Infrastructure hinders N900bn investment in data centres

Ben Uzor Jr

There is a N900 billion investment honey pot in data centre deployment, a critical infrastructure needed to provide faster and cheaper internet connectivity, waiting to be tapped, if only the Federal Government can resolve the power and broadband infrastructure short comings, analysts have said.The Ministry of Communication Technology has estimated that approximately 300 data centres will be required in the coming years, to support affordable internet services and software applications in Nigeria. A world class data warehouse is estimated to cost between $20 million and $30 million. This means that Nigeria requires an investment of approximately N900 billion for its planned 300 data centres.

Foreign Information Technology (IT) companies, such as Google Incorporated, Microsoft Corporation and Oracle, have at various fora, said they would be willing to invest in this area. The companies however expressed concern that two years after the landing of fibre-optic submarine cables on Nigeria’s shores, the country has been unable to speed up the pace of wholesale fibre access, due to the absence of a broadband policy that promotes infrastructure sharing and competition. “Technology firms such as Google Inc. are interested in investing hugely in data centres, if Nigeria can address the power challenge and speedily tackle the issue of lastmile connectivity and distribution capacity, so as to spread available bandwidth capacity across the entire country”, Taiwo Kola-Ogunlade, communications manager, Anglophone West Africa, for Google, told Benuzorreports.

“Yes, broadband infrastructure is important but power is even more critical. Today, Nigeria is still struggling with unstable power supply. Importantly, data centres consume a lot of electricity”, Taofeek Okoya, director, business and strategy, for Kits Technologies, a data centre infrastructure provider, told Benuzorreports. “Nigeria is indeed a huge market and the potentials here are enormous for local and foreign IT companies,” he said, adding that “As I speak, there are lots of data centre initiatives on-going in the country. A lot of banks and government agencies are building data centres.”

Okoya further said there was great necessity for data centre owners to build competent human capacity to manage their high cost infrastructure. Data centre deployment, according to analysts and market watchers, is a big business, capable of creating wealth and job opportunities. Benuzorreports gathered that a large data centre might have from 100 to as many as 300 on-site employees. But interestingly, data centres give impetus to Nigeria’s online business community to provide innovative services cost-effectively. A senior executive at Microsoft West Africa, who pleaded anonymity because he was not authorised to speak, said massive investments would be ploughed into data centre deployment over the next few years.

“Hopefully, when we get power and broadband right, then technology firms like Microsoft can concentrate on bridging Nigeria’s and indeed Africa’s digital divide. Data centres will also create a lot of employment for Nigerians directly and indirectly,” he added. The rise in the availability of international bandwidth connectivity from underwater fibre-optic cable systems has attracted a lot of foreign ICT companies into the country. Data centre deployment is one area expected to witness a boom in coming years. But the absence of last mile broadband connectivity, technical know-how and expertise, continue to slow down progress in data centre deployment.

Giving her perspective on what needs to be done to address Nigeria’s internet access problem, Funke Opeke, chief executive officer of MainOne Cable Company, who was quoted in a recent industry report, said “We really need to agree to a commercially viable framework for infrastructure sharing with incentives for the incumbent operators to share their proprietary networks”.

Global data centre operators have flocked to the Nigerian market, particularly since 2011, with the likes of Google’s cloud platform aggressively marketing their services to corporations. United States software giant, Microsoft, launched its global Office 365 cloud solution in Nigeria in June 2012. Dell’s global CEO visited Nigeria in July 2012 in a bid to promote Dell servers or local data warehousing initiatives.

Mobile network operators have not been left out of the party, as MTN Nigeria in 2012 introduced a wide variety of enterprise cloud-based services, supported by its state-of-the-art data centre. Also, Gateway Communications, a pan-African service provider with the largest Multi-protocol Label Switching cloud in Africa, bought by Vodacom in December 2008, introduced its cloud services to the Nigerian market in 2011. Besides, indigenous firms are increasingly looking at partnering with global vendors with experience in cloud system and data centre development.

According to a report, Internet Solutions West Africa invested N1.65bn ($10.5m) over a two year period (2009 to 2011) in building two data centres in Lagos, covering a combined space of 125 sq metres. It further invested N225m in upgrades and expansion of its Victoria Island, Lagos, location, in 2011. Resourcery Nigeria, another local IT firm, established its own Cisco Unified Computing System in January 2012, targeting telecoms companies and banks. In addition, TTC Technologies is partnering with the Obafemi Awolowo University, Ile-Ife, to build private clouds for corporate customers.