Cloud Computing Reaching Nigeria

South Africa's Dimension Data has launched cloud computing services in Nigeria, with the service offered to public and private enterprises and the country's telecoms service providers. The launch is in line with the growing trend for IT services in Nigeria with cloud computing expected to be a major growth driver. BMI believes Nigerian companies will be keen to lower costs and reduce the need for onsite servers in order to improve IT provision and use.

Dimension Data's announcement comes less than 10 days after local software provider eSofties Solutions announced a partnership with FICO , eXo Platform and Amazon to develop cloud computing services in the market. Increasing competition for cloud computing will ensure prices are kept low, enabling more companies to take advantage of the range of services on offer. Dimension Data said its public cloud services are immediately available while dedicated private cloud services can be deployed 'in a matter of weeks'.

Nigeria's Infrastructure Still Needs Development
Broadband Penetration Rates (%)

Nigeria's cloud computing market growth will be closely linked to the increasing availability of broadband infrastructure. BMI estimates Nigeria's broadband subscriptions grew at around 30% each year between 2010-2012, reaching 4.6% penetration rate. While we forecast the growth rate to slow only slightly each year between 2013-2017, the availability of broadband infrastructure remains a key barrier to the market's growth. We forecast just 13% penetration by 2017, with the majority of infrastructure likely to be in major cities Abuja and Lagos. Establishing six internet exchange points (IXPs) across the country's six geopolitical zones is a positive development, but lack of infrastructure to connect to homes and businesses will remain a medium-term barrier to growth in IT services. An additional hurdle to IT service development is the availability of power infrastructure with power provision particularly important for datacentres and services that need to be constantly online.

Dimension Data clearly sees strong potential in the Nigerian IT services market, with its fast-growing economy encouraging investors to enter the country. Companies in outperforming sectors such as construction, trade, electricity, mining and manufacturing will provide growth opportunities while sectors such as financial services and professional services are likely to be first movers to using cloud services.

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Geography: Nigeria

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