The data center market in Nigeria is on a remarkable trajectory, with projections pointing towards a valuation of $288.8 million by 2027, according to the recently released “Nigeria Data Centre Market Outlook to 2027” report by Research and Markets. This growth represents an impressive 220% increase from the estimated $131.6 million value recorded in 2022.
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Several Key Factors are Driving this Rapid Expansion
1. 5G Technology: The rollout of 5G technology in Nigeria, renowned for its enhanced network speed and reduced latency, is expected to boost data consumption, digital productivity, and, consequently, the demand for data centers. MTN, Airtel, and MAFAB have pioneered 5G offerings in Nigeria, signaling a significant shift towards advanced connectivity.
2. Internet Penetration: As of December 2022, Nigeria has achieved a broadband penetration rate of 47.3%. With approximately 154.8 million internet subscribers as of April 2023, the country’s digital landscape continues to grow, fostering an environment ripe for data center expansion.
3. National Digital Economy Policy and Strategy (NDEPS 2020-2030): Nigeria’s commitment to transitioning into a fully digital economy by 2030, as outlined in the NDEPS, necessitates robust data center infrastructure. This policy initiative is driving investments in digital infrastructure.
4. Fintech and Startup Ecosystem: Nigeria’s burgeoning fintech and startup ecosystem is a significant contributor to the surge in data center demand. Companies that previously opted to host their data offshore are increasingly looking to domestic data center solutions. This shift is driven by greater confidence in the reliability and scalability of local data center services.
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Major players in the digital infrastructure sector
The influx of major players in the digital infrastructure sector, including Equinix and NTT Data, underscores the growing importance of Nigeria in the global data center landscape. Vertiv, an international digital infrastructure company, recently expanded its presence in Lagos, a testament to the burgeoning opportunities within the Nigerian market.
Wojtek Piorko, Managing Director for Africa at Vertiv, pointed out that Nigeria’s youthful population, accounting for 70% of the country’s residents, and their inclination towards technology and data utilization, is a compelling driver for data center demand. This demographic potential positions Nigeria for substantial growth in the digital sector.
Colocation services, where multiple data-heavy organizations share data center facilities, are expected to play a pivotal role in the market’s development. Retail colocation, favored by small and medium-sized businesses in Nigeria due to its convenience, security, and reduced power interruptions, is anticipated to dominate this segment.
Consolidation is a noticeable trend in the market, with top players holding over 70% of the market share. Competition among these key players revolves around various factors such as the number of data centers, IT load, gross floor area, total white space, number of racks, and geographical presence.
Prominent entities contributing to the data-centric landscape in Nigeria encompass data companies like Africa Data Centre, Galaxy Backbone, and CloudExchange; telecommunications giants like MTN, Airtel, 9Mobile, and Glo; financial institutions including Access, Standard Chartered, and UBA; fintech companies such as Opay, Flutterwave, and Piggyvest; and e-commerce platforms like Jumia, Konga, and Payporte.
Conclusion
Nigeria’s data center market is poised for substantial expansion in the coming years. This growth reflects the nation’s dedication to embracing digital transformation and recognizing the pivotal role data centers play in achieving this vision.
The confluence of technology advancements, increasing internet penetration, policy initiatives, and a thriving digital ecosystem paints a promising future for the data center sector in Nigeria.
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