How Nigeria’s AI, digital infrastructure revolution could face significant setbacks

By Khalil Woli

As global attention turns to artificial intelligence, cloud computing, and digital ecosystems, many African countries—including Nigeria—see an opportunity to leapfrog into the knowledge economy. Lagos is already home to Africa’s largest tech hub. Submarine fiber cables from Google, Meta, and others are improving broadband capacity. And foreign direct investment is pouring into data centers, fintech, and enterprise IT.
But there’s one critical resource that could choke this digital revolution before it takes root: electricity.

Digital infrastructure—especially data centers, edge computing clusters, and AI training facilities—are notoriously power-hungry. A Tier III data center requires between 1.5 to 5 megawatts (MW) of stable power. That’s roughly the average demand of a small Nigerian town. With the rise of AI, especially in image recognition, language models, and predictive analytics, this demand will only increase. In the U.S., data center electricity consumption is expected to double by 2030. Nigeria is heading in the same direction, but without the energy backbone to support it.

This challenge is urgent—not theoretical. Between 2021 and 2023, multiple major data center projects were announced in Lagos, Lekki, and Abuja, including investments from MDXi, Open Access Data Centre (OADC), and MainOne (now part of Equinix). Collectively, these facilities could require over 50 MW of continuous power within the next five years. And that’s just the beginning.

The Problem: A Digital Grid Running on Analog Energy Systems

Nigeria’s national grid still struggles to deliver 4,500 MW reliably to over 200 million people. Frequent collapses, unstable voltage, and aging substations make it one of the least reliable power systems in the world. Backup diesel generation remains the default for most mission-critical facilities—but that’s costly, polluting, and unsustainable.

When I worked at Ikeja Electric, one of the largest distribution companies in Nigeria, we saw firsthand how difficult it was to support industrial and commercial customers at scale. Load shedding, transformer downtime, and feeder congestion meant that even well-capitalized clients couldn’t get the 24/7 uptime they needed.

As an equity analyst at CardinalStone Securities, I tracked how power unreliability inflated operational costs for telecom towers, server farms, and broadcast networks. These companies often spend up to 40% of their OPEX on self-generation. This model is not scalable—certainly not for the kind of AI-powered, compute-heavy applications that define modern cloud computing and digital banking.

The Hidden Cost: AI Growth Without Energy Planning

AI requires consistent, low-latency processing environments—often relying on specialized GPU clusters and massive storage arrays. These workloads are both energy-intensive and heat-sensitive, requiring constant cooling and redundant power sources. If Nigeria wants to become a true digital hub, we must start treating power infrastructure as the foundation, not an afterthought.

Without high-reliability power, our dreams of becoming the “Africa’s Silicon Valley” will remain tethered to diesel fumes, load rejection, and latency bottlenecks.

What Can Be Done: Powering the Digital Economy Smartly

Nigeria has a unique opportunity to get ahead of this problem by integrating energy planning directly into digital infrastructure policy. Here are four pathways to make it happen: Dedicated Energy Corridors for Tech Infrastructure

Just as we’ve developed industrial zones with special power lines, we should create “digital energy corridors” around emerging data center hubs like Lekki, Ikeja, and Abuja.

These would include high-reliability 132kV or 330kV feeders, backed by spinning reserves and gas peaking plants, with redundancy built in for uptime.

Embedded Generation + Hybrid Solar for Compute Clusters
Data centers shouldn’t rely solely on the grid. Instead, they should co-invest in embedded gas turbines or hybrid solar + storage plants, sized to their load profiles.

Think of it as a private grid within a grid—a model that’s already been successful for cement and fertilizer plants in Nigeria.

To encourage this, the government can provide duty-free equipment importation, accelerated depreciation on energy assets, and VAT exemptions for energy used in mission-critical ICT facilities.

Green Finance Tools for AI-Ready Infrastructure
Many global tech players have net-zero mandates. Nigeria can tap into this by promoting green bonds, climate-focused sukuk, or carbon-linked power purchase agreements (PPAs) to fund digital infrastructure powered by clean energy.

For instance, a green sukuk could finance a 10 MW solar plant tied to a Lekki data cluster, with returns paid from revenue generated by stable AI compute services.

Public-Private Power Agreements (PPPAs)
Tech companies, ISPs, and data center operators can pool demand to negotiate power offtake agreements directly with independent power producers (IPPs). This would de-risk the market for energy developers while giving digital firms cost stability and reliability.

As I learned while conducting valuation analyses for power companies, aggregated offtake contracts lower project risk and make bank financing more feasible. It’s a win-win.

Conclusion: Nigeria Must Build Energy With Intelligence, Not Just Ambition
Africa is not just a consumer of digital tools—we’re becoming creators. From fintech innovations to agritech platforms and AI-driven logistics, we are generating workloads that demand modern compute environments. But compute is nothing without capacity.

To avoid falling behind, Nigeria must embed energy thinking into its digital aspirations. That means aligning policy, finance, and infrastructure—not just chasing headlines or cable landings.

Our AI future doesn’t just need faster processors. It needs reliable power to run them.

READ MORE FROM: NIGERIAN TRIBUNE