In December, Nigerian data centre and network firm MainOne confirmed that it will be acquired by NASDAQ-listed US giant Equinix in a $320m deal, an agreement that marks a pivotal moment in the development of Africa’s digital infrastructure market.
MainOne has three West Africa-based operational data centres, with another under construction expected to open in the first quarter of this year. The firm also owns and operates a submarine network extending 7,000km from Portugal along the west African coast, as well as 1,200km of terrestrial fibre across the Nigerian states of Lagos, Edo and Ogun.
MainOne founder and CEO Funke Opeke – who will remain in place alongside her senior management team following the takeover expected to complete in the first quarter – says the deal with the California-based company signals Africa’s increasing integration into the global digital economy.
“For me, coming into the Equinix umbrella says we become part of this global platform that has 10,000 customers around the world. It is one of the largest multinationals, with a presence in so many cities and countries around the world. And so becoming part of this network says we are truly integrating West Africa and our region on the same footing to do business with the other parts of the world, and global players have access to our markets.”
Data centres, which house computer systems and associated components, such as telecommunications and storage systems, are an increasingly important part of the global digital infrastructure network, allowing for greater speeds, improved reliability and international connectivity. Technology firms – including some of the most familiar global internet brands – rent capacity in data centres to ensure that local customers and businesses can seamlessly access their services.
Originally confined to the developed world, data centres are taking root in African countries as millions of customers per year come online, straining Africa’s digital infrastructure to the limit. Since 2010, the number of people using the internet worldwide has doubled, and the pandemic has exacerbated needs further – global internet traffic surged by more than 40% in 2020 as a result of increased video streaming, video conferencing, online gaming and social networking, according to the International Energy Agency.
Yet while the potential is vast, the data centre market is constrained by centres’ huge energy needs and policymakers’ lack of urgency. Meanwhile, controversies in Europe hint at potential future challenges to come.
A growing market
Nevertheless, Opeke says that the deal shows that Africa’s digital integration is continuing apace.
“As you have more people accessing the internet and more global data being consumed in the region people require improved performance for their transactions. Rather than having all that data flow first into Europe, which has been the default destination for African traffic, we are starting to bring that data to Africa.
“You have the growth of the local digital economy, the growth of e-commerce companies, the migration of financial services and all the types of services online. And that all requires the availability of data centres. All of the global tech firms today have a presence on the continent either directly or indirectly.”
MainOne’s facilities, which serve over 800 business-to-business customers and generate approximately $60m of annualised revenues, will join Equinix’s 237 data centres across 27 countries serving 10,000 businesses, according to a statement announcing the deal.
The acquisition will add more than 64,000 gross sq ft of space to Equinix, with 570,000 sq ft of land for future expansions. Opeke says that the deal will allow MainOne to “build out faster, bigger and better in West Africa” and provide coverage beyond major urban hubs.
“The plan is to build more data centres. When you look at the region, both the number of data centres we have and the size of data centres we have on a per-capita basis is much lower than you have in other parts of the world.
“In addition, because of the low density of data centres there is considerable latency [the delay before a transfer of data begins following an instruction for its transfer] between the end consumer and the data. And so part of the strategy going forward is to continue to expand.”
While submarine cables and fibre networks have been essential building blocks in bringing global content to the region and supporting the data centre rollout, they are not envisaged as the central area of focus for the company.
“I expect connectivity will become less critical in terms of being an investment area for us, because others will provide adequate supply to complement what we have, but until then – and I think we still give them the time it takes to build out infrastructure and get it working efficiently – we still have quite a few years ahead of us,” she says.
One potential drag on that growth is the enormous power needs of data centres, particularly owing to video streaming and gaming. Data centres and data transmission networks each account for around 1% of global electricity use, according to the IAE, and in 2020, global data centre electricity use was 200-250 TWh, or around 1% of global final electricity demand.
This excludes energy used for cryptocurrency mining, which was around 100 TWh in 2020. That presents a major challenge in Africa, particularly in MainOne’s home market of Nigeria.
“Energy is just a critical component. When you talk about Nigeria, availability of power has been a challenge and is not as high as one would like it to be. However, we have been very deliberate – energy availability and power access is one of the key building blocks that we have planned into all of our facilities.
“In most West African countries, there is actually a higher amount of power being generated than is being effectively distributed, and in some instances we’ve had to build out our own private direct access to connect to the grid, so that we can have high availability in a country like Nigeria that’s notorious for power outages for long stretches of time.”
The huge energy uses of data centres can lead to anger among local communities, a problem recently seen in the Netherlands. Facebook parent company Meta’s plans for a 166-hectare data centre in Zeewolde have led to opposition from local residents, who fear that the centre will syphon off a large percentage of the country’s renewable energy and replace valuable agricultural cropland.
In a December coalition agreement document, the Netherlands government said that “hyperscale data centres place an unreasonably large demand on the available renewable energy in relation to their societal or economic value,” according to Wired.
The outlook is not entirely bleak – IAE says that strong growth in demand for data centre services continues to be mostly offset by ongoing efficiency improvements for servers, storage devices and other infrastructure, as well as the growing share of services met by efficient cloud and hyperscale data centres.
Opeke says such challenges have yet to emerge around the company’s data centres, which she says provide vital employment for communities and revenue for power companies. MainOne targets natural gas power generation rather than diesel to improve its environmental footprint, she adds.
“To the extent I mentioned, we are building private direct access to energy supplies. So typically rather than depriving the community or imposing a burden or load on existing distribution, we’re building out our own.”
Given the challenges, Opeke says that the African data centre market requires more support from policymakers, particularly in energy, if global interest in Africa’s market is to continue.
“I think transactions like this one highlight the opportunity. However, when we look at other countries that are advanced data centre markets, be it Ireland or the Netherlands, then clearly for a region that needs to grow data centres, we’re not doing nearly enough.
“Africa needs jobs, we need investments having large consumers of energy supply… I think there’s more that could be done to accelerate, grow and incentivise the investments in the sector to help the development of Africa and of the region.”
Listen to the full interview on our podcast.