Rédaction Africa Links 24 with Guardian Nigeria
Published on 2024-03-13 03:12:47
The ongoing crisis in Nigeria is impacting various sectors of the economy, including the telecoms industry, which has been a significant contributor to the country’s recent GDP growth. One sub-sector within the industry, data centers, is particularly feeling the pressure of rising energy costs in the country. As global energy prices continue to soar due to factors such as the conflict in Ukraine, Nigeria is also facing the challenge of increasing costs, making it difficult for both individuals and businesses to cope.
Data centers, often referred to as the backbone of the Internet revolution, are facing tough times as the escalating price of diesel fuels a rise in energy costs. These centers operate 24/7, regardless of the number of customers they serve, leading to significant cost pressures on companies operating in a high inflation economy. Despite these challenges, Nigeria has seen over $230 million in investments in data centers, with a projected market size of $415 million by 2028.
Currently, there are over 11 data centers in Nigeria, primarily located in Lagos, Abuja, and Kano. These centers have a combined computing power of about 55MW and over 30,000 racks capacity. However, they are facing several challenges in addition to rising energy costs, including multiple taxations, policy issues, and the preference of some government agencies to host data abroad rather than locally.
The energy crisis in Nigeria is further exacerbating the challenges faced by data center operators. With grid electricity generation only providing a fraction of the required power, companies are heavily reliant on diesel generators, the prices of which fluctuate between N855 and N1,350 per liter. Inflation rates in Nigeria are at 29.9%, with the exchange rate of the naira to the dollar standing at N1600/$. The instability in the foreign exchange market has driven up the cost of diesel-powered electricity, with experts estimating costs of over N500/kWh.
To mitigate the impact of rising costs, telecoms operators and data center companies are considering outsourcing data center management. By engaging reliable and competent providers, companies can reduce operational challenges, maintain information integrity, and ensure operational continuity. Outsourcing can also provide benefits such as information security certification, carrier neutrality, and redundancy, essential for the smooth operation of data centers.
Despite the challenges faced by data center operators in Nigeria, there is optimism for growth in the sector. However, addressing issues such as power supply, forex availability, multiple taxation, and policy implementation is crucial for the industry to reach its full potential. By prioritizing outsourcing and local hosting of data, businesses can navigate the current crisis and position themselves for sustainable growth in the data center space.
