(Bloomberg) — Nigeria is drawing millions of dollars into new data centers, propelled by the voracious online habits of its young, tech-savvy population and a push to harness artificial intelligence to power the next wave of its digital boom, reinforcing its position as one of Africa’s top technology hubs.
Global and regional operators — including Equinix Inc., Microsoft Corp., MTN Nigeria Communications Plc, Rack Centre, Airtel Nigeria and Open Access Data Centres — are investing nearly $1 billion in next-generation facilities designed to handle advanced computing workloads and serve the continent’s rapidly expanding online population.
“Over the next decade, I expect AI workloads to drive not just capacity expansion, but infrastructure diversification,” said Wole Abu, Equinix managing director for West Africa, which is investing $140 million to expand its Nigerian operations. “As Nigeria works toward its ambitious 70% digital literacy target by 2027, you’ll see exponentially more users generating data and requiring AI-enhanced services.” Its current digital literacy rate is 50%.
AI’s appetite for computing power is colliding with Nigeria’s demographic surge. The country’s nearly 240 million people, with a median age of 18, are driving a data explosion through mobile-first internet habits, gaming, video streaming, and remote work. That’s fueling demand for faster, more resilient digital infrastructure as companies ditch on-premises systems for cloud and hybrid models, spurring a wave of data centers built closer to users — designed to handle AI workloads and link local computing power to global networks.
“This momentum signals a deeper economic shift,” said Abideen Yusuf, general manager for Microsoft Nigeria and Ghana. “Powered by a youthful population, expanding internet access, and a vibrant entrepreneurial ecosystem, Nigeria is emerging as a digital leader in Africa.”
While other African nations such as Kenya, Egypt, Ivory Coast, and South Africa are also drawing investors, Nigeria stands out for its focus on building inclusive AI, said Equinix’s Abu.
“This isn’t about deploying Western AI solutions, it’s about creating African AI capabilities.” That means developing models in local languages and tailored to regional challenges, which requires both domestic compute power and connectivity to global data hubs, he added.
Sector-specific demands are also rising. Agriculture, for instance, increasingly relies on satellite imagery, weather modeling, and IoT sensors — all data-intensive technologies. “Smart mining operations using 5G networks will further drive edge computing and data processing,” Abu said.
Recent regulatory reforms that establish clear digital governance, legally recognize online transactions, and strengthen data protection — coupled with rapid cloud adoption — are adding to the appeal for investors.
Nigeria’s cloud computing market is expanding at a 26% compound annual growth rate, according to Microsoft’s Yusuf. “As organizations pursue greater data security and scalability, the demand for data centers continues to rise.”
Data from Mordor Intelligence show the market’s value is projected to climb to $3.28 billion by 2030 from an estimated $1.03 billion this year.
In Lagos, the Itana Digital Zone is developing Africa’s first full-stack growth zone for AI and data companies — a hub aimed at fostering innovation and lowering costs as the naira’s devaluation has made dollar-priced services out of reach for many startups, said Chief Executive Officer Mayowa Olugbile.
Modeled after Dubai’s Internet City, Itana seeks to create a digital-first jurisdiction offering tax breaks, streamlined immigration, and simplified operations to help startups scale across Africa. Olugbile expects more naira-priced, locally hosted services to emerge within five years. “With the right policy support, Nigeria can still become one of the world’s fastest-growing cloud markets,” he said. “Affordability will be the critical hurdle.”
Infrastructure Challenges
Still, power instability remains one of the industry’s biggest challenges. Frequent blackouts and costly diesel fuel weigh heavily on profitability. Developers are now turning to renewable and gas-based solutions to stabilize operations and attract sustainability-focused investors.
Open Access Data Centres plans to rely mainly on natural gas to power its hyperscale data center in Lagos, said Chief Executive Officer Ayotunde Coker. “Gas is our most sustainable approach,” he said. “You want to hit 98–99% availability so that you revert to diesel as little as possible — ideally, not at all.”
Despite having 13,000 megawatts of installed generation capacity, Nigeria’s grid supplies only about 5,800 megawatts, forcing data center operators to build their own energy sources. “No matter how good your utility is, you still need to have diesel backup,” Coker said.
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–With assistance from Chris Miller.
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