The answer is high-stakes, given that digital payments have become the absolute backbone of the nation’s economy. According to data from the Nigeria Inter-Bank Settlement System (NIBSS), the value of electronic transactions surged 80% to a record ₦1.07 quadrillion (approx. $702 billion) in 2024, up from ₦600 trillion ($393.6 billion) the previous year, with total volumes climbing to 11.2 billion transactions. Managing a financial engine of this magnitude locally will be the ultimate test for Nigeria’s data centers.

Yet much of the cloud infrastructure underpinning these transactions still resides on foreign platforms such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and IBM Cloud. 

That dependence has persisted even as banks sharply increase their digital investments. Nigeria’s 10 largest banks spent a combined ₦177.91 billion (about $116 million) on information technology in the first quarter of 2026, up 30.8% from ₦136.04 billion ($98.46 million) a year earlier, as they expanded artificial intelligence capabilities, cloud infrastructure and cybersecurity. 

According to industry experts, requiring payment data to remain within Nigeria will strengthen data sovereignty, improve regulatory and law-enforcement access during investigations, reduce dependence on foreign jurisdictions, and keep more of the capital Nigerian organisations spend annually on overseas cloud and hosting services within the local economy.

The question is no longer whether financial institutions must comply. The debate has shifted to whether Nigeria’s data centre ecosystem is ready.

The industry says it is ready 

Nigeria’s data centre operators say they are ready.

Ayotunde Coker, chief executive officer of Open Access Data Centres (OADC), a subsidiary of the WIOCC Group (West Indian Ocean Cable Company), said the CBN’s directive is the result of years of investment in Nigeria’s digital infrastructure.

“This has been a long time coming,” Coker said during a media briefing on June 25. “We’ve spent years building reliable, world-class data centres that allow banks and other businesses to host their systems in Nigeria.”

He said Nigeria’s data centre industry today is vastly different from what existed a decade ago.

Nigeria now has about 26 data centre facilities, according to industry estimates compiled by TechCabal Insights. 18 of them are commercial data centres where banks, fintechs, cloud providers, and other businesses rent space for their servers. The rest are private facilities built for organisations such as telecom operators and banks. 

Most of these facilities are located in Lagos, particularly in Lekki, Ikeja, and Eko Atlantic, although cities including Abuja, Kano, Enugu, and Port Harcourt also have operational data centres.

The industry’s size is measured by how much computing power it can support rather than by the physical size of the buildings. Nigeria’s commercial data centres currently provide between 50 and 56 megawatts (MW) of live computing capacity. When expansion projects that have already been built but are yet to be fully equipped are included, total installed capacity rises to about 124 MW.

That already makes Nigeria Africa’s second-largest data centre market after South Africa, accounting for about 15% of the continent’s installed capacity. Demand is also growing rapidly. Driven by cloud computing, artificial intelligence, and new data localisation rules, Nigeria’s capacity is expected to grow to between 210 MW and 300 MW by 2030.

Coker said operators have spent years preparing for this moment. OADC’s newest Lagos campus alone is being expanded to 24 MW and is designed to support both cloud computing and artificial intelligence workloads. The site is currently actively running an operational 1.5 MW Tier-III certified colocation base data hall. The company said it has also invested heavily in backup power systems, high-speed fibre connections and direct links to international submarine cables.

“We know how to deliver reliable power,” Coker said. “The data centres we build today are world-class. They’re comparable to the best you’ll find anywhere.”

Other operators make similar claims. Rack Centre says its facility is designed to eliminate the risk of grid instability by operating entirely off-grid on a dedicated 13.5MW gas-powered energy system, providing enough capacity to meet growing demand.

“Based on our skilled in-house personnel and strict adherence to processes/procedures, Rack Centre has, since its inception 13 years back, recorded a 100% uptime,” Lars Christer Johannisson, CEO of Rack Centre, told TechCabal in an emailed response. “We are not relenting, and we continue to invest in skilled personnel, resources and infrastructure to guarantee optimum service delivery to our clients, local and international.”

But while operators believe the physical infrastructure is largely in place, they say the bigger challenge lies elsewhere.

Johnson Agogbua, co-founder and chief executive of Kasi Cloud, West Africa’s first hyperscale-ready AI-capable data centre, said Nigeria has enough data centre space to support the migration. 

“The short answer is yes,” Agogbua told TechCabal via email. “Physical data centre capacity is not the problem.” Kasi Cloud is developing a hyperscale data centre campus in Lekki, Lagos, that will scale to about 100MW of critical IT capacity upon full build-out, making it one of the largest data centre developments in Africa.

Instead, he believes Nigeria now needs more locally available cloud computing and storage platforms—the same services banks currently obtain from providers such as AWS, Microsoft Azure and Google Cloud.

“The real question is whether we have enough cloud computing and storage platforms that can support this migration at scale,” he said. “What the CBN has done is create the demand that will encourage more investment in those services.”

Data centres provide the physical environment—power, cooling, security and connectivity—while cloud platforms provide the computing services that banks and fintechs actually consume. 

For that reason, several industry leaders argue that localisation should encourage those global cloud companies to establish infrastructure inside Nigeria rather than forcing customers to abandon the platforms they already use.

Ope Adeoye, chief executive of OnePipe, a Nigerian embedded finance and banking-as-a-service (BaaS) platform, offers what he describes as the  “smoothest path” to compliance.

“In my view, the practical path is to create the environment that allows the major global cloud providers to deploy mirrors and physical infrastructure in Nigeria while continuing to offer the same services customers already use,” he said. “That keeps the localisation requirement at the infrastructure level rather than forcing banks and fintechs to switch cloud providers.”

Adeoye warns that migration itself will not be trivial.

Moving mission-critical payment systems involves far more than copying databases from one server to another. Financial institutions must redesign applications, validate performance, maintain regulatory compliance, and ensure uninterrupted service throughout the transition. 

The broader ecosystem also faces longstanding infrastructure challenges.

“The major issue is dealing with infrastructure gaps that support local deployments,” Adeoye said, pointing to power reliability, cooling systems and the availability of experienced engineers capable of managing large-scale cloud infrastructure.

Even so, he believes banks may have an advantage over fintechs. 

“I think banks are better primed to execute this,” he said. “Many of the older banks operated their own infrastructure before the cloud era. They can revisit and modernise existing deployment architectures rather than building everything from scratch.”

“Infrastructure investments paying off”

Data centre operators, however, argue that the ecosystem has evolved significantly in recent years.

Coker points to Nigeria’s rapidly improving connectivity backbone as evidence.

Over the past decade, submarine cables, including MainOne, Glo-1, WACS, ACE, Equiano, and, most recently, 2Africa, have increased international bandwidth into Nigeria. During the widespread cable disruptions in March 2024, Equiano played