Investors scramble for Kenya's prime data centre market

A pipeline of billions of shillings worth of new investments is expected into Kenya’s data centre market fuelled by a rising internet economy.

In the latest move, South Africa-based Dimension data targets to build a new data facility adding to a host of others by corporates such as Safaricom, Mwalimu Sacco, MTN, Nairobi data, and Icolo.

Dimension Data boss Alan Turnley-Jones said the firm is looking for a suitable site in Nairobi to set up a new data centre within the next two years.

“We see it as critical for Dimension Data and NTT operations in East Africa. The data centre is the hotel of the digital economy, we see massive digitisation across all clients and sectors in the short and medium-term. The data centre is one of the foundations to offer managed services to our clients including hosting, networks, and platform services,” he said.

Another firm Masinga Data is planning Sh6 billion green facility along Tana River in Masinga.

The Masinga Data Centre is being set up by US-based software solutions company Cloudoon Inc located in Delaware.

Separately, the Internet Corporation for Assigned Names and Numbers (ICANN), the non-profit corporation that coordinates the domain name systems, announced in March that Kenya will host one of the two mega data centres it plans to construct in Africa.

Multiple servers

The new facility will have multiple servers with high bandwidth to cater to increased demand for internet services and offer better protection from cyberattacks.

“The clusters ensure that internet queries from Africa can be answered within the region, and not be dependent on networks and servers in other parts of the world, thus reducing latency and improving internet user experience in the entire region,” the organisation said in March.

Currently, there are four other such ICANN data centres globally, two in North America and one each in Europe and Asia.

“ICANN announced that it will install and manage two new ICANN Managed Root Server (IMRS) clusters in Africa, one of which is confirmed to be in Kenya. This is ICANN’s first-of-its-kind investment in Africa,” the organisation said in a statement.

A survey report released in March revealed that data centres and special homes for the elderly are the target investments for Kenya’s super-wealthy this year-- a departure from real estate, which has traditionally been the investment of choice for the ultra-high net worth individuals.

The 2022 Knight Frank wealth report said Kenyans with a net worth of over Sh3.4 billion prefer investing in the two sets of assets for long-term returns.

“We also expect data centres to be developed close to the geothermal springs of the Great Rift Valley, with the power-hungry facilities making use of the geothermal energy produced by volcanic activity in the region,” said Mr Ben Woodhams, head of Knight Frank’s Africa desk.

Data centres have been a magnet for investors amid an expected global boom in online services. Working remotely and e-commerce have led to higher data consumption, shoring up demand for more data centres globally.

Special Economic Zone

The rise of Olkaria as a preferred site for many companies could be linked to affordable and sufficient power as the centres are power guzzlers.

The government targets to create a Special Economic Zone (SEZ) around the Olkaria geothermal field to woo investors with discounted electricity tariffs.

Businesses in SEZs pay a lower power tariff of Sh5 per unit, which is significantly lower than the normal rate. The Energy and Petroleum Regulatory Authority last month revealed that no industry had set up shop at the Olkaria-Kedong SEZ in Naivasha.

The State has dangled tax incentives for investors in the SEZs, including exemption from stamp duty, supply of taxable goods and services into the zones, as well as lower corporate tax.

Establishment of more data centres would be a boon for Kenya’s highly digitised economy, which is facing a heightened risk of attack by cyber crooks.

The linking of mobile money through telcos and banks has made the country a target for cybercrime and online fraudsters, with lenders losing hundreds of millions of shillings every year.

The ICANN projects that its system will boost internet speeds and reduce the impact of cyber-attacks, especially those that work by overwhelming servers with a flood of queries.

The clusters will reduce the time it takes for a website to load, particularly when there are spikes in internet usage.

With two separate IMRS cluster locations and higher bandwidth and data processing capacity, the risk of the Internet going down because of a cyberattack will be significantly reduced since increased capacity lessens the impact of attacks.

Mobile money

Kenya’s highly digitised economy linked with mobile money through telcos and banks has made the country a target for cybercrime and online fraudsters, with lenders losing hundreds of millions of shillings annually.

Detected backdoor computer malware attacks in Kenya increased by 53 percent to a historic high between April and June this year targeting businesses and government agencies, according to cybersecurity firm Kaspersky.

The firm said the trend was replicated in other African countries such as South Africa and Nigeria which saw a 140 percent and 83 percent increase in the backdoor malware attacks respectively.

Backdoors are one of the most dangerous types of malware and provide cybercriminals with remote administration of a victim’s machine.

Backdoors install, launch, and run invisibly, without the consent or knowledge of the user, and once installed, they can be instructed to send, receive, execute and delete files and harvest confidential data from the computer.

Kaspersky said the malware is wreaking havoc on companies and government agencies with the backdoors enabling long unnoticed cyberespionage campaigns, which result in significant financial or reputational losses.

The firm said it recently discovered a hard-to-detect backdoor dubbed SessionManager that targeted governments and non-governmental organisations around the globe.

This backdoor, said Kaspersky, was set up as a malicious module within the Internet Information Services (IIS), and enables a wide range of malicious activities from collecting emails to complete control over the victim’s infrastructure. “First leveraged in March 2021, this backdoor hit government institutions and NGOs in Africa, South Asia, Europe, and the Middle East. Many of the targeted organisations remain at risk,” said Kaspersky.

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