Just in: Fintechs, internet penetration to power Nigeria’s data centre market value to $288m by 2027

Nigeria’s data centre market is expected to hit a valuation of $288.8 million by 2027. This is according to a report by Research and Markets titled Nigeria Data Centre Market Outlook to 2027. According to the report, Nigeria’s data centre market reached an estimated value of $131.6 million in 2022, thus, by 2027, the market is expected to have experienced a growth of approximately 220 per cent.

This suggests that the Nigerian data centre market is on its path to significant expansion. Indeed major data companies have been making incursions into the country in anticipation of the surge. According to the report, this substantial growth can be attributed to various factors, One of them is the launch of 5G technology in the country which, along with the continuous emergence of new technologies, is expected to increase data consumption as well as digital output and productivity. This will in turn expand the demand for data centres.

Unlike the familiar 3G and 4G, 5G boasts improved network speed, fewer lags, and more benefits. The country recently hit a milestone of 500,000 5G subscriptions in a little more than a year after its general rollout. As of today, MTN, Airtel, and MAFAB are the only telcos that have successfully launched 5G offerings in Nigeria.

See also: Nigeria’s 5G subscriptions hit 500,000 as NCC looks to widen network access

Another factor responsible for the growth in demand for data centres is the increasing penetration of the internet in Nigeria. As of December 2022, the country’s broadband penetration stood at 47.3 per cent while the total number of internet subscribers was 154.8 million as of April 2023. This number is projected to grow as digital infrastructure becomes more accessible.

Furthermore, the National Digital Economy Policy and Strategy (NDEPS 2020-2030) has ensured that the West African country has set lofty goals for its digital future. With that policy, the country aims to transform into a fully digital economy by 2030, driving the need for robust data centre infrastructure.

Finally, the report attributed the impressive growth of the Nigerian data centre market to the burgeoning fintech and overall startup ecosystem. It noted that while many Nigerian companies prefer to host their data offshore, the trend is changing quickly as companies are beginning to look back home.

“The thriving fintech and startup ecosystem in Nigeria is also contributing to the demand for dynamic data centres. Previously, many companies hosted their data offshore due to concerns about reliability and scalability. However, as international data centre operators turn their attention to Nigeria, the sector has become more resilient and reliant on local hosting,” the report reads in part.

The growing data centre market in Nigeria

The growth of data centres in Nigeria is expressed by the sheer amount of big digital infrastructure companies making their entries into the market. These include companies like Equinix and NTT Data. Recently, Vertiv, an international digital infrastructure company expanded its presence within the country with the opening of a new office and bigger showroom in Lagos. This trend shows that there are big things already happening.

Indeed, Wojtek Piorko, Vertiv’s Managing Director for Africa, while speaking with Technext at the launch, was quite apt and depictive when he explained the reason for the growth in data centres in Nigeria and across Africa. According to him, the sheer size of the youthful population that is more inclined to heavily utilise tech and data is reason enough to drive demand and growth

“I was reading a report which says Africa as a whole currently has 300 megawatts of data centres. That represents the same number as it is in Italy. Italy has 40 million people, and Africa has 1.5 billion. Definitely, there will be growth. I understand that 70% of the population in Nigeria is below 30 years old. They will look for content. They will create content. They will become this digital generation and based on that, the future is bright,” he told Technext

The report noted, however, that the colocation trend will continue to grow and become a significant revenue driver in Nigeria’s data centre market, accounting for more than half of the market share. Colocation occurs when more than one data-heavy organisation decide to locate their data in the same location. The convenience, security, and reduced power interruptions make colocation an attractive choice for businesses.

The report also noted that the market is characterized by consolidation, with top players holding over 70% of the market share. Competition among these players is based on various factors, including the number of data centres, IT load, gross floor area, total white space, number of racks, and geographical presence.

The biggest data-centric companies in Nigeria include data companies like the Africa Data Centre, Galaxy Backbone and CloudExchange; telcos like MTN, Airtel, 9Mobile and Glo; banks like Access, Standard Chartered and UBA; fintechs like Opay, Flutterwave and Piggyvest; and eCommerce like Jumia, Konga and Payporte etc.

“As Nigeria continues to experience increased internet penetration, higher investments, and government initiatives, the data centre market is poised for substantial expansion in the coming years. This growth reflects the country’s commitment to embracing digital transformation and the critical role data centres play in achieving that vision,” the report says.