70% of govt agencies host data abroad despite $220m local infrastructure

By Adeyemi Adepetun |   04 June 2021   |   4:31 am  

• Apart from capital flight, situation does not guarantee data security, says Adegbiji
• IXPN saves operators $40m yearly from capital flight
• Stakeholders want govt to increase local hosting by 30% in two years

With as much as $220 million investments in about 11 data centre operations in Nigeria, utilisation of this huge infrastructure is still below 30 per cent in the country.

The Guardian gathered that a data centre requires between $10 million and $20 million depending on the Tier before it could be sited.

While checks have shown that telecoms operators and other ICT firms host their data locally, governments’ Ministries, Departments and Agencies (MDAs) that should lead in local hosting are increasing the sector’s capital flight by hosting their data abroad.

It was gathered that about 70 per cent of governments’ MDAs still host data abroad despite data localisation guidelines in the country. It was revealed that Israel, Ukraine, UK, USA, were among the countries where some Nigerian data are hosted.

A data centre is a dedicated space within a building, or a group of buildings, used to house computer systems and associated components, such as telecommunications and storage systems.

While there are about 11 data centres in the country, the main commercial multi-tenant data centre providers are Rack Centre, Main One, both are constructed facility Tier III certified (MDXi), 21 Century and Cloud, Exchange which are Tier IV design (not constructed facility) certified, Galaxy Backbone in Abuja, 21st Century Limited and Medallion in Lagos, with few other smaller commercial multi-tenant data centre providers.

Unconfirmed reports claimed that Galaxy Backbone Limited, the only Uptime Institute Certified Tier 3 data centre in the public sector (in Nigeria) is currently estimated at 38 per cent capacity utilisation of its 2.5MW capacity.

The National Information Technology Development Agency (NITDA), Nigeria’s agency in charge of IT development attested to this challenge of under-utilisation of data centres in the country, especially by the MDAs.

Already, a NITDA mandatory Guideline for Nigerian Content Development in Information and Communication Technology (ICT) encourages indigenous innovation, development of the local ICT industry and establishment of intellectual property and data regulation and protection standards, each of which has a set of related strategic goals.

Specifically, NITDA’s Guideline 9.1 requires all indigenous Original Equipment Manufacturers (companies that produce functional computer devices from component parts bought from other organisations) to assemble all hardware in Nigeria and maintain fully staffed facilities for that purpose. Guideline 11.1(4) requires all telecommunications companies to host all subscriber and consumer data in Nigeria. Guideline 12.1(4) requires all network service companies to host all subscriber and consumer data in Nigeria. Guideline 12.2(1) requires all ministries, departments and agencies of Nigeria’s Federal Government (MDAs) to host their websites locally and under a registered.gov.ng domain. Guideline 13.1(2) requires all data and information management companies to host all sovereign data in Nigeria. Guideline 13.2(3) requires MDAs to host all sovereign data locally on servers within Nigeria.

NITDA Guidelines for Nigerian Content Development in ICT cover subscriber and consumer data hosted by telecommunications companies, network service companies, and ICT companies; and sovereign data hosted by ministries, departments, and agencies of Nigeria’s Federal Government and information management companies.

Speaking at an ICT forum recently, the Director-General of NITDA, Kashifu Abdullai, represented by the Head, South West Zonal office, Mrs. Chioma Okey-Aguguo, confirmed that a larger percentage of MDAs are not hosting their data locally.

Okey-Aguguo said though it is challenging, NITDA is seriously engaging and sensitising them on the need to host locally.

Industry stakeholders have described this lack of patronage of indigenous data centres as worrisome. For instance, the President, Institute of Software Practitioners of Nigeria (ISPON) Chinenye Mba-Uzoukwu, confirmed that the current utilisation capacity for these 11 data centers is below 30 per cent.

