CBN’s data localisation order may expand beyond banking as Nigeria eyes cloud investment boom

Nigeria’s decision to require banks and financial technology companies to keep payment data within its borders is emerging as more than a regulatory compliance exercise.

Industry leaders now see the policy as the foundation for a broader data sovereignty agenda that could extend to sectors such as oil and gas, manufacturing and government, while unlocking a fresh wave of investment in cloud infrastructure, artificial intelligence (AI) and hyperscale data centres.

The Central Bank of Nigeria (CBN) recently directed banks, payment service providers and fintech firms to localise payment-related data by January 1, 2027. While the directive primarily targets the financial sector, technology executives believe it signals the beginning of a wider national strategy to ensure that critical Nigerian data is stored, processed and managed within the country.

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That was the dominant message at a forum organised by Hyperscalers Africa with the theme, “From Regulation to Infrastructure: What the CBN’s Data Localisation Directive Means for Nigeria’s Digital Economy.”

The event brought together Ayotunde Coker, the chief executive officer of Open Access Data Centres (OADC); Yele Okeremi, the chief executive officer of Precise Financial Systems and Gbenga Adegbiji. The chief executive officer of Geniserve, who argued that the new policy should be viewed not as a burden on financial institutions but as a long-overdue catalyst for Nigeria’s digital transformation.

Their position reflects a growing belief across the technology ecosystem that Nigeria is entering a new phase of digital infrastructure development, one where the country no longer exports one of its most valuable digital assets—data—only to pay foreign companies to store and process it.

For years, Nigerian banks and fintech companies have relied heavily on global cloud providers such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform to host critical applications and payment infrastructure. While those services enabled rapid innovation and scalability, they also increased dependence on offshore infrastructure and exposed businesses to foreign exchange fluctuations, cross-border regulatory issues and data sovereignty concerns.

According to Coker, the CBN’s directive represents the next logical step in a digital infrastructure journey that has been evolving for more than a decade. “In many ways, this has been a long time coming,” he said.

He noted that Nigeria has gradually built the engineering capacity, connectivity and data centre infrastructure required to support local hosting. From carrier-neutral facilities and high-speed submarine cable connectivity to indigenous cloud providers and globally certified data centres, the building blocks needed for compliance are already in place.

“The infrastructure is ready,” Coker said, dismissing concerns that Nigeria lacks the capacity to accommodate the expected migration of financial institutions.

According to him, leading operators, including OADC, Rack Centre, Equinix, Medallion Data Centres and other major facilities already have available capacity, while expansion projects are underway to meet future demand.

OADC itself is expanding its Lagos campus to about 24 megawatts, with facilities designed to support enterprise cloud services as well as next-generation AI workloads through advanced cooling technologies and high-density computing infrastructure.

Beyond physical infrastructure, Coker said the policy sends a strong signal to global cloud providers that Nigeria is serious about data localisation.

“It tells the world that data sovereignty and localisation are now priorities. That signal will encourage hyperscale cloud providers to deepen their investments in Nigeria over time,” he said.

Industry observers believe that could strengthen Nigeria’s position as Africa’s second-largest digital infrastructure hub after South Africa, attracting additional investment from international cloud companies seeking to establish local availability zones closer to customers.

The implications extend beyond technology companies.

Technology executives argue that data has become one of the world’s most strategic economic resources, particularly as artificial intelligence becomes increasingly dependent on large volumes of local data for model training, analytics and automation.

Coker warned that countries that fail to control their data risk repeating the same economic mistakes associated with exporting raw commodities without developing local value chains. “If you do not control your data and continue to give it away, you are returning to the flawed economics of primary product dependency.

“This is the world of artificial intelligence, and AI thrives on data. If you take away data, you take away the oxygen from AI. It is time for Nigeria to domesticate its data and protect its share in the global value chain,” he said.

That thinking reflects what analysts increasingly describe as digital economic sovereignty, where data is viewed not merely as information but as a strategic national asset capable of driving innovation, investment and economic competitiveness.

Industry estimates suggest Nigeria currently has about 21 operational data centres of varying standards, with almost 90 per cent located in Lagos. Analysts believe that number will need to increase significantly if Nigeria is to support its ambition of becoming a trillion-dollar economy over the coming years.

While some estimates suggest more than 70 modern data centres may eventually be required, industry leaders insist that existing operators already possess sufficient capacity to meet the CBN’s immediate deadline because most facilities were designed with phased expansion plans.

Rather than building entirely new facilities from scratch, operators can add equipment, cooling systems and additional computing capacity as customer demand grows.

For financial institutions, the transition could also bring significant economic benefits.

Today, many organisations pay for cloud services in US dollars, exposing them to exchange rate volatility and rising operating costs whenever the naira weakens.

Local hosting is expected to reduce that exposure by allowing a greater share of technology spending to remain within Nigeria’s economy.

Industry executives also argue that keeping data within Nigeria will stimulate broader economic activity by creating demand for engineers, electricians, cybersecurity specialists, architects, telecommunications providers, equipment suppliers and independent power producers that support hyperscale data centres.

According to Coker, each new data centre expansion generates employment across multiple industries while strengthening Nigeria’s digital infrastructure ecosystem.

Although migration itself will require investment and careful planning, he believes the long-term economic gains far outweigh the initial costs, particularly as cloud demand continues to accelerate across Africa.

For Yele Okeremi, chief executive officer of Precise Financial Systems, the CBN’s directive represents a return to principles that shaped Nigeria’s banking technology landscape decades ago.

