Data Centre investment critical to Nigeria’s economic advancement

Interview by Adeyemi Adepetun, Guardian Newspaper, August 29, 2018

Tunde Coker is the Managing Director, Rack Centre, a Tier III Constructed Facility Certified data centre, offering carrier neutral co-location services in Nigeria. Coker has over 25 years’ international experience across Europe, USA, Asia, and Africa in global blue chip organisations such as Ford, M&C Saatchi and The Prudential.

In Nigeria, he was the Group CIO of Access Bank PLC and also served as the MD/CEO of Emerging Markets Payments, West and Central Africa before going into data centre operations. In this interview with ADEYEMI ADEPETUN, he spoke on challenges confronting data centre operations in Nigeria and how his firm has weathered the storm in the last five year.

How will you describe the health of the data centre segment of the ICT sector?

It has been quite a journey, which has equally been very interesting, challenging, and fulfilling. Rack Centre went live in October 2013. We have really set out to develop a brand based on a whole set of values of authenticity, excellence, setting the bar of quality in the market place. We have had a track record of successes.

To get to this point, we doubled our capacity, expanding with a 25 kilowatt of power generating set and we have not rested. We set the pace for quality data centre management in the country.

So, it has been five years of great service. Though, there was recession in 2016, but that did not stopped us from expanding the business, I am proud of some of the feedbacks we get in Africa being recognised as a leading player on the continent. We now have the basis of establishing the ecosystem for cloud hosted business in Nigeria. You wouldn’t have to go and procure your cloud services elsewhere and those are services we have been putting in place. It’s been five years of good operations.

Between 2013 and now, what challenges confronted data centre businesses in the country?

The challenge has been to get the message across to all organisations that they don’t need to build a data centre. All they need to do is just to outsource their operations to us. We provide the platform. If an organisation decides to build its own data centre, it is putting real capital that could be put at the back or front end of the business for expansion. Data centre is a big and critical infrastructure. Though, it is taking a while to break through, but we have done well and we are not relaxing.

How is the market composition for co-location services?

Yes, the market is ripening up and some of the fundamentals are in place. We have median age in the country, just a group that consumes lot of data on social network that expects to have their lives enabled through technology, so there is huge demand for data. The environment, I mean the ecosystem is a major factor. We have over 20 million SMEs that have needs to be met, especially in business. Even, if these SMEs were the population of a country, they are big enough. The population of Belgium and Netherlands together are the examples I used. Like the mobile phone, people started to use it and adapted, same with big technologies such as data centre, as we move on, people would start embracing it as well.

At Rack Centre, we are making technology available, even locally. I think that is a transformation for the economy, because when you introduce technology, it drives the growth and create a positive cycle in the ecosystem for things to thrive.

So, I think Nigeria is ripe, but we continued to have the challenge of creating and unlocking accessible market places. It is going to be quite tasking, a challenge we have to deal within a time frame.

Let’s look at the issue of data residency and local hosting, what do you think can make this happen in Nigeria?

If you go back five years ago, people move from places to places for hosting services, but lately, we have brought world class infrastructure down to Nigeria to tackle that. If you don’t have the facility, you can’t tell the people, but now we have the facility and there is need to create awareness about its importance. Data residency is government’s prerogative and it is left for them to enforce it. We have been pushing this as well. We have capability to cloud share services. Data Centre is now and the country is absolutely ripe for companies to host. It is now for us to make awareness that this is where we are. Awareness has to be intensified that the facility for hosting is in the country. We must not stop the awareness, perhaps, it needs regulatory push.

How dynamic is the Nigerian market vis-à-vis the readiness to meet the 30 per cent broadband target?

Broadband drives demand for IT, drives consumption and data centre capacity. Looking at it as a country, I think there are changes in technology development. Just three years ago, 4G and LTE technology was not as matured as it is now, and lately it is enabling real growth and connectivity for the ecosystem.

We now have cords of fibre moving to several regions but we don’t have the connectivity that can help deliver it in more efficient means. There are places in Europe that are still dependent on copper (ADSL technology) and there are pockets of areas where this applies, example, Lagos State. Lagos State GDP is worth about 30 per cent of Nigeria’s GDP per capital income.

Broadband penetration in Lagos is more than 22 per cent, so on its own the market in Lagos is significant and others in the country. The key thing is to harness this to create the right momentum for the addressable market. The whole of Africa has about 15 good quality data centres, UK has 65, compared to Nigeria, that is a huge gap. In South Africa, the installed base of data centres is over 50 per cent of what is installed in the rest of Africa; surely something must unlock the rest of Africa. With new technologies coming up, we must key into them and drive broadband penetration.

In what ways have certification helped Rack Centre operations?