Speaking at the event with the theme: “Achieving 30% Growth In Local Cloud Hosting By 2024”, Mba-Uzoukwu said that the topic was timely even as “we are faced with a puzzling question: the housing estates that our friends are building against all odds in a super-challenging environment, will they be occupied by offshore tenants or ourselves?

“There are 11 data centers in Nigeria and the largest are expanding their capacity constantly in anticipation of a growing demand but currently the utilisation of capacity probably sits at below 30 per cent.

“With four certified Tier 3 constructed facilities in Nigeria and more on the way, the Africa datacenter market is expected to gross $3 billion by 2025, growing at a CAGR over 12 per cent.

“This indicates that despite the forecast growth in installed capacity, the patronage by way of utilisation does not match the expected levels.”

To this end, the President of ISPON said: “We must ask why?”

According to him performance of data centres is driven by large corporations and MNCs for whom data services are not taken lightly, as they commit to long-term relationships on the basis of reliability, especially high availability, which is indexed to global standards.

In this context, he said digital transformation; especially in the public sector, is a critical prerequisite.

“Digital Transformation delivers a joined-up government that enables the policy and process of governance to ride on top of IT infrastructure from broadband to software solution stacks. It also presents opportunities for entrepreneurship and innovation to flourish as solution providers get work to do. For this dynamic to be accelerated and proliferated, it is difficult to overestimate or emphasise the importance of the Local Cloud, which must be the initial point of access for a broad-based digital adoption and transformation strategy in a rising tide that lifts all. We often fail to recognise and prioritise this fundamental – perhaps it is an inconvenient truth?” he stated.

The Chief Executive Officer and Managing Director, Rack Centre, Dr. Ayotunde Coker, told The Guardian that data centre operations in the country are pretty stable even in the slow economy.

However, he said a growing economy will result in increased data centre demand, bolstered by the increasing shift to digital platforms across all parts of the economy, adding that cloud services will grow as businesses focus on acquiring only the level of compute power they require on a pay as needed basis.

Coker said it is worrisome that after so many years of local data centre capacity at world-class quality, there are assertions that MDAs host abroad. He said as local cloud platforms become more available there really is no reason MDAs should not set the example and honour the sovereign data rules and host locally.

The Rack Centre boss, who admitted that data centres are highly capital intensive, noted that broadly around the world, they require an investment of anything from just below $10 million per MW to $20m per MW depending on location dynamics and terrain.

According to him, the potential for data centre growth in the country is tremendous given the number of Internet users at about 155 million, growing broadband penetration, number of MSMEs and continuing growth in demand for content. He said the number and size of data centres required vary from five times the amount of capacity right now to over 20 times.

Data centre operations in Nigeria compared to other parts of Africa and world, the Rack Centre CEO said is way behind South Africa and with huge potential to grow. He disclosed that South Africa has 50 per cent of total African installed capacity according to Xalam Analytics, experts in Africa data centre capacity assessments.

Nevertheless, he said this is an indication of the potential for Nigeria, pointing that Africa has one per cent of total global data centres installed and 14 per cent of global population or thereabouts, which are compelling indicators for growth.

Giving his perspective, Chief Operations Officer, MDXi, Gbenga Adegbiji said data centres should be fully utilised as designed, as the more entities that are hosting in a data centre, the larger the ecosystem that is created and the more information can be exchanged amongst the interconnecting entities within the data centre, which directly translates to lower cost of information exchange and better user experience.

Adegbiji said having the data centre being used to its maximum capacity also means that you have a lower cost of operation per rack, which is measured by Power Utilization Effectiveness, PUE).

The PUE, according to him, is a measure of the total facility energy consumption to the energy consumed by the actual computer equipment, adding that a lower value of PUE means more energy usage effectiveness and overall lower operational cost.

Like Mba-Uzoukwu and Coker, the MDXi COO said the government has to do more in the digitalization drive. “We need to get Ministries and MDAs to move from paperwork which is inefficient, to digital technology and computer-based operations. After digitalisation, we have to enforce the data residency policy. Today and despite having a world class and purpose-built Data Centre like MDXI, we still have ministries and MDAs hosting data in foreign data centres.

