareness about the benefits of data domestication is essential. Educating citizens about data privacy rights and the importance of data security will foster trust and encourage wider participation in the digital economy.
Essentially, data is hosted in Data Centers. A search on Google indicates that Nigeria has eleven data centers. One is in Abuja, while the remaining ten are located in Lagos.
This shouldn’t be the case. As Dr. Krishnan Ranganath, Regional Executive West Africa at Africa Data Centres (ADC) rightly put it: “Theoretically, based on geography, Nigeria would ideally require two data centres in each state – one primary and one secondary – totaling 74 data centres across all states and the Federal Capital Territory (FCT).”
He however posed a rhetorical question, Is this commercially viable for any investor?
According to Dr. Krishnan, deploying an edge-type model in key cities could offer a solution to this challenge of data hosting in Nigeria. He explained that such an approach would involve setting up smaller data centres capable of accommodating 25 to 50 racks at a low-cost model. Thus, making the investment more feasible for operators.
According to a report by Research and Markets titled “Nigeria Data Centre Market Outlook to 2027,” the Nigerian Data Centre market reached an estimated value of $131.6 million in 2022. By 2027, it is projected to experience a remarkable 220% growth, reaching a valuation of $288.8 million. This substantial expansion is attributed to the introduction of 5G technologies and the increasing internet penetration in Nigeria.
The growth potential highlighted in this report, coupled with the overall expansion of the ICT sector in the country, indicates a lucrative opportunity that has captured the attention of global players seeking investments in Nigeria.
Key global players such as Equinix, Digital Realty, Africa Data Centres, and Open Access Data Centre have outlined plans for significant investments in the country. Beyond Foreign Direct Investments (FDI), these ventures also generate direct and indirect employment opportunities. It’s worth noting the contributions of regional and local Data Centre operators such as 21st Century and Galaxy Backbone, who also play a substantial role in enhancing the Data Centre ecosystem in Nigeria.