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Panning for data centre opportunities in Africa’s digital gold rush

East Africa is undergoing a technological revolution. Banking modernisation, transition to cloud-based services and expansion in household electrification are all helping to increase demand for web-based services in the region.

Add in a renewed sense of data mission criticality into the mix and the recipe brings together all the ingredients to create opportunities for data centre development.

Although Kenya, Rwanda, and Tanzania are expected to drive the region’s growth further in 2018 and 2019, according to the African Development Bank Group, for many, a lack of awareness could mean that they are overlooking the potential opportunities in East Africa, according to Guy Willner, CEO of IXcellerate.

“In western Europe and the US, there remains a perception of these emerging markets: “Oh, I went there in 1972. It’s terrible, isn’t it? There’s no power.” Just because Western Europe and the US is like Sleepy Hollow – nothing much has changed in infrastructure terms since 1985 – it doesn’t mean that nothing has changed in those countries. So, for example, Kenya has got loads of power now – the power grid is pretty good,“ he says.

GDP Growth IMF

London of Africa

Willner describes Nairobi as the “London of Africa”, saying it is very sophisticated technologically and adds that there is, to an extent, a “digital gold rush in Sub-Saharan Africa right now, with a lot expected to happen over the next five years”.

One such development is tipped to become the “biggest data centre campus in East Africa”. Willner has his sights on a $100 million project which will eventually have a capacity of 30-40MW in Nairobi. Future-Tech is helping with initial design, planning and permissions, as well as “civil design philosophy” – helping to carve out a master plan on how 40MW can be deployed over a 10 year period.

Up to 10,000 racks will be delivered on the 14,000-metre site, although the IXcellerate CEO points out that the sheer number of racks, or size, is not the most important point here.

“It’s not about how many racks you’ve got – many companies around the world have gone out on their own and built out a massive project in the “build it and they’ll come” hope for customers. And I get so upset with these models, because that’s the best way to lose money.”

“Taking time to get to know the market, preparing a step by step plan which can grow with our customers, and understanding the real customer needs up-front are the keys to success.”

“Kenya’s got a good legal system, a good banking system and a very sophisticated, educated population, so it’s a good place to start,” adds Willner.

Starting out in Nairobi, the aim is to eventually develop out 500km to Mombasa as well. The data centre campus is being designed to address a population of 300 million of Kenya and neighbouring countries: Tanzania, Rwanda, Mozambique and Uganda.

Lining up the ducks in Uganda

Uganda has also emerged in recent years with strong ambition; to transform its society from “a peasant to a modern and prosperous country within 30 years”, according to the government’s National Broadband Strategy (2016-2020). Within this change, ICT has been identified as a “pillar for social economic transformation” with broadband connectivity being positioned at the centre stage.

By 2020, a goal was set out to have broadband penetration rates of 50% for rural areas and 100% for urban areas.

In line with these developments, the country’s first Tier III, carrier-neutral co-location data centre is being set up in the Namanve Industrial and Business Park.

The data centre is being designed by Future-Tech, with local architectural firm Symbion carrying out civil and structural design work. It’s also the first data centre for Raxio Data Centre, owned by Roha, a US greenfield investment company.

“The reason we started with Uganda is because having looked a little bit at the landscape, there were, in layman’s terms, a lot of the ducks were nicely lined up in Uganda: having found a good and reliable partner, the underlying dynamics in that particular market and really the lack of adequate facilities,” says Robert Mullins, partner at Roha. “So a lot of the fundamentals and things that we need as investors to work out were very evidently in place in Uganda.”

On track to open in the summer of 2019, the data centre is being built out in three phases with an investment in the region of $10-$15 million. To start, it will have 260 racks at 1.1MW capacity, with the potential to expand to 400 racks and 1.5MW capacity. Customer power density requirements will influence the total number of delivered racks.

City of Kampala

Investing into a data centre network

Tier III was chosen for the Namanve site ahead of the expected customers in the region.

“Basically Tier II will not be sufficient to meet the requirements of the kind of enterprises and customers we expect to attract into the facility,” adds Mullins. “Tier IV we believe would be overkill probably in terms of the region and also I think in practise. It would also be difficult to accommodate given the infrastructure.”

Two key hires have been made in Uganda to oversee the project – general manager James Byaruhanga, former operations chief at Rake Telecom and a new head of technology, to be named shortly.

Although Roha has invested in other projects in the region, including $80 million into a glass manufacturing plant in Ethiopia, it doesn’t intend for the Namanve project be a one-hit data centre wonder in Uganda.

“In our mind when we went into Uganda it was always with the idea and spirit of making one of several in the region,” says Mullins. “We really want to create a regional platform of data centres…in a couple of years we plan to have up to five facilities in operation.”

James Wilman, CEO of Future-Tech, adds: “Economic growth in Sub-Saharan Africa is strong and forecast at 3.6% in 2019-20. The projects in Nairobi and Namanve reflect the growth in high quality data centre infrastructure across East African countries, including Kenya, Uganda, Tanzania and Ethiopia. Governments are waking up to the value and importance of their citizens’ and companies’ data and this is shaping legislation and policy, further driving the need for, and growth of, well engineered data centre infrastructure. This new infrastructer will provide a foundation for the next generation of digital  development in the region and it is very exciting to be part of this.”

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