iXAfrica to Transform Kenya into East Africa’s Data Center Hub – A Conversation with Snehar Shah

Interview with Snehar Shah, CEO of iXAfrica

Could you share your vision for iXAfrica? Why did you choose to establish a data center, and why specifically in Kenya?

Over the past nine months, I have been leading iXAfrica, which has rapidly grown to become the largest data center company in East Africa. To understand why we are focusing on data centers, let’s take a step back and consider the broader context.

In the past decade, we have witnessed a global digital revolution. Everything we do, whether at work or in our personal lives, has increasingly moved to digital platforms. This ranges from social media interactions to critical IT applications. The COVID-19 pandemic accelerated this shift, pushing more IT infrastructure into the cloud. Historically, individual enterprises, banks, and connectivity companies managed their own server rooms. This required significant investment in hardware, power, cooling infrastructure, and the associated operational overhead. Data centers offer a solution to these challenges by providing a centralized, scalable infrastructure that takes on these burdens for companies.

When we think about the entire tech ecosystem, data centers are indispensable. They form the crucial link that connects end-users, who access IT services through their devices via local networks, like mobile or fiber, to the global internet. This global connection is supported by extensive submarine cable networks that span the oceans. Essentially, data centers are the hubs where all this connectivity and data processing converge.

With the ongoing AI revolution, the demand for data centers has surged even further. AI technologies require robust infrastructure, and this has driven a massive increase in investments in data centers, especially in the Western world. For instance, in Ireland, data centers consume up to a quarter of the country’s national power supply, and this demand continues to grow. This intense consumption has sparked discussions about potentially limiting the power allocated to data centers in some regions.

In this global context, Africa, and Kenya in particular, presents a compelling opportunity. Geographically, Kenya is centrally located, making it a strategic point for serving both Western and Eastern markets. Beyond this, Kenya’s local demand for digital services is increasing due to its growing population. From a resource perspective, Kenya is incredibly well-positioned. Currently, 92% of our energy comes from renewable sources, making our operations highly sustainable. Kenya is also the eighth-largest producer of geothermal energy globally, ranking just behind countries like Iceland and those in Scandinavia. This abundant and renewable energy supply is a significant advantage for data center operations, especially given the global push towards sustainability.

Additionally, my previous experience as the CEO of Moringa School has shown me the potential of local talent. At Moringa, we focused on training young Africans in tech skills, preparing them to meet both local and global demands. This talent pool is rapidly growing and can be leveraged for roles in IT development, cloud computing, and power engineering. The availability of skilled professionals is another key factor that makes Kenya an attractive location for data centers.

Africa’s connectivity to the global internet has also improved dramatically. Since the early 2000s, various submarine cables have been laid, connecting Africa to the rest of the world. Africa is also becoming more globally connected through submarine cables laid by tech giants such as Google, with their Equiano cable, Meta, and companies from China and the Far East. This improved connectivity makes Africa a viable location for housing IT infrastructure, especially as other regions face constraints in expanding their facilities.

Kenya’s regulatory environment and funding support also play crucial roles in our strategy This regulatory and financial backing has been instrumental in our decision to invest in Kenya and expand iXAfrica’s operations here. Although we are a later entrant in the data center market, there were already three established data centers in Kenya that had been operating for about a decade. These earlier data centers grew organically and primarily served the local enterprise market. In contrast, iXAfrica is targeting a much larger scale and we are focused on what we call the hyperscalers.

We have seen major cloud deployments in South Africa by companies like AWS, Google, and Microsoft. After South Africa, Kenya and Nigeria are emerging as the next major hubs for cloud infrastructure. Nigeria, while a large market with significant economic potential, faces challenges such as unreliable power and foreign currency issues. South Africa also grapples with power reliability. Kenya, on the other hand, offers a balanced environment with stable renewable energy sources and growing infrastructure. This makes it an ideal location for expanding digital operations.

In Nairobi, we are developing a 22.5-megawatt facility. This facility is strategically positioned near submarine cable connections and close to the airport, making it accessible and well-connected. Our initial phase, with a 4.5-megawatt capacity, is already live, making us the largest data center operator in this region. Our goal is to attract hyperscalers like Microsoft, Google, Oracle, and AWS to set up their local and regional zones in our data center.

Besides targeting these large-scale operations, we are also focused on attracting financial services firms, fintech companies, other enterprises, and connectivity providers. A unique aspect of iXAfrica is that we are a fully carrier-neutral data center. This means we are not biased towards any particular connectivity provider. Instead, we offer our clients the freedom to choose the best options for their connectivity needs, ensuring they get competitive pricing and quality service. So those are the major opportunities before us, and that is what iXAfrica is focusing on.

What is your vision and goal for iXAfrica? You started nearly a year ago, so what do you aim to achieve in the coming years?

Our mission is to become East Africa’s leading infrastructure provider, specifically focusing on hyperscale and AI-ready solutions. We are dedicated to building high-quality, high-availability infrastructure. We have completed the first phase of our data center, and we are currently in advanced discussions to bring on board large clients to fully utilize this initial capacity.

