Local data hosting will enable Africa’s digital transformation

For many developing countries, a lack of legacy architecture has proven to be a bonus rather than a disadvantage in terms of closing the digital gap. As the digital economy accelerates across much of Africa, investment is ploughed into fibre and mobile – but data centres can be overlooked, according to First Brick Holdings.

Set up as a portfolio company of US-based Roha, First Brick Holdings is focused on investment and development for data centres across Africa, although it is primarily active in the east. We spoke to the company’s executive director Robert Mullins about the dearth of data centres in much of Africa, and how this needs to be addressed.

Why have data centres been overlooked in Africa?

If you look at what’s been happening across Africa, plenty of backbone fibre and urban fibre has been put in, so from a connectivity perspective data is being transported fairly well. The last six to eight years have also seen substantial improvements in the international gateways.

There’s also been a tremendous amount of investment in the mobile infrastructure – there’s great connectivity in much of Africa, with things like video calling completely commonplace. Data is being transported effectively and efficiently, both within the borders of most African countries and outside of them. There’s much better latency than there has been in the past,

The one thing that from our perspective is being left out is what happens to the data that’s being transported in-country – that’s what we consider the third leg of the stool. This critical piece of infrastructure, processing and storing data within the borders of these countries, has been left out of the equation. Effectively, the offering of a data centre is to provide an environment in which customers from across both the public and private sector can host and keep their data and core systems working in an optimal environment, as is being done in the rest of the world outside of Africa.

Why has adoption of data centres lagged, and how has the issue been overcome?

It’s a question of priority – the competition in terms of legacy is generic. People have built their own ‘data centres’ in-house; six or eight racks in a server room for banks, or smaller for private enterprises. Telecom companies built their own for their own purposes and offered space to third parties, so they exist in a generic form but not in the way that they exist outside the region, where they’re a shared infrastructure that benefits all stakeholders.

You have a much better service and offering, as well as a lower cost of ownership, plus the additional oft-overlooked benefit: it’s an actual location with proper security and cooling, backup power etc, and the equipment is operating optimally. One of the fundamental benefits of this is that they create an environment where different customers and networks can connect to each other in more effective ways – it’s a healthier environment.

How are you encouraging operators in Africa to move towards this data centre model?

We’ve positioned it as a carrier-neutral and cloud-neutral environment, which means that all telco carriers – whether international, regional or local ISPs – can come in with their own equipment and offer choice to other customers hosting within the data centre. Neutrality is the optimal model – different cloud providers can come in and have equipment within the data centre that lets them offer services. Beyond the traditional functions of the data centre, it creates an environment of interconnectivity and choice.

We believe that this is an advantageous proposition in terms of digital transformation. When you look at what’s happening in many of these markets – for example Uganda – the nature of entrepreneurship and the way the business environment is evolving, it’s very much in a digital sense. We can create an enabling cornerstone which is hugely beneficial to the broader economy and society – not just in the context of Uganda, but across the region.

What are the key growth areas in Africa’s digital economy?

“Digital Economy” is a broad term – the economy itself is increasingly becoming digital one way or another. There will still be traditional industries such as manufacturing, and countries such as Uganda are pushing towards local manufacture, but a lot of these industries are themselves digitally transforming. This is for their own benefit in terms of internal efficiencies, but also in how they can offer access to their customers - whether this is within their countries or regionally. It gives them a chance to compete regionally and/or internationally; if there’s an infrastructure that allows them to have digital platforms for purchasing or creating a market place, that’s by extension driving growth of the traditional economy as well. It’s a sequential migration towards a broader digitalisation.

In another sense, there is a growing digital economy in its own right; a lot of the digital entrepreneurship within Uganda is focused on areas such as cloud service offerings, digital marketing, and mobile payments, so there’s a very vibrant digital economy developing.

Is it fair to say that the relative novelty of these services is a factor driving uptake in Africa?

If you look at the demographics in these markets in terms of the youth population and technology that they adopt, it’s a tremendous opportunity and in that sense it’s not that different from what we see in more developed markets – for example, I wasn’t expecting Uber to be a pretty common way to get around Kampala.

The mobile payments market is far more developed than in many more developed economies. There’s a full understanding and perception of the availability of these services because they are there, but there’s a difference between a service being present in a market and having actual availability – and the latter is often much lower than it should be due to missing infrastructure. For example, if I arrive at the airport in Kampala there are around five ATMs, but on any given day only one or two will be working, and it can be the same for mobile payments services. They’re lacking the infrastructure to the support all the services that are being demanded by the population.

