The Central Bank of Nigeria (CBN’s) directive to financial institutions to localise payment-related dat by January next year will trigger the global providers to bring their own scale of cloud into the country for building the nation’s digital infrastructure scale give investors more confidence to deploy the capital that brings in the scale to prepare for other scale that needs to come into the country, a major player in the data center ecosystem in the country Open Access Data Centre (OADC) has said.
Its CEO, Dr Ayotunde Coker, in an interview, said sectors such as oil and gas and some other big players in the economy using ERP domiciled offshore would also have the incentive to host their data in-country, adding that “we’ve been making some progress with bringing the scale of the hyperscalers in Amazon Web Services”. But we’re now starting to actually see some of the inquiries around about how this might happen with our data centres.
Speaking on the economic value of the CBN’s directive on the economy, Dr Coker said: “I’ve mentioned this a few times that typically if you build, say, for one Mw data center, it’s a nice round figure, say $10 million. It could be depending on systemic efficiency, a variety of things. It could be $8million, it could be $15million. In the early days, when we were still building out, we didn’t have the supply chains that we’ve created a supply chain in Nigeria for data centre build capability that didn’t exist. Remember, going back 10 years, and that’s with… we’ve trained the generator companies to know how to do the generators that are right for data centers, the ones that bring the energy centers in, they’re here. They are here now operating a few choices if you’re building out a data center, which is great in itself, that has economic value.
“Because they’re hiring locally, they are bringing in capability to build out capacity into the data centers. You have the security companies who have to step up in understanding to meet the demands of the level of kind of physical security that you require for data centers. So we’ve been building industries right, around this capability around here, employing people and well-paid people in engineering jobs. Architects that are now able to understand the kind of architectural requirements for data centers are now able to do that locally.
“International companies are establishing and growing their capabilities here are much more locally. People like Verte, people like Schneider, you know, I speak to the executives of this company, do my own for Nigeria, do my own for Africa, actually, also in terms of growing local capacity, because then it builds our supply chain.
“Those are economic values. So one summary for it is that for every Mw, you do about $10 million; so if you build a 10 Mw data center, just $100 million, a nice round number.
“But you can have like up to 50 times that in terms of either direct or induced impact on your economy. So immediately, and I was talking about, let’s say, 5 billion impact in different ways, summarizing. One, you’ve got the architect that’s done it, you’ve got the engineers that design, you’ve got the, even if you had foreign engineering companies that come in to design for you, it may be some Arab or it could be Royal Huskins or something.
“They are employing local people that are engineers to build that capacity, capability for the engineering. Then you start to build. The local building companies are now much more able to build the kind of shell structures that you require for hyperscale technology. You bring in the reticulations and the cables and all of this, it builds out all of that. Those are some of the direct consequences. Then you start to operate, you have operating engineers, you have people to support and maintain your generators that you probably outsource, that build capacity and capability elsewhere. You’re connecting to power companies that now know that they need to scale up to deliver megawatts of power, buying expensive cables that you use to connect yourself directly to it. Even if you build your own IPP, a bit like I triggered off and got some going on back center, they build; buy gas generators that bring local companies to operate the IPP to meet the power demand. That’s why you have that kind of huge impact on the local economic ecosystem and being able to deliver high quality digital services locally adds its own value as well. The induced and direct impacts. I think the first time I did this presentation on induced impact was in 2015. And the economic impact has actually been continuing to increase because of course you now have the impact of AI and high demand compute.”
According to him, the directive will also spur investment into the system “because it means, therefore, that, you know, you will see the growth in demand for the cloud services. And when the demand for the cloud services grow, it grows the demand for the interconnect services that grows; it grows the demand for extra data center space. It means that we need to put more investment into that growth trajectory implementation profile. It solidifies the investment of the existing players.
“And when you see other international players locally, like Equinix, who are investing in the expansions, that’s good. We are investing in our own expansion. And it just puts significantly even more confidence in that choice, that belief that we had to have committed to the kind of expansions that we have, it just reinforces that belief that yes, we were making the right move in anticipating the scale. And also it will bring the global players, cloud players as well”.
Addressing issues around capacity, timing, readiness and security, Dr Coker said the industry is ready and described the fears around security as rubbish.
“But as far as readiness is concerned, we have the co-location base, we have the co-infrastructure basis, we have the interconnection capability. And in the four years, three years of OADC being here, we’ve made that infrastructure available really quite remarkably in that time scale. And it’s always good to take a certain BUY regulator is assessing a certain sort of time timeline.
“I think it’s a lot of rubbish talking about issues with security. Data center security is strong physical security as you would get elsewhere. And you have to make sure you have your disaster recovery process in place. Now, broader questions, you know, digital national infrastructure, you know, it’s critical national infrastructure (CNI) that the data centres have been defined as now. You might say, are there broader security issues in places.
“Other places also have their own broader security issues. You have to make sure your perimeter securities are high. And the top end data centers, I can speak for OADC anyway, physical security protocols are very, very high indeed and meet global standards. Systemic environmental security is something you also take care of in the general security profile. Now, when it comes to software security, cyber security that is up to the providers, the companies, because that is a software issue. There are many other things that they have to take into account in the way they secure their own platforms.
“With respect to other industries, I’m pretty excited that the oil and gas is going through significant transformation. Amazing, fantastic transformation needs to be enabled through technology. They’re talking about the need that they need, they need to connect, they need data center capacity, they need to move quickly. The way to move quickly with that is to move into co-location because any agile business that thinks that they will build their own data centers, they already lost their agility because by the time you think of building it, you put your capital where your capital shouldn’t be going. You should be building wells, you should be expanding your gas facilities and this, that and the other. You’re looking back at data centers, you’ve lost the race.
“So you see demand for co-location increase from that industry as well. And the changes in dynamics, it’s just amazing what’s in my view, what I’ve seen in the industry over the last two years. Now, there is data that’s held abroad, you say exploration data, you know, and so on. And there’s actually also therefore a possibility that says the sovereign data demands and requirements will be put in place for the industry. And let’s see how that develops. But certainly I’m seeing
a shift in that energy, the dynamism, need to have agility, need to get technology in place, need to figure out how do you use AI. AI at the inference level needs lower latency, you need more compute locally. They’re figuring out some of those things.
“So you get the tipping point in waves, in my view, over the next sort of year to two to three years for the oil and gas industry. That’s another level of point of scale. I think as the states look to expand the citizen government, you know, so on, you see more shifts happening there. As states think, oh, we’ll be the data center. I always say to states, there’s no point building a data center. Go and build a school, build a road, build a hospital, you know, partner with people who know how to do these data center things, automate government, bring in e-government. You see patches of scale starting to come through there with the senior states that are doing it. And some of that is what will then bring in edge data centers, right.
“The other area of scale would be manufacturing companies, industrial companies, the pharmaceuticals, the drinks companies, the general manufacturing environment that we have. They’re using ERP systems that are hosted in Germany or hosted in Netherlands and so on. And they’re all complaining about latency.
“The key ARP companies that are established locally will just see a whole wave of migration from them.
And I have a feeling that just for practical reasons, right? When that happens, they will have to move. So I see some scale coming up there as well. But the two significant points of scales are the financial services, the oil and gas, and the cloud service providers that will come in to service what the needs of those companies are because the localization laws have been put in place. It will send a signal. The way these people work is they see the demand side coming. They need to respond to the supply side. They send a signal to their technical people. They really start to move. They already know where the best data centers to go for. And immediately they start to ask questions about, can I bring the scaling because the demand side is now meeting their own calculations,” Dr Coker said.
