Nigeria loses fresh $30b ICT investment to South Africa

ATCON President, Olusola Teniola, said the cloud computing market is a fast growing one within the ICT sector, and that South Africa infrastructure in sub-Saharan Africa is more mature and advanced in terms of capacity build and running operating costs.

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The combination of poor power generating capacity; harsh business climate; foreign exchange volatility; high level corruption, and a host of others, have caused Nigeria to lose a major Information and Communications Technology (ICT) investment to South Africa.

Specifically, the investment, which is worth about $30 billion had to do with the citing of two Data Centres by Microsoft in two South African cities of Johannesburg, and Cape Town, at the expense of Nigeria and other parts of the Continent.

The Senior Programme Manager, Microsoft Azure’s Blockchain-as-a-Service, Michael Glaros, at a forum in Lagos, hinted that the firm spent about $15 billion on each of its Data Centre infrastructure across the globe.

Microsoft has Data Centres covering 40 regions across the globe, more regions than any other cloud provider. The implication of Nigeria missing this investment, according to The Guardian investigation is that a single Data Centre is cable of creating between 5,000 and 10,000 jobs directly and indirectly.

This means that if Microsoft had considered Nigeria, significant amount of jobs would have been created and the ever growing unemployment gap in the country would have been further bridged.

Besides, such gigantic investment could also have helped Nigeria in developing its knowledge economy. Indeed, Microsoft revealed at the weekend, plans to deliver a complete, intelligent Microsoft Cloud for the first time from Data Centres located in Africa.

This new investment is a major milestone in the company’s mission to empower every person and organisation on the planet to achieve more, and recognition of the enormous opportunity for digital transformation in Africa.

The firm explained that expanding on existing investments, Microsoft will deliver cloud services, including Microsoft Azure, Office 365, and Dynamics 365, from Data centres located in Johannesburg and Cape Town, South Africa with initial availability anticipated in 2018.

The Executive Vice President, Cloud and Enterprise Group, Microsoft Corp, Scott Guthrie, said the firm is excited about the growing demand for cloud services in Africa and their ability to be a catalyst for new economic opportunities.

“With cloud services ranging from intelligent collaboration to predictive analytics, the Microsoft Cloud delivered from Africa will enable developers to build new and innovative apps, customers to transform their businesses, and governments to better serve the needs of their citizens.”

This development is coming a year after The Guardian reported that South Africa and Egypt got the Samsung manufacturing plants ahead of Nigeria. Samsung had cited economies of scale, improved infrastructure; dependable power generation system and tax reliefs, among others for the choice of South Africa and Egypt.

Though, the South Korean never ruled out the possibility of citing a manufacturing plant in Nigeria, the firm however, disclosed that the Egypt’s plant would serve Nigeria and other West African countries, while the South African plant would cater for the region and part of East Africa.

Sources in the know of the Microsoft plan, claimed that the same challenges of poor infrastructure, insecurity; poor power generation, corruption; Naira instability, economic slowdown, among others contributed to investments flights from Nigeria to South Africa.

Reacting to the development, a telecoms analyst, Kehinde Aluko, said Microsoft shouldn’t be blamed for taking its investment to where it will get maximum profit yield.

“Now, let’s look at it from this perspective, a 21st Century Data Centre run on efficient and reliable power supply. Do we have power in Nigeria? We are still struggling since the beginning of this democracy to attain 5000 megawatts (MW), whereas South Africa has generated power in excess of 40,000MW. How do we explain the trillions of Naira that had gone down the drain all in the name of fixing the power sector?” he asked.

According to Aluko, Nigeria’s economy is worse off now, the Naira refused to stabilise; policies are not sustained and above all, “the level of corruption in this country is grieving.”

Like Aluko, the President of the Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, said the cloud computing market is a fast growing one within the ICT sector, and that South Africa infrastructure in sub-Saharan Africa is more mature and advanced in terms of capacity build and running operating costs.

“It is the cost of doing business in Nigeria that doesn’t yet make sense for the likes of Microsoft to want to invest in Nigeria. Currently, the cost of maintaining a fully functional Tier3 Data Centre is more than 35 per cent of like-for-like just on power management alone,” Teniola stated.

Besides, the ATCON President said the skills set and capacity building also plays into South Africa’s hands, saying that most recently, Facebook opened its African presence in South Africa, even though Nigeria hosts the greatest number of Facebook users in the Continent.

He advised government to make the cost of doing business in Nigeria not only cost effective but easier. He said government also needs to promote the current Tier3 data centre facilities that already exist in the country; enforce data sovereignty and local data presence of its citizens.

Giving insight into what a Data Centre operation looks like, the General Manager, MainOne Data Centre, Gbenga Adegbiji, said such are very critical infrastructure.

Adegbiji told The Guardian that as ICT becomes more pervasive, there is need for Data centers to store data generated to enhance processes.