Are these services comparable? Would the availability of a digital service not be more reliable?

Many of the legacy mobile payments services have been so successful in part due to using incredibly reliable technology standards such as USSD or SMS. That being said, the whole mobile payments segment is moving towards omni-channel, so while mobile banking in Africa has typically been supported by more legacy technologies, this shift towards omni-channel strengthens the case for infrastructure. The systems that are supporting ATMs are back office systems in banks, and if there are issues with how those are being run then customers can’t withdraw money. The legacy mobile payment market will be around in Africa for some time but the migration is underway.

These services are launching in more densely populated areas – is it viable to extend them to more remote regions?

From a data centre perspective you don’t need to build out into remote areas; connectivity within these countries is generally very good, or at least not a huge issue in most places. What the data centres are doing is providing a centralised infrastructure where a bank or mobile payment provider’s core systems are guaranteed to be always on. The advantage of the data centre is that due to the neutrality aspect, any of these banks or mobile payment providers can have a choice of carrier. Typically what they would do is subscribe to two or more carriers, so if there’s any issue with their connectivity, i.e. carrying that data in and out of their core systems, they have a backup channel on which they’re able to do that. In the current environment that’s typically not the case; banks usually have one service provider delivering them connectivity from their headquarters or wherever their core systems are based. This is also addressing uptime and risk from a connectivity perspective, as well as keeping the system itself up and running.

The content side of things is also driving both traffic and the need for a local cache. Activity isn’t just based around financial transactions – a lot of it is content, and there’s a tremendous amount being generated in Africa. There needs to be a place for this to be effectively stored and accessed, but additionally access to global content is also growing exponentially. From a user experience perspective, this content needs to be closer to the audience accessing it – lower latency will drive a better user experience. The thirst for content is only growing so content providers are realising the importance of having this infrastructure in-country, closer to the population.

First Brick Plans To Build Five African Data Centres By 2021

The American investment firm is already building a major data centre in Uganda, which is expected go live later this year.

US-based First Brick Holdings has announced that “scoping is under way” for its $50m regional expansion in East and Southern Africa, with the funding and creation of several data centres across the region.

First Brick Holdings is proceeding with an expansion of its data centre investments across East Africa with a focus on Ethiopia, Rwanda and Tanzania “high on the list”. First Brick plans to complete its data centre investments in the region within the next three years, with five Tier III data centres due to be live by 2021, it promises.

These investments will “open up new opportunities for financial services, governments and small- to medium-sized enterprises (SMEs) by addressing their mission-critical needs for data storage, business continuity and disaster recovery,” said the firm.

They will build on the company’s first investment in Uganda – Raxio Data Centre Ltd. Raxio has commenced construction of Uganda’s first state-of-the-art Tier III, carrier-neutral data centre in the Namanve Industrial and Business Park. The data centre will be able to house up to 400 racks, delivering 1.5MW of IT power, upon completion in December 2019.

Raxio has signed up its first customers, including local cloud services provider Hamilton Cloud Services (HCS).

Robert Mullins, executive director at First Brick Holdings, said: “Demand for data centre services in Africa is on the rise. This is being driven by improving connectivity levels, rising data traffic volumes and a growing demand for secure, stable operating environments for data traffic.”

He added: “We’re delighted at how Raxio Data Centre is progressing, with customers and carriers signing up and construction proceeding at a rapid pace. By building the data centre infrastructure with the needs of local, regional and global customers in mind, we can underpin continued growth in the African digital economy and connect Africa to the global data economy.”

First Brick Holdings Inc is a portfolio company of US-based investment firm Roha Group Inc.

Driving Digital Transformation in Africa through data centres

Demand for data centre services in Africa is on the rise, driven by improving connectivity levels and rising data traffic volumes amongst its large ‘digital native’ market. Robert Mullins, Executive Director of First Brick Holdings, tells us how this rise in data centre developments is providing the necessary environment to transport data at scale in the region, which in turn is driving demand for digital content, mobile money, cloud services and more.

With continued and sustained growth in Internet penetration and connectivity, some of the foundations begin to be in place for a deeper and more meaningful Digital Transformation in Africa. In Sub-Saharan Africa, mobile penetration reached 44% in 2018, catalysing an uptake in demand for data for both business and personal use.

