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Nigeria: Data centre market is growing

Arizton Advisory and Intelligence’s report into the Nigeria data centre market suggests the market size is expected to grow a compound annual growth rate of more than 17% over the period 2020 to 2026.

According to the report, Nigeria is hosting one of Africa’s fastest-growing data centre markets. The growth in population and internet users, rise in digitalisation and government initiatives driving such opportunities all contribute to the rise of the sector.

Key drivers and tends fueling market growth include: big data and an IoT surge fueling data centre demand; a rise in submarine cable deployment; growing procurement of renewable energy; and smart city initiatives and government support driving data centre growth.

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Capital city Lagos is a major data centre hub, with ten data centre facilities. Low labour and land costs and the increased adoption of advanced technology makes the city an attractive investment location.

West African neutral data centre operator Rack Centre is expanding its capacity to 13MW of IT power capacity on its Lagos campus; MainOne’s data centre is also in the process of expanding; 21st Century Technology is building an edge hyperscale data centre with future build-outs planned in Apapa, Ikoyi, Victoria Island, Maryland and Ikeja; new entrant Africa Data Centres is building a facility in Lagos; and Teraco Data Environments has announced plans to enter the Nigeria market.

Tapping into renewable energy for own generation could affect data centre growth

The report suggest migration from on-premise data centres in Nigeria to cloud and colocation data centres is expected during the forecast period, with a higher dependency on managed service offerings compared to stand-alone colocation.

In Nigeria, cloud-based services, IoT, and AI coupled with the adoption of high-power computing servers are the major driving factors for the growth of data centers. Mission-critical and high-performance server systems are likely to dominate the market owing to the increase in 5G deployment and IoT related technology.

The National Information Technology Development Agency (NITDA) has released the Nigeria Cloud Computing Policy (NCCP) with the goal of achieving around 30% increase in the cloud adoption by 2024. The revenue from public cloud expects to cross over $400 million in 2021, which is likely to reach over $1.5 billion by 2026.

Nigeria’s strategic location is beneficial for the generation of renewable energy, especially solar power. By 2025, electricity generated from renewables is expected to form 10% of the overall electricity generated in Nigeria.

Power instability across Nigeria means most companies have some form of diesel generation backup. While data centres such as MainOne currently maintain diesel back-up generators, the growth of the solar C&I sector across Africa is beginning to offer viable alternatives.

You can access the report online.

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.