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Data Center Real Estate In Nigeria – Build Or Lease?

By Abutu Odu, Ismaila Shaib Usman and Ayuk Kure


Data centers are designed to house a large amount of IT equipment used to store and process important applications or data. A data center typically contains servers, storage sub-systems, routers, firewalls, uninterruptible power supplies, cooling systems, fire control equipment, backup generators, and external network connections. Unlike a server room that is normally located in a room at an organization's headquarters, a data center is an entire building dedicated to storing computer equipment for use by one or more organizations.

In this age of heavy reliance on technology, especially on IT solutions, data centers play a critical role. This article looks at Nigeria's data center real estate sector with specific reference to considerations for building or leasing of data centers in Nigeria.

Overview of data center real estate in Nigeria

The Nigerian data center market is one of the fastest-growing markets in Africa. Increasing investments in the industry are largely driven by increased demand for data services, digitization, improved infrastructure, and rising e-governance. The COVID-19 pandemic has also affected the growth of the data center industry.

According to GlobeNewswire's Nigeria Data Center Market Investment Report 2021-2026, more than 90% of the country's data is being hosted abroad as most public institutions prefer to host their data overseas. There are currently 11 data centers in Nigeria and despite growing capacity to meet projected increase in demand, the current capacity utilization of existing data centers is thought to be less than 30%, despite the investment of about USD220 million in data center operations. This clearly shows that local utilization does not meet expected levels.

With the recent regulations put in place by the government in favor of local data hosting, it is expected that companies and government Ministries, Departments and Agencies (MDAs) will look to develop their own data centers or lease space from data center infrastructure providers. The overall effect will be seen in the development of data center real estate in Nigeria.

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