Several powerful players from the tech industry gathered in Addis Ababa over the past week for a high-profile summit. The two-day Accelerated Digital Transformation Summit served to be a fertile format for insightful discussions about the prospects and challenges of technology in the Global South. A whopping 1.6 trillion USD will be needed across Africa to enable universal connectivity by 2030, according to findings of the International Telecommunications Union. Among the attendees were representatives from Raxio Ethiopia, a carrier-neutral Tier III data center facility located along the outskirts of Addis Ababa. Degol Gossaye, General Manager of Raxio Ethiopia, sat down with Shega to discuss the industry’s prospects and its potential contribution to digitization across Ethiopia.

Shega: It has been two years since Raxio’s Large investment data center was commissioned with operations starting a short while after. How has the response in terms of demand been from the Ethiopian market?

Degol: Well, it's been a year since we began operations, and some businesses have shown significant interest. However, we still need to continue informing the market about the benefits of collocation and its contribution to growth. Just today we organized a workshop to highlight the benefits of data centers and their potential use cases. It is important to also recognize the benefits of data centers for government service providers. As more banks, existing and new foreign entrants, cloud companies, and even nascent startups enter the market, we will surely increase our clientele number.

Shega: Are there any industry sectors that you specifically expect to exhibit significant interest?

Degol: It would be well within expectations to attract interest from financial institutions as they have significant demand for data center services alongside public service providers and enterprises currently digitizing under a national initiative. Another interesting development has been the emergence of cloud service startups. Since one of Raxio’s missions is scalability, we work with small startups, governments, and multinational corporations. Our operations in other markets include colocation services for massive multinational corporations. Raxio’s services are designed to cater to all.

Shega: Over the past two years, the introduction of AI services to the wider public has transformed the business landscape. While in its early stage of adoption in Ethiopia, it is bound to make a massive impact soon. How does Raxio plan to position itself as a major player in catering to data center needs from the AI industry?

Degol: Interestingly enough, I was just discussing the rise of AI with a few industry insiders earlier. I am skeptical of the sentiment that AI is on the way somehow, it is already here. We (Ethiopia) have lagged in terms of AI, this is not the time to talk but rather to act. Social media algorithms have been modifying our preferences for a while now. Financial institutions like Bank of America adopted Virtual Assistants eight years ago. They gradually shifted their call center as the AI-powered system supports nearly 1.3 million transactions daily allowing the Bank’s revenue to grow by around 19%. This should force us to look at ourselves and how we should have progressed. At Raxio we have recognized the importance of maintaining a sophisticated compute, cooling and high-density power to accommodate the burgeoning AI sector. A single rack can run around 21 KW/h, which equips our data center with the capacity to handle high computing demand and density. That is one of the reasons we confidently claim to be preparing the country for the future. Be it AI, disruptive startups or any other innovative technology.

Shega: Ethiopia has cultivated quite a name as a major generator of hydroelectric power. However, the delivery of electricity to individual homes and businesses is far from guaranteed. How does Raxio overcome the national challenges of access for its data center?

Degol: Ethiopia’s investment into hydropower electric generation has multiple benefits, particularly for data centers. It gives us pride that we source our power from sustainable energy sources. It is no simple achievement to provide services by solely relying on green energy. To navigate potential distribution issues, we design our data centers with direct lines to nearby substations. We further backup our energy sources with powerful, perennially running data center ready generators. They are monstrous generators capable of outputting power to support the entire operations of the data center. Even if an extreme unforeseen natural disaster occurs, our data center can run continuously. Everything is redundant. They are also concurrently maintainable, allowing you to work on one while the other is operating. We relieve our customers from any headaches around power and guarantee it with our Service Level Agreement (SLA). Our customers rest assured that their system is up for almost 100% of the time.

Shega: Raxio is building and operating data centers in seven African countries currently. How does Ethiopia’s landscape compare in terms of the cost of doing business?

Degol: It is well known that Ethiopia lands on the cheaper side of the spectrum in terms of the cost of electricity. Some of the countries have slightly competitive rates. A data center business is heavily dependent on power. Hence, sustainable power sources are one of the main things we look at when entering a market. After all, you are dealing with customer data, and you have to minimize risk. Having access to back up power solutions does not necessarily mean it is cost effective; you have to be able to rely on the available grid. Green power allows you to source energy at an affordable rate while remaining sustainable.

Shega: Ethiopia is home to nearly 130 million people. Raxio has only one data center facility. Are there plans to scale up and expand operations?

Degol: There are plans. But you have to remember that when you provide a primary data center for a client, there also needs to be a way to deliver backup service. If a customer entrusts his primary data center to us, we must be providing a DR (data recovery) service somewhere else. There are internationally acceptable distances to maintain. We are already studying and identifying locations outside of Addis Ababa. If you look at our website, you will notice it says ET-1 since we know there will be ET-2 and so forth. When we create enough of a business case and volume, since it requires investment, we will roll out the other locations, which have concurrently been researched.

Shega: Speaking of recovery, there is an elevated frequency of earthquakes in Ethiopia over the past few months. Are your datacenters built to withstand such incidences?

Degol: The first advantage we offer is our presence in several countries, this provides preliminary backup capacities. One of the reasons we are confident about our service is that we can provide resilient infrastructure. Our data centers are rigorously tested for seismic activity up to a certain magnitude. 

Shega: Ethiopia has recently opened its economy to foreign investors on several fronts. How do you expect the potential FDI inflow to align with Raxio’s strategy in terms of partnerships?

Degol:. In terms of other prospective entrants into the market like banks, there would be no reason for them to build data centers. We are contributing to ease of entry. They can just bring in equipment and systems rather than putting large amount of investment in building data centers. They would have little to worry about in terms of reliable infrastructure. A bank from a neighboring country or somewhere farther can just enter with their servers. They will save significant amounts in terms of capex, which is vital for attracting FDI. These kinds of investments also constitute our major customer target. From small startups to large corporate clients, we are scalable enough to serve them all.

Shega: Ethiopia’s innovative landscape is undergoing constant legislative evolution. Just recently, the Ethiopian Communication Authority absorbed responsibility for oversight and regulation of data centers. How has the overall regulatory landscape been from Raxio’s vantage point?

Degol: Ethiopia’s regulatory framework at its current state is supportive. We were for instance given duty free privileges to import our equipment because there was already a concession to the importance of data centers for a thriving digital economy. Personal data protection laws have also been implemented. There might be issues around implementation. We maintain close relationships with regulators and our services have now been registered as a licensable service. Digitization as an anchor concept has already been adopted by the government, this helps simplify several elements of the regulatory framework.

Shega: Challenges in finding competent human capital are often cited by technology investors in Ethiopia. How are you navigating the human resources challenge?

Degol: Our data centers are fully run by Ethiopians. We believe that one of the benefits in such types of investments is the knowledge transfer that is facilitated. Our key staffs are certified in their respective fields of specialization. Of course, we are backed by a global talent pool that supports all our endeavors. We also help our staff find certifications in highly specialized fields of engineering and other emerging sectors. A pool of experts is being created.

Shega: Considering the Summit and accompanying incidences of a technology renaissance in Ethiopia, are there any things you would like to see happen in the near term?

Dagol: massive private infrastructures are being built in the country. We hope to see the culture of using these types of infrastructure for better efficiency and reliability. The reason we attend these types of summits is to expand awareness. We still see bids for building data centers but we are claiming that it costs more to build than to use existing robust infrastructure like ours. Our message is Let’s optimize and grow together. We should be using our scarce resources in a way that maximizes benefits.