With 41% of the population under the age of 15, the region is also home to a market of digital natives hungry for modern technological services – this, combined with the availability of increasingly affordable smartphones and mobile data plans, means demand for all things digital in the region is on the rise. 

Building data centres that can cope with these rising requirements is critical to driving this Digital Transformation. With new technologies such as IoT, cloud and content delivery networks fuelling both consumer and business demand for high-velocity, high-availability services, a more localised IT and data infrastructure is essential.

Modern data centres in Africa will not only help meet these needs, but also serve as hubs to connect the region to the wider global data economy; facilitating economic and social development.

Despite the dramatic rise in both terrestrial and mobile connectivity over the past 10 years, broader Digital Transformation in Africa has been largely stymied by a lack of adequate data centre infrastructure.

Existing infrastructure is not equipped to cater to ever-growing server space, power and cooling requirements. By building a modern, state-of-the-art data centre infrastructure, Africa can benefit not only from improved digital services, but also significant socioeconomic growth.

The role of data centres in economic and social growth

The economic value of the Internet in Africa is unsurprisingly strong, with research from McKinsey claiming that the Internet can increase productivity in the continent for a multitude of sectors, including education, healthcare, financial services, agriculture, retail and government. According to the Internet Society, the Internet contributes to 3.7% of developed countries’ GDP on average. In African countries, however, this lies at just 1.1%.

Building and utilising local data centres is vital to boosting this figure and driving economic growth. For instance, the Internet Society identifies a lack of local content infrastructure and content delivery networks (CDN) as a key barrier to achieving wider Internet use. Hosting content in local data centres significantly reduces the latency and cost of content delivery, which will ultimately improve its accessibility for local communities. Capitalising on opportunities such as these is vital as the mobile CDN market is set to become a major driver of data traffic growth in Africa, with CDN traffic predicted to exceed 70% of total online traffic in the next five years. 

A growing colocation data centre market will also facilitate job creation and cultivate local partners, such as cloud service and other third-party service providers who will be able to deliver higher quality, more reliable services to their customers from within modern data centres. For instance, new data centres in South Africa alone are predicted to create over 100,000 jobs .

As demand for data centres rises, data centre operators will inevitably require more staff and create more IT training programmes; a particularly promising prospect when considering Africa’s youthful population will directly cause GDP to grow by 11% to 15% over the next decade, by which time they will have entered working age. Additionally, with the advent of Edge Computing and hybrid cloud, there will be demand for specialised IT skills, in turn bringing a number of highly skilled, well-paid jobs to the region.

Choosing the right data centre for your business

As the popularity of new technologies such as IoT and cloud continue to grow amongst African consumer and business markets, data centre operators are racing to satisfy these new demands. While data centre modernisation can facilitate greater IT agility and lower costs, building a data centre is no easy feat. 

Businesses should look to cost-effective and flexible alternatives, for instance housing hardware in colocation facilities, or renting from a cloud hosting provider. Outsourcing will allow businesses to not only get their services up and running faster but will also require less upfront investment.

There are various factors that local African businesses should consider when choosing to build or purchase space in a data centre.

Selecting a local colocation data centre facility or provider that is close to key customer markets ensures that they will benefit from low latency connectivity, in turn helping to create a consistent regional service that meets market demand and satisfies customer needs. Additionally, choosing a data centre that is close to a business hub facilitates ease of access; allowing business owners to visit their IT environment, supervise staff and keep a close eye on their operations. 

Power and network accessibility is another critical aspect when selecting a data centre, and will serve as the foundation of a reliable operating environment. While the location of a data centre will rely upon factors such as access to power grids, businesses should also consider the redundancy of the systems that data centre operators have put in place.

To ensure stable connectivity and continuous uptime, businesses should look to data centres that guarantee minimal downtime, for instance Tier III colocation facilities. Built to satisfy redundancy and concurrent maintainability requirements, Tier III data centres are designed to ensure a maximum level of availability. Selecting a data centre with these capabilities is particularly critical for businesses who run high-velocity, high-availability operations and will help them to avoid financial losses and reputational damage during power outages. 

Opting for a carrier-neutral, colocation data centre facility also allows local businesses to interconnect with other networks, including those of partners, distributors, government entities or even competitors for peering. This is particularly important when considering the emergence of new technologies in Africa, where businesses must be agile enough to adapt to a changing environment.

