Chief Executive Officer of Digital Realty Nigeria, Engr. Ikechukwu Nnamani
Indigenous data centre investor and Chief Executive Officer of Digital Realty Nigeria, Engr. Ikechukwu Nnamani, has expressed strong reservations on the way and manner Nigerian banks are focusing primarily on quick return on investment (RoI) to give loans to prospective investors in data centre industry.
Speaking at the recent Hyperscalers Convergence Africa (HCA) conference in Lagos, he revealed that approximately 90 per cent of the investment required to build a new data centre relies on imported infrastructure which is powered by forex, thus making the sector highly vulnerable to exchange rate fluctuations.
Making a graphic reference, Nnamani argued that “If you benchmark your costs in dollars and convert to naira, a depreciation of the naira can reduce your revenue by up to 40 per cent.” Continuing on how banks approach loan entries by investors in data centres, the former President of ATCON averred that “The Nigerian banks, for instance, that want to invest and get their money back within two years, it’s just not sustainable. This is the current situation, and each company is trying to address it in its way.
“My concern is that some data center operators will run into major problems if they don’t have a source of long-term, affordable funding that can withstand exchange rate disruptions. If not, many companies will face trouble very soon.
Corroborating Nnamani’s views, the Regional Industry Manager for Central and Anglophone West Africa at the International Finance Corporation, Dan Croft, said during a panel session that while financing availability in Africa has remained relatively stable, with total capital investment around $8.5bn in recent years, the complexities of investing in Nigeria were heightened by macroeconomic factors.
He posited further that “Typically, revenues are in local currency while investments are in dollars, which presents challenges until we resolve manufacturing issues. We are exploring guarantee options to mobilize local capital, but being dollar-denominated limits our competitiveness in local markets.