“Apart from the associated cost of hosting, which is being paid for from the country’s scarce foreign exchange, there is the issue of the speed at which information will be retrieved from the host DC, which will always be very slow because of the distance to the host. The worst of it is the issue of information security which cannot be guaranteed if you are not in absolute control of your data,” he stated.

On the assumption that Nigeria’s porous cyberspace might be fueling the rise in foreign hosting by MDAs, Adegbiji said such arguments are unfounded.

He explained that IT security is a global phenomenon and location is not a barrier to hackers.

According to him, “data center security entails physical practices and virtual technologies used to protect the data center from external threats and attacks and it has both physical and logical (or software) components. A standard MTDC should have not less than five to six levels of physical security/barrier before access is gained to physical machines.

“On the logical side, creating secure zones in the network is one-way, security is layered into the data center and these are the practices in a standard data centre. Information security should be a serious concern for any enterprise or government and hosting data where you cannot guarantee it could be more dangerous than the threat of attack.”

Adegbiji said the data centre industry in Nigeria is young but growing very fast. He stressed that Nigeria today can boast of standard Tier III certified data centres with 100 per cent availability year-on-year for more than six years now.

Contributing, the Nigeria Coordinator, Alliance for Affordable Internet (A4AI), Olusola Teniola, said the MDAs under NDPR should be encouraged to migrate the data they store out of country to a secure locally present data centre that provides the level of security, availability and uptime they seek.

Teniola said under Presidential Executive Orders 003 & 005, NITDA should continue to convince the MDAs that e-Government must be built in Nigeria and controlled by Nigerians so that Nigerian data is protected under the Data Protection laws of the country, especially highly sensitive and medical records for instance.

The Managing Director of Cloudflex, a leading local Cloud hosting company in Nigeria, Aderemi Adejumo, identified that major beneficiaries, accounting for 95 per cent market spent in Nigeria’s cloud hosting market, are actually foreign hosting companies.

Adejumo, who said the Nigeria Cloud hosting market was worth between $100 million to $450 million, noted that by implication, about 95 per cent of the $450 million market valuation is with the Hyperscalers, (AWS, Azure & Google Cloud Platforms), outside the shores of Nigeria and public sector organisations are most culpable.

The Cloudflex MD argued that the Central Bank of Nigeria (CBN) has a major role to play in ensuring that most data hosted abroad are repatriated in-country by “having as part of its licensing agreement a commitment from the licensee that they will be hosted in Nigeria.”

“NAICOM and PenCom can also play their part to ensure the organisations they regulate do not host their data outside of Nigeria.”

“There are three important definitions about data: Data Residency – where the business defines where its data is located; Data Sovereignty – country law where the data resides; and Data Localisation – legal requirement that the data is stored within the country’s borders.

“With 95 per cent of Nigeria’s data being abroad, the country’s regulators have no control or authority over the data.”

He called for more stringent measures by NITDA and other agencies to strengthen NDPR and related regulations to maintain watertight data sovereignty for the country.

According to Adejumo, “With the Patriot Act, Cloud Act and GDPR – Western governments have more control and authority over Nigeria’s data than the Nigerian government and regulatory authorities.”

MEANWHILE, the Chief Executive Officer of Internet Exchange Point of Nigeria (IXPN), Muhammed Rudamn, has said that an increase in the number of data being hosted locally, especially telecommunications operators, is saving the country about $40 million yearly.

According to him, this amount is being saved on local Internet traffic, which increased to 60 per cent in 2020 from less than one per cent in 2006.

“The reality is that data is the economic engine of the Internet. With billions of U.S. dollars invested yearly across the globe towards cloud infrastructure by private and public entities, Nigeria must strive to become the hub for Internet content in Africa, not just content consumers.”

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