Nigeria’s data centre market is expected to generate over $280 million by 2027 driven by factors that include the launch of 5G service in the country, according to a new report. 

Analysts at Ken Research in their latest publication “Nigeria Data Centre Market Outlook to 2027” report that the Nigeria data centre market is expected to showcase considerable growth in the coming five years. 

In the upcoming years, the authors predict, the Nigeria Data Centre market is expected to grow at robust CAGR over the forecasted period 2022 -2027 and will expand more rapidly due to increased internet penetration and the launch of 5G.

The Nigeria data centre’s expected revenue growth will also be fuelled by growing investments in hyperscale and co-location services and rising  internet penetration, according to Ken Research.

Nigeria Data Centre Market Ecosystem

The Nigeria Data Center industry is consolidated with top players holding more than 70% market share. The players compete with each other on the basis of number of data centres, IT load, gross floor area, total white space, number of racks, geographical presence, among others.

According to the key market findings, one of several factors that will propel the positive growth forecast is Nigeria’s promotion of a fully digital economy by 2030 through the National Digital Economy Policy and Strategy (NDEPS 2020-2030).

The growing fintech and startup ecosystem also needs dynamic data centres to survive, the report authors say. “So far, many of these companies host their data offshore, as reliability and scalability concerns have forced companies to look elsewhere.”

According to the report authors, “however, as the attention of international data centre operators shifts to the country, the sector will become more robust and reliant on local hosting.”

The growth of the data centre market in Nigeria is owing to the launch of 5G as e-commerce platforms and fintech will greatly benefit from 5G networks. “Launch of 5G will strengthen the digital economy in the nation and hereby accelerate growth in the data centre market. The launch of 5G technology in Nigeria is poised to catalyse substantial growth in the data centre market. With its remarkable network speed, low latency, and support for IoT and edge computing, 5G will enable faster and more efficient data processing and transmission,” according to the forecast.

This boost in connectivity and data processing capabilities is expected to greatly benefit industries like e-commerce and fintech, enhancing the online shopping experience, expediting financial transactions, and supporting the growth of the digital economy, the report adds. “As businesses in these sectors expand their operations and adopt IoT solutions, the demand for scalable and reliable data centre services will surge, making data centres a critical infrastructure component in Nigeria’s evolving digital landscape,” the authors say.

The Nigeria Data Protection Regulation (NDPR) is also seen as a growth driver of data localization initiatives and the increasing development of data centres in the country that will lead to increased local data storage and computing requirements. “Future data centre demand, especially from a colocation perspective, will come from sectors such as cloud and large technology companies expanding their operations in West Africa,” according to the report.

Another key driver remains the rising internet penetration following improvement in network connectivity, government support, and rapid growth in the adoption of big data, and IoT services that have been strong enablers for the growth of the industry in Nigeria. “Internet penetration in Nigeria is increasing year-over-year, which will thereby accelerate the data centre market in Nigeria.”

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