New Opportunities are driving massive inflow of investment by international investors into Nigeria data centre market. Additional funding is expected as the largely underexplored market picks in terms of patronage and policy support, says CEO of Medallion Data Centres Limited, Ike Nnamani to IT Edge News in Lagos.
The company recently announced being part of a new portfolio of $500 million investments into data centre operations across Africa by Digital Realty, a global provider of cloud and carrier-neutral data centre services.
A huge part of that investment came into the Nigerian company and underscored its brand transition from Medallion Communications Limited to Medallion Data Centres Limited.
“It is true datacenter business is capital intensive but the current transactions noticed in the space are not because the home-based organizations are struggling financially but because the international datacenter operators have seen the massive opportunity that exist in the country and want to be part of it,” says Nnamani.
He adds: “Nigeria is rated the next market for massive datacenter services growth and this is attracting global datacenter operators and it is good for the country. Although datacenter services performance in Nigeria is currently below that of South Africa, the Number 1 datacenter market in Africa, the Nigeria market is projected to top that of South Africa over the next 10 years as activities in the datacenter space picks up. Not only is this good for the country from an investment standpoint since it will increase the foreign direct investment into the country, it will also lead to development of local expertise in the space and promote the digital economy”
As the report by the “Nigeria Data Center Market – Investment Analysis & Growth Opportunities 2021-2026” shows, Nigeria data center market is expected to grow at a CAGR of 17% during 2021-2026.
The market is still largely green. “Over 90% of Nigeria’s data is still hosted abroad. Many government ministries, departments, and agencies (MDAs) in Nigeria host their data outside the country. Improved digital infrastructure and connectivity will increase the demand in the country, leading to further growth of data centers” notes the GlobeNewswire in its commentary on the “Nigeria Data Center Market – Investment Analysis & Growth Opportunities 2021-2026” by Research and Markets.
Nnamani believes a mix of factors that include the Covid-19 pandemic, technology and foreign exchanges dynamics, all have connived to boost the patronage for the local data centres.
Hear him: “During the lockdown that resulted from Covid-19 pandemic when several countries shut down operations, getting support from foreign locations was difficult as most countries focused support on their regions. This was a major challenge for Nigerian businesses as support was not readily available. Several local companies could not get support for their datacenter hosting operations during this time. Only those companies in Nigeria that were hosting their data locally got adequate support and this is indication that local hosting remains the way to go for efficient service delivery.
“Fourthly, as the exchange rate fluctuates and the Naira depreciates, it is becoming difficult to pay for datacenter services outside the country than paying in Naira to a Nigerian based datacenter.”
The Medallion’s boss is supported by the market insights of Research and Markets noting: “The data center market in Nigeria is among the fastest-growing markets in Africa. The Nigeria data center market investments are majorly driven by factors such as digitalization, advanced technologies, the presence of major operators, internet penetration, and government initiatives. The COVID-19 pandemic has been a strong market enabler for several digitization initiatives across Nigeria.”