Ahead January deadline, Nigeria eyes $50m savings from data localization

About $50million spent annually by financial institutions and digital infrastructure providers to host their data offshore will be saved if data localisation policy takes effect next year, the Federal Government has said.

This is coming amidst implementation hurdles faced by financial institutions as the January 1, 2027 deadline approaches.

The Central Bank of Nigeria had in June this year issued a sweeping directive requiring all payment and financial transaction data generated within the country to be processed and stored locally by January 2027.

Daily Trust reports that for over a decade, Nigerian financial institutions built their digital platforms atop international hyperscalers like Amazon Web Services (AWS) and Microsoft Azure.

What this means is that financial service providers including fintechs would abandon their reliance on global digital cloud platforms for available local data centres.

The development has created anxiety among operators amidst call for deadline extension.

But yesterday, the Director-General of the National Information Technology Agency (NITDA), Kashifu Inuwa Abdullahi, speaking at the Executive Regulatory Dialogue on National Sovereign Cloud Initiative (NSCI) Implementation and Data Localisation in Lagos on Wednesday disclosed that more than 85% of Nigeria’s information technology workload is currently hosted on public cloud infrastructure outside the country.

He spoke just as a new report by PWC indicated that the data localisation rule could reshape competition among financial institution operators.

Figures cited by NITDA showed that Nigeria’s 10 largest banks spent about N177.91billion on information technology in the first quarter of 2026 alone, representing a 31 per cent increase over the corresponding period last year.

A sizeable portion of the investment currently supports cloud infrastructure hosted outside Nigeria, a trend the new policy is expected to address by encouraging greater utilisation of local infrastructure.

The new framework is aimed at improving confidence in Nigeria’s digital infrastructure while promoting local capacity and enhancing oversight of critical national data.

But with January 2027 deadline approaching, yesterday’s dialogue organised by the Central Bank of Nigeria (CBN) and the NITDA in Lagos had stakeholders across financial and financial technology sectors discussing issues around the successful implementation of policy by the two regulators.

Abdullahi in an interview with newsmen said NITDA and the CBN had engaged financial institutions several times ahead of the January 2027 deadline.

The NITDA DG said Nigeria wants global hyperscalers and local data centre operators to expand infrastructure in Nigeria and help establish the country as a regional cloud hub.

“We want to be able to control our digital future. We want to be digitally independent,” Abdullah said.

The first phase is focused on the financial sector, which Abdullah described as Nigeria’s most digitalised industry.

The initiative comes as Nigerian banks face growing cybersecurity and operational risks, including the potential loss of access to critical services during infrastructure disruptions.

The NITDA DG said technology resilience is increasingly important for protecting financial institutions’ capital, particularly as cyber fraud and other digitally enabled incidents become more prevalent.

The framework is based on a classification of data rather than a blanket requirement that all Nigerian data remain inside the country.

NITDA is identifying categories it considers sovereign, including defense information, national security data, financial records and citizens’ health information.

“We are not locking our doors and we are not saying all Nigerian data must stay in Nigeria,” Inuwa said. “We are saying we have different classes of data.”

Under the approach outlined by NITDA, sovereign data would need to be hosted domestically, while other types of information could continue to use international infrastructure where permitted. The goal is to protect sensitive information without preventing Nigerian companies from accessing global technology platforms.

Although Nigeria has local data center operators, many businesses continue to use global hyperscalers because of their scale, reliability and range of services.

Abdullahi said Nigeria’s connectivity and role as a transit point for neighbouring countries could allow it to host data and provide computing services for landlocked markets across the region.

“The intention is to achieve both our sovereign control and positioning Nigeria as a hub,” he said.

He said NITDA plans to extend the framework beyond financial services once the first phase is completed.

PWC in its report titled, “CBN Data Localisation and Market Structure Rules”, the PwC said the Central Bank of Nigeria’s new rules on data localisation and market structure could reshape how payment operators compete, manage data and invest in technology.

The rules apply to deposit money banks, microfinance banks, mobile money operators, switching and processing companies, payment terminal service providers, payment solution service providers, super agents and other licensed operators in Nigeria’s payments ecosystem.

Under the market structure requirements, PwC says an operator with more than 25% of card issuing must limit its share of merchant acquiring to 15%.

The same restriction applies in reverse to an operator with more than 25% of merchant acquiring.

It said meeting the requirements may involve more than changes to regulatory reporting and data storage. Institutions may need to reconsider where they compete, whether their current business models remain viable and how their technology environments must change.

The report says the market share limits could affect integrated issuing and acquiring models, scale advantages and competitive positioning.

It adds that data localisation could have implications for cloud infrastructure, disaster recovery, analytics, AI platforms, third-party providers and long-term technology investments. Restructuring and implementation decisions may also create tax considerations and influence how investors assess opportunities in Nigeria’s payments sector.

Connecting compliance with wider business decisions

The report also brings the regulatory, strategic and technology implications together. It examines the questions institutions should address before restructuring their operations, migrating payment data or committing to significant infrastructure investments.

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