By colocating in a data centre environment where other partners can readily provide state-of-the-art services businesses can gain the IT agility needed to cope with the demands of Africa’s growing and evolving digital economy.

When economic growth in the region is integrated with parallel trends in digitalisation and content consumption, data usage and its associated storage requirements will inevitably continue to rise. Developing modern, state-of-the-art local data centre infrastructure is vital to creating a reliable operating environment for businesses to deliver increasingly sophisticated digital services and a key enabler to facilitate this continued Digital Transformation across the region.

Raxio on course to launch new Tier III carrier-neutral data centre in Uganda – its investor First Brick Holdings wants to launch four more by 2021

Africa’s new digital life needs cloud services and the data centres to host them. Uganda took one step forward with the announcement of a new Tier III carrier-neutral data centre called Raxio in January 2020. Russell Southwood spoke to Robert Mullins, the Executive Director of its operator and investor First Brick Holdings.

The backers and investors in Raxio are First Brick Holdings, a company set up by the Roha Group. The latter was set up by Brooks Washington, a Harvard-educated American who used to work with McKinsey & Co in Nigeria where he “coordinated much of McKinsey's private equity work in Africa.”

As Mullins told me, Roha Group focuses on “areas we identify as having unsupplied demand.” Its first major play was to set up Juniper Glass Industries in Ethiopia, something the country lacked. It has now also gone into an equipment leasing business in the same country.

The third area it has identified with unsupplied demand is data centres:”We think one of the missing pieces is data centers. In order to have a functional and energetic digital economy, one essential piece is a data centre.”

This general proposition is unarguable but why Uganda, as its one of Sub-Saharan Africa’s smaller digital economies?:”We scanned the continent. Our investment sweet-spot is US$50-100 million but that’s probably not a single investment. So we’re looking at something multi-country or pan-regional.”

“We looked at which countries we could address most rapidly. Things moved quicker in terms of local partnerships and there was a pent-up demand there. It will be an independently operated data center based on best practices with neutrality as a key characteristic. That will be both carrier and cloud service neutrality. From our first customers we’re seeing local and international cloud providers.”

Some of those cloud services will come from carriers who have seen their traditional business eroded and want to expand their enterprise services portfolio with a cloud offering.

The data centre will be able to house up to 400 racks, delivering 1.5MW of IT power at final phase. Located 15 kms from Kampala in Namanve Industrial and Business Park, Raxio will meet the requirements for both primary and disaster recovery sites and will sit along one of Uganda’s principal fibre routes to ensure connectivity. Mullins says they are on target for an opening at the beginning of January 2020:”The civils are fully under way and the parts needed for the design are on order.”

So who is going to use the data center?:”Initially most demand will be local. The most obvious category is the banking sector, which is increasingly going online, often with a regulatory component to it. They have a need for uptime and in order to maintain uptime, you either make a considerable investment in your own data centre or you use an external provider.”

“One of the interesting developments from disaster recovery is now some banks are talking about making our facility their primary data center and having their disaster recovery elsewhere.”

There are also pure cloud play service providers and those with enterprise portfolios who want to add in cloud services: one of the first signed up local customers is Hamilton Cloud Services. There are also potentially media providers who are dealing with online content generation and who have “search problems and storage issues.”

A key feature is that Raxio will become a ‘meet point’ for the industry:”We already have 10 carriers who will have active equipment in the facility. The ability to interconnect with others in the facility is very important.”

The final element of potential demand are the international OTTs:”People like Akami and all the rest. It’s about being closer to their eyeballs and content needs to be cached locally for quality of service.”

So what are the prospects for Uganda’s digital economy?:”I’ve been involved in this project for a year. We’re just at the beginning. The way content is being consumed and the way business and Government are digitalizing is already happening. The country as a whole has immense possibilities. Reliability will increase the provision of digital services.”

“There’s a push in East Africa for shared provision of cross-border services. This will enable businesses to transport business concepts across borders.”

So where’s it going to set up next?”We already have an office and a team in Kenya but there are already several data centers there so we’ll see how things play out there. We’re looking closely at Rwanda, Tanzania and Ethiopia. At the moment, Ethiopia is top of our list. From a demand perspective, there’s a bigger pool there than in other countries.”

He sees the announced liberalization as a factor in accelerating its planning and has already had good discussions with the Government:”New (telco) entrants will provide better connectivity and the plans for a national (fibre) backbone are also important.”