Why global hyperscalers are avoiding Nigeria despite Africa’s biggest market

Nigeria’s ambition to become Africa’s leading digital economy is facing a major setback as global hyperscale cloud providers continue to bypass the country despite its massive population, growing internet usage and position as Africa’s biggest telecom market.

Industry stakeholders at the ongoing telecommunications policy review workshop organised by the Nigerian Communications Commission in Lagos warned that unless Nigeria urgently addresses policy gaps, infrastructure costs, poor power supply, multiple taxation and regulatory uncertainty, the country may continue losing strategic digital investments to smaller African economies such as Kenya and South Africa.

Speaking during the workshop, Ikechukwu Nnamani, managing director of Digital Realty Nigeria, said one of the biggest concerns for Nigeria’s digital future is the absence of full cloud regions operated by the world’s major hyperscale cloud providers.

According to him, although Nigeria has one of the largest subscriber bases and digital markets in Africa, global cloud giants are still prioritising other African countries for major infrastructure investments.

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“One concerning issue is that none of the world’s top cloud providers currently operates a full cloud region in Nigeria. What we mainly have are access points connected to regions hosted outside the country. Interestingly, many current conversations around hyperscale cloud investment in Africa are focused on Kenya rather than Nigeria. That should concern us, considering Nigeria’s size and digital potential,”
Nnamani said.

Hyperscalers are large global cloud computing companies that operate massive digital infrastructure supporting artificial intelligence, cloud computing, streaming, financial services, e-commerce and enterprise applications across the world.

Their investments are considered critical for modern digital economies because they attract technology companies, strengthen local internet ecosystems, improve data sovereignty, lower latency and create thousands of technology-related jobs.

However, stakeholders said Nigeria’s current environment is making the country less attractive despite its market size.

Nnamani explained that the country is still operating largely under telecommunications policies designed more than 25 years ago, when technologies such as cloud computing, artificial intelligence, blockchain, hyperscale data centres and smart cities were not part of mainstream global conversations.

“If a sector is still operating largely under policies developed over two decades ago, can it truly remain efficient and responsive to present realities?” he asked.

He noted that the traditional telecom licensing structure was originally designed around voice calls and SMS services, but the industry has now evolved into a broader digital ecosystem driven by cloud platforms, data centres, artificial intelligence, Internet of Things and edge computing.

“Today, operators are dealing with smart cities, cloud platforms, artificial intelligence and data-driven ecosystems. For example, if someone wants to build a smart city today, which regulator oversees that process? The traditional licensing frameworks do not clearly address these emerging realities,” he said.

Nnamani also exposed several structural problems discouraging digital infrastructure investments in Nigeria. He identified the high cost of deploying infrastructure as one of the biggest obstacles.

According to him, deploying digital infrastructure in Nigeria is significantly more expensive than in several African countries competing for global technology investments.

“Import duties on ICT infrastructure are also very high. In some African countries, import duties on such equipment are as low as one percent, while operators in Nigeria face far higher costs,” he said.

He added that unreliable electricity remains another major challenge, revealing that a company once considered Nigeria for a major Bitcoin mining project requiring about 20 megawatts of electricity, but eventually moved the investment to Ethiopia because electricity costs there were far lower. “The cost of electricity is another major issue,” he stated.

Industry players also raised concerns over multiple taxation, overlapping regulatory demands and poor protection of telecom infrastructure.

Nnamani said operators often face different taxes and demands from several agencies, even within the same level of government.

He further lamented the increasing cases of fibre cuts and vandalism, despite government declarations recognising telecom infrastructure as critical national infrastructure.

“In one instance, a construction company that damaged fibre infrastructure simply told operators to go to court. Situations like that discourage investment,” he said.

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Stakeholders also warned against the over-concentration of digital infrastructure in Lagos.

According to Nnamani, Nigeria’s digital ecosystem would become more resilient if investments spread across multiple cities instead of remaining concentrated in one commercial hub.

He noted that in some cases, transporting internet capacity between Lagos and another Nigerian city costs more than moving the same capacity between Lagos and South Africa. “That is a serious issue that must be addressed,” he said.

The concerns formed part of broader discussions around the federal government’s move to rewrite Nigeria’s National Telecommunications Policy for the first time since 2000.

The review workshop organised by the NCC brought together regulators, operators, investors, development partners and industry leaders to discuss how Nigeria can reposition itself for the next phase of digital transformation.

Delivering the keynote address, Hadiza Bala Usman, special adviser to the president on policy and coordination, said the policy review had become necessary because telecommunications now sits at the centre of Nigeria’s economy.

According to her, the sector now drives digital trade, fintech, healthcare, agriculture, education, security, public service delivery and innovation.

She warned that outdated policies could weaken implementation, create overlapping responsibilities and reduce the country’s ability to compete globally. “More than two decades later, Nigeria has changed. Technology has changed. The economy has changed. The expectations of citizens have changed,” she said.

Earlier, Aminu Maida, the executive vice chairman of the NCC, admitted that the telecom sector still faces major structural challenges affecting service delivery and long-term growth. “These are not just operational issues for operators; they are national development issues because they affect the quality, resilience and reach of digital services across the economy,” he said.

Maida explained that the industry has now entered what he described as an “advanced regulatory frontier” involving emerging technologies such as 5G, artificial intelligence, satellite broadband, cloud infrastructure and cybersecurity.

“This is no longer a narrow telecommunications conversation. Telecommunications is no longer just one sector within the economy; it is productivity infrastructure for the entire economy,” he added.

Industry experts believe Nigeria still holds enormous digital potential because of its youthful population, large consumer market and growing internet penetration.

However, they warned that unless policies are modernised quickly and investment conditions improve, the country may continue losing strategic opportunities to rival African economies already positioning themselves as preferred destinations for cloud infrastructure, artificial intelligence and hyperscale digital investments.

Stakeholders at the workshop are expected to submit recommendations that will shape a new National Telecommunications Policy aimed at aligning Nigeria’s regulations with current technological realities and strengthening the country’s ambition to become Africa’s leading digital economy.