We are a much respected brand in Africa in the area of our strength. I think the certifications earned are indications that as a respected body, Rack Centre has met a minimum level of development and as the first one in Africa, we also remain carrier neutral. Our market is not just Nigeria, but to multinational companies that want a footprint in Nigeria, and companies that want to deliver to Nigeria.

Our certifications are testament to the quality we offer, attested to by a global body. There are other certifications we have, which in the course of our business have enabled us to do more. We were not given for having sake; they meant to validate what we are doing.

Are there differences in Tier I, Tier II, Tier III data centres?

That means you have minimum level of up time. Tier IV is the highest, with the highest level of design constructed by time. Level III, II and I is a bit like a five Star hotel and Tier IV is like is 6/7 Star hotel. Tier III is the commercial level or the highest level of tiering among the first three levels.

Your cabling, power, your entire chain of managing the data centre is what they measure and it goes down to the backup. If you are a 4 star hotel, it is your own opinion, until a global bodies come and say we have looked at your design, it is a four star design, that validates it.

With all these certifications, what next for Rack Centre?

We certify as we grow because that has to be done. We operate to the standard as well and anywhere we found our self, we establish a standard. We intend to expand to more location in Nigeria, which is driven by clients wanting us to have multiple locations and you will see that emerging by the end of next year. And we also see that there is room for us to expand in Africa, and we are working to establish our footprints across the continent.

What is the level of cloud technology adoption in Nigeria?

Cloud technology is a whole range of solutions that give you assured service so you don’t have to buy your own data centre, application services and so on. It is quite diverse, what we have been doing on this journey is to build an ecosystem in diverse clouds for economic growth.

We have partners that provide cloud hosting here, so we are already on that journey. The cloud journey is a continuous one; we always have new player coming in, we have a broader range of services that you can consume on cloud. Don’t think you now have to go abroad to host your website, here in Nigeria, we have Infrastructure As You go (IAAS); Pay As You Go basis, you have to check out what we have and what we are able to do here. It is the same process of hosting in a Japanese cloud and a Nigerian cloud.

The fourth industrial revolution is gradually gathering momentum, what role will Rack Centre be playing, especially when it comes to Internet of Things, Machine Learning?

It’s all depend on several factors . What we shall be doing is to under pin those technologies and services with data centre infrastructure.

This is exactly what I talked about. The growth of Internet of Things, Machine Learning, Artificial Intelligence and other cloud technologies are going to put significant infrastructure owners on the verge of reinvention and I see great transformation coming up. If the country did not relent, by investing in infrastructure, especially power, I see Nigeria playing a huge role in the fourth industrial revolution.

Is it possible to put a worth to data centre operations in Nigeria?

The operation is growing. Different markets have different multiples that are considered for valuation. It is difficult to say this centre is worth this amount. But nevertheless, at Rack Centre, we are putting significant money into core infrastructure so that we can recreate the ecosystem. The shareholder value that comes out of that as we continue to bring demand for data service would be higher.

Nigeria is a huge market, where operators like Rack Centre need to create demand for data services. The more footprints we have, the more the valuation of the company. I think you will see couple of companies emerging in Africa. I see Rack Centre driving significant growth and others would follow.

What is the way forward for the telecoms sector?

There are some fundamentals. Broadband penetration is important. Government needs to make sure we achieve that as soon as possible. If you look at India some 18 months ago, it was 3G, but they have scaled up with adoption of 4G technology to drive broadband penetration. It is possible for us to do that in Nigeria because of increasing affection for technology, so I will advise that government should create that ecosystem. I shall appeal to some state governments not to see Right of Way as an avenue to milk the operators that have intention of investing in their region. If they charged them exorbitant fees, the investors would run and it will be a minus for such state, in terms of technology development. I will prefer people to bring broadband services to my state, which would open it for growth and development.

Broadband would open up many states, industries will come in, education will improve, population would benefit immensely, and health sector would leap for joy. Broadband comes with enormous potential. So, charging taxes that are above agreed term would really slow economic progress.

It doesn’t take time for broadband penetration to impact and bring in tangible opportunities for the society. It will make consumption of IT services affordable. All barriers to these developments must be removed.

There is also need for capacity building, we must also ensure we have the right level of seed funding to unleash the kind of creativity we need in the technology ecosystem here.

And finally, you cannot get away from creating the right macro environment. If the macros are wrong, the perception of the country will be wrong to investors, if the confidence in governance and longevity of government are not there, it undermines everything because you would no longer have investors coming in. We need that consistency and stability of the macro government.

How do you manage competitions?

By simply minding our business. We set a track record of excellence and we lead the way. We have a great customer satisfaction. We set in the intellectual context. We say what we do. Of course, we are interested in competition but there is also the need to create an ecosystem, and more players isn’t a bad thing. We focus on setting a high standard with what we do with great people, and also assuring that we are passionate about customer satisfaction here. That is the competitive edge people say we have and we are happy about that.

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