Over the years, Nigeria’s expanding digital economy has depended on computing infrastructure that is not always within its borders. Banks, fintech companies, government agencies and other businesses have increasingly relied on international cloud platforms to store, process and manage data, even as the country’s domestic data centre market has expanded.
That model is now coming under pressure as regulators and policymakers place greater emphasis on where Nigerian data is stored, where it is processed and who controls the infrastructure supporting it.
At the centre of the shift is the Central Bank of Nigeria’s directive requiring financial institutions and other payment system participants to store and manage payment transaction data generated in Nigeria on servers located within the country from January 1, 2027.
The requirement applies to banks, mobile money operators, switching and processing companies, payment service providers and other licensed participants in the payments ecosystem.
The financial sector requirement is, however, part of a broader push towards greater control over Nigeria’s digital infrastructure.
The National Information Technology Development Agency’s National Sovereign Cloud Initiative is seeking to establish a framework around data residency, cloud governance, security and infrastructure assurance, while the Federal Government’s National Digital Cloud Policy places cloud and data centre infrastructure within Nigeria’s wider digital economy and investment strategy.
The emerging policy direction could increase demand for domestic cloud and data-centre infrastructure while putting greater pressure on Nigeria to address the constraints that have historically made large-scale digital operations difficult to run locally.
Ike Nnamani, chairman of the Technical Working Group of the National Sovereign Cloud Initiative, said the initiative was designed to address both the security implications of sensitive Nigerian data being hosted abroad and the economic cost of relying on overseas infrastructure.
In a televised interview, Nnamani said billions of dollars were being spent on hosting Nigerian data outside the country, arguing that bringing more services onshore could reduce capital outflows while encouraging investment in domestic data centres and cloud platforms.
“We also have a situation where today a lot of money running into billions of dollars is actually spent by the country in hosting our data outside the country,” he said.
According to Nnamani, the initiative could also attract foreign direct investment into data centre infrastructure, create employment and improve the performance of services that depend on low-latency access to data.
He said the policy would not require every category of Nigerian data to be stored locally. Instead, data would be classified according to sensitivity, with the most critical categories subject to domestic storage requirements.
“We’ve classified all the data into four categories. Category three and four being the most critical one that must by law be stored within Nigeria,” Nnamani said.
He identified national security, financial services, healthcare, citizen-identifiable information, national wellbeing and parts of the digital economy among the areas covered by the more sensitive classifications.
Less sensitive public data, he said, could continue to be hosted outside Nigeria where appropriate.
The approach is intended to make data localisation more targeted rather than requiring every digital service operating in Nigeria to maintain all its information domestically.
Nnamani also acknowledged that the policy could face resistance from international cloud providers and other businesses that currently benefit from the existing model.
He said the government was not necessarily seeking to exclude international providers from Nigeria’s cloud market, but wanted them to establish infrastructure locally and provide services from within the country.
“All we are encouraging them to do is come to Nigeria, set up a zone in the country and offer the service right here in Nigeria,” he said.
For domestic cloud and hosting companies, the policy could create a larger addressable market as organisations move more workloads into locally hosted environments.
Nnamani said smaller Nigerian companies already operating in cloud and web hosting could use the expected increase in demand to scale their operations, while new entrants could emerge to serve the market.
But he stressed that localisation would not justify lower service standards.
“The same service level you will get if you host outside in any of the big global hosting platforms… has to be the same quality of service you offer even if it’s within Nigeria,” he said.
Nnamani also said localisation would not come at the expense of data security, arguing that services hosted in Nigeria would still be expected to meet global standards for security, availability and service delivery.
On cybersecurity, he said Nigeria’s cyberspace was adequately secured and that the threats facing the country were not fundamentally different from those faced in other parts of the world.
He said the initiative would also require certification and adherence to global standards, adding that some Nigerian entities already operate at international standards, particularly within the banking sector.
The scale of that opportunity will depend heavily on whether Nigeria can provide the physical infrastructure required to support the additional workloads.
Ayotunde Coker, chief executive officer of Open Access Data Centres, said reliable electricity and greater data centre capacity would be critical to the expansion of local infrastructure required by the CBN’s data localisation requirement.
Speaking at GrowthX by TechEconomy 2026 in Lagos during a panel session on “Data Localisation, Security & Future of Payments in Nigeria”, Coker said the policy could stimulate investment in digital infrastructure but warned that power supply remained a major constraint for the industry.
He pointed to Nigeria’s gas resources and changes in electricity regulation as potential enablers of dedicated power systems for data centres.
“We have gas. We are increasingly providing domesticated gas,” Coker said, adding that captive power generation at the scale of megawatts and tens of megawatts could help data centre operators meet the rising electricity requirements of conventional digital services as well as AI workloads.
Coker also identified permitting, access to gas and the tax environment as areas that would need attention if Nigeria is to attract the level of investment required to expand its data centre infrastructure.
The power challenge comes at a time when data centre demand is expected to rise alongside cloud adoption, digital payments, artificial intelligence and the broader movement of businesses towards data-intensive applications.
This means that the CBN’s localisation requirement could have effects beyond the banking and payments industry. A larger pool of locally hosted workloads would increase demand for data centre space, cloud computing, fibre connectivity, cybersecurity, power infrastructure and technical expertise.
Nnamani said the National Sovereign Cloud Initiative had been in development for more than two years, with potential implementation challenges identified and solutions developed as part of the process.