In the coming years, we plan to expand further in response to growing demand. We have laid out plans for additional phases at our current site, and we have also secured an option for a new site about 13 kilometers from Nairobi. This new location, where we are looking to acquire 11 acres, will host a 53-megawatt facility. This expansion aligns with the growing momentum in the region, exemplified by Microsoft’s recent announcement of a billion-dollar investment in Kenya to develop AI infrastructure, leveraging our clean energy resources.

With our expertise, investment, and relationships, we aim to be integral to this ecosystem, providing essential infrastructure to local cloud players. Kenya is uniquely positioned due to its advanced regulatory environment. We have robust data sovereignty and protection regulations aligned with European GDPR standards, which require companies to store and manage data locally. This regulation is driving increased demand for local data centers like ours.

Moreover, as applications become more sophisticated, we are seeing a shift from companies managing their server rooms on-premises to migrating their data and applications to the cloud, especially during COVID. While much of this data has traditionally been stored outside the region, the new data residency and lower latency requirements are prompting a reverse migration, with data now moving back to local centers. Our data centers are poised to benefit from this trend.

Our mission is to capitalize on these growing trends and emerge as a market leader, enabling the technological advancements we foresee over the next three, five, or ten years.

Apart from Kenya, which you mentioned as the largest hub for East Africa, have you started operations in any other countries in East Africa or considered expanding elsewhere?

In this industry, scale is paramount, particularly in acquiring strategic land with ample power at competitive rates. Kenya offers an ideal environment for us in this regard. Our co-founders bring over 20 years of experience, having previously built large data centers in the UK and Europe, which were later sold to Equinix, the world’s largest data center company. Subsequently, they were involved in similar projects in Russia and contributed to the development of Teraco in South Africa. With this expertise, we identified Kenya as one of the next frontier markets.

Before considering diversification into other markets, we see significant opportunities in Kenya. Not only does it have a rapidly growing population of its own, but it also serves as a gateway to East Africa, a region with a population exceeding 300 million and expanding. Additionally, we have partnered with Helios Private Equity, one of the largest private equity funds focused on Africa, as our majority shareholder. Through Helios, we have synergies with their operations in North Africa, specifically in Morocco, where they acquired a data center. We foresee potential investments in other parts of the continent in collaboration with Helios, focusing on selective opportunities.

As you continue to develop your infrastructure, what projects are you currently focusing on?

Our first building, which occupies five acres of land and hosts a capacity of 4.5-megawatt, is already operational. We are actively onboarding various clients, starting with connectivity providers who are already partnering with us. Additionally, we are bringing on board local enterprises and institutions such as financial services and banks. We also host LINX, the London Internet Exchange, one of the largest in the world, making us its hub in Kenya.

And in addition to that, we are focusing on selling substantial capacity to hyperscalers. This is our current priority. Given our capability to deliver high amounts of power and high power density, which are essential for AI infrastructure. For instance, NVIDIA GPUs require very high power density, around 30 to 50 kilowatts per rack, which is more than ten times the average consumption per rack of typical enterprise grid servers. This positions us to accommodate a significant amount of high-density AI infrastructure in our data center, allowing us to stay ahead in this regard.

Currently, we are advancing plans for our next project, an 18-megawatt facility, with the building design already in place. We are waiting to gauge demand visibility before launching this phase. Additionally, our second site, projected at 53 megawatts, is also in the pipeline. We are actively managing a robust pipeline of client engagements and future construction projects.

Could you elaborate on how iXAfrica approaches sustainability and enhances energy efficiency within its operations?

Sustainability is a cornerstone of our strategy. Our mission emphasizes keeping operations local. Kenya’s grid power is already 92% renewable, primarily sourced from hydro, wind, and geothermal energy. This provides a significant advantage, especially considering the stable grid power we enjoy, unlike challenges faced in other African countries such as South Africa or Nigeria.

At our current facility, we achieve over 99.5% uptime from the grid alone. However, we have constructed our facility to meet tier three plus standards, ensuring 99.9999% uptime to meet the stringent requirements of our clients. While we have substantial backup infrastructure including UPS power and larger generators, our reliable grid uptime minimizes the need for diesel and other fossil fuels as backups.

Regarding the remaining 8% of non-green energy, we are exploring options such as carbon credits to offset our carbon footprint. Additionally, sustainability extends to our supply chain, prioritizing local materials and talent. Schneider is our key power partner, and we are fortunate that much of our switchgear and power infrastructure is fabricated and manufactured locally in Kenya by Schneider.

These elements reflect our steadfast commitment to maintaining rigorous sustainability standards throughout our operations.

As a new entrant in this market, how challenging is it to convince companies and clients that you can deliver?

Firstly, many existing market players rely on legacy technologies like underfloor cabling and older power equipment. In contrast, we offer solid floors and the capability to provide very high-density power, which our competitors currently cannot match. Moreover, several existing data centers are nearing full capacity. This is where we step in, catering to the hyperscalers’ need for larger deployments and greater demand. We are positioned as one of the key players capable of meeting these requirements promptly, considering the significant lead times involved in infrastructure setup. With the hyperscalers, we have a first-mover advantage. Furthermore, drawing on our team’s extensive expertise spanning over 20 years in building world-class infrastructure globally, we leverage this knowledge to reinforce our capabilities.

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