He recalled that before the rise of global cloud computing, banks were responsible for running their own data centres, building network infrastructure and securing mission-critical systems internally.

According to him, technology leaders at the time had to develop local expertise almost from scratch, relying on physical backup tapes for disaster recovery while designing systems capable of withstanding cyber threats and operational failures.

That model changed with the emergence of professional data centre operators, which enabled banks to move into shared colocation facilities where power, cooling, physical security and connectivity were managed by specialist providers.

The rapid expansion of global hyperscale cloud companies later encouraged many organisations to shift more workloads offshore because of their scalability and flexibility.

Okeremi said the CBN’s latest directive effectively reverses that trend by encouraging institutions to bring critical payment infrastructure back home.

“The directive challenges local players to recapture and scale that foundational autonomy,” he said, describing the policy as the next phase in Nigeria’s digital evolution rather than a step backwards.

While industry leaders broadly welcomed the policy, they acknowledged that implementation will require careful planning, particularly for institutions running complex banking and payment systems.

Gbenga Adegbiji, chief executive officer of Geniserve, said the biggest challenge is unlikely to be the availability of data centres but ensuring that migration takes place without disrupting financial services.

“The real operational test is Day Zero execution,” he said.

Migrating banking applications involves transferring enormous volumes of sensitive customer and transaction data into new environments without affecting live operations.

According to him, the process demands what engineers describe as “atomic migration,” where applications, databases and services move seamlessly while maintaining business continuity.

Even minor testing errors, he warned, can allow test environments to interfere with live production systems, creating operational risks for financial institutions.

For that reason, migration planning must include comprehensive disaster recovery strategies, application testing, cybersecurity controls and detailed contingency plans before any production systems are transferred.

Power reliability, another issue often raised whenever digital infrastructure is discussed in Nigeria, should not become a barrier to implementation, Adegbiji argued.

Tier III and hyperscale data centres require an uninterrupted power supply, supported by multiple layers of redundancy, to maintain continuous operations.

Although Nigeria’s national grid continues to face challenges, he said local engineers have developed extensive experience designing resilient power systems capable of supporting world-class facilities.

“Nigerian engineers understand how to build resilience into power architecture because they have been solving these problems for years,” he said.

That capability, he argued, has become one of Nigeria’s competitive advantages rather than a weakness.

Industry leaders also sought to address lingering concerns about whether local data centres can match international standards.

According to Adegbiji, many Nigerian facilities already comply with globally recognised certifications covering information security, quality management and payment card security.

Those certifications, he said, place Nigeria ahead of several regional markets and reflect years of investment encouraged by earlier regulatory policies.

“Nigeria’s advantage today did not happen overnight. Earlier interventions by the Central Bank helped create an ecosystem that forced the industry to develop strong local capabilities,” he said.

Executives also dismissed suggestions that financial institutions must build and manage their own data centres to comply with the directive.

Instead, they advocated a shared infrastructure model in which banks, fintechs and payment companies utilise professionally managed colocation facilities while focusing their own investments on financial products and customer services.

According to Adegbiji, collaboration rather than duplication will allow institutions to reduce costs while benefiting from specialised expertise in power management, cybersecurity, networking and cloud infrastructure.

Industry executives believe the policy could also reshape Nigeria’s artificial intelligence ambitions.

As governments and businesses increasingly adopt AI, the availability of locally generated and locally stored datasets is becoming a strategic advantage.

Executives argued that keeping financial data within Nigeria creates opportunities to develop indigenous AI models, advanced analytics platforms and data-driven digital services tailored to local realities.

Rather than exporting valuable datasets for processing abroad, they said Nigeria can begin building an AI ecosystem supported by domestic infrastructure and local computing capacity.

The wider economic implications could be equally significant.

According to Coker, every expansion of hyperscale data centre capacity creates ripple effects across the economy, generating demand for engineers, architects, electrical contractors, telecommunications companies, cybersecurity professionals, equipment suppliers and independent power producers.

He noted that Nigeria’s data centre supply chain has matured considerably over the past decade, with global engineering firms and equipment manufacturers strengthening their local operations to support growing demand.

The executives also believe the CBN directive could serve as a template for broader localisation policies in other strategic sectors.

Coker pointed specifically to oil and gas, where operators are deploying artificial intelligence, cloud computing and advanced analytics to improve exploration, production and operational efficiency.

He said as those industries become increasingly digital, pressure will grow to ensure that strategically important operational data remains within Nigeria.

Manufacturing, healthcare and government services are also expected to increase demand for local cloud infrastructure as organisations seek lower latency, improved regulatory compliance and greater control over sensitive information.

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Taken together, the executives argued that the CBN’s directive should be viewed less as a banking regulation and more as an industrial policy for Nigeria’s digital economy.

If implemented successfully, they believe it could accelerate investment in hyperscale data centres, encourage global cloud providers to establish larger local operations, reduce dependence on foreign-hosted infrastructure and create the foundation for Nigeria’s next phase of digital growth.

“There will undoubtedly be teething problems during the transition. But Nigeria’s financial sector has the engineering capability and operational maturity to overcome them. Data domestication is no longer simply a technology strategy. It is becoming the foundation of Nigeria’s digital sovereignty,” Adegbiji said.

With the January 1, 2027 deadline approaching, banks and fintech companies now face the immediate task of preparing for compliance. For the broader technology industry, however, the directive represents something much bigger, a signal that Nigeria intends to keep more of its digital value at home while positioning itself as one of Africa’s leading destinations for cloud infrastructure, artificial intelligence and data-driven innovation.