Uganda gets internet boost with new data centre

Bringing data closer to internet users will reduce costs, improve speeds and help to boost the ICT sector, writes Liam Taylor in Kampala

The internet can seem an airy, intangible thing. But at an industrial park near Kampala, the Ugandan capital, the digital revolution is arriving with graders and gravel. A new data centre, the first of its kind in Uganda, is being built here by a new company called Raxio. 

“I look at this as a real estate business,” says Abdul Rahman Baguma Ahmed, who is in charge of technology and operations. Wearing hardhat and hi-vis he picks his way through the mud to a half-finished hall, which will eventually house 400 whirring racks.

Raxio is part of the Roha Group, a US-based investment firm which is bringing proven technologies to unmet African demand. The group’s first project was a container glass factory in Ethiopia, where it has also started a leasing company. Now it is turning its attention from bottles to bytes. 

“A tremendous amount of investment has been put in across the continent into connectivity,” says Robert Mullins, executive director at Raxio, giving the example of 4G networks. Data centres are the “missing piece of digital infrastructure”.

The 1.5 MW centre is set to open in June and provides a secure “colocation” facility where different businesses can house their computing, networking, storage and IT infrastructure. An Ethiopian version is in the works; Raxio could be running 10 more across Africa within three years, says Mullins. It is not the only player in the data centre business. The private equity firm Actis is investing $250m in the sector, starting with a Nigerian company. In the last year Africa Data Centres, a subsidiary of Liquid Telecom, has tripled its South African capacity.

But whereas most providers focus on established hubs, Raxio is blazing a trail into new places. Data centre capacity in sub-Saharan Africa is just a quarter of that in London, according to Xalam Analytics, which researches cloud and connectivity markets. Much of that is in South Africa, with smaller concentrations in Kenya, Nigeria and Ghana. The region’s remaining markets “account for 50% of the broadband subscriber base in sub-Saharan Africa, but only around 5% of the region’s available colocation supply”, says Guy Zibi, Xalam’s founder.

Bringing content nearer

Much of the content that Africans want to access is currently held far away. When a Ugandan tries to access a website hosted in Europe, for example, messages are zapped down cables to the Kenyan coast and under oceans to Europe, then back again. That slows down speeds and pushes up costs, explains Kyle Spencer, executive director of the Uganda Internet eXchange Point. “The trick to making the internet affordable is to bring content close to the user,” he says.

Ugandan enterprises are also generating their own data, and need somewhere to store it. A state-run centre, opened last July, mostly serves government ministries. Private businesses often store data on in-house servers, which are difficult to maintain. Or they might rent space in a centre run by a telecommunications company, like MTN or Airtel, where the only way to connect is through the service that the telco itself provides.

The Raxio data centre, by contrast, is “carrier neutral”. Users will be able to shop around with a dozen different carriers, driving costs down. “The data centre is much more than a place where data is just protected, stored and extracted,” says Mullins. “It’s really an environment where people can interact, where’s there’s multiple options of connectivity, and where there’s different third-party service providers.”

The more people in the room the better. “It’s like trying to fill a nightclub,” says Spencer, who will be one of the data centre’s first customers. His internet exchange point connects networks to each other, so it will pull in other customers. Finding enough clients is one of the biggest risks for these kinds of projects. But Mullins says that he already has commitments for around two-thirds of capacity in the project’s initial phase.

Cost reduction

One potential customer is the financial sector. Running an in-house data centre is a long way from banks’ core business of making loans. “You’ve got to manage your power, you’ve got to manage your cooling, you’ve got to manage your access,” says the head of IT at a bank, “which no one really wants to do.” Offloading data to a specialised facility like Raxio – a move he says his bank would “definitely” consider – would let banks reduce their costs. 

Interest could also come from big international players, like Google, Facebook, Microsoft and Amazon, which are trying to get ever closer to their customers. In more developed markets, they are building facilities themselves. Microsoft launched its first data centres on the continent in South Africa last year; Amazon Web Services will soon open its own in Cape Town. Every millisecond counts in a world of media streaming, online gaming and live customer services.

In Uganda, Google and others have already built shared fibre networks, breaking the back of a fibre oligopoly and making it easier for new service providers to enter the market. The resulting fall in the cost of domestic bandwidth is one of several factors that makes the market ripe for a data centre. Others include growing business demand and data protection regulations which make it harder to hold data outside the country.

A boost for the ICT sector

And the data centre will itself lay the ground for the next level of digital infrastructure. Steven Kirenga of the National Information Technology Authority, a government agency, describes it as “a welcome initiative” which “will inspire continued growth of the ICT sector”.

Back at the building site, a team of builders is hoisting up a roofing panel. The data centre will be connected to two separate sub-stations, and has five standby generators. Tanks will hold enough water to keep the centre cool for 78 hours in case the pipes from the mains and a backup borehole run dry. 

“Every piece of equipment that I buy, I buy in twos,” says Ahmed. If something has to be shut for repairs, customers should not even notice. Their data will still have physical presence here, encased in bricks and mortar, steel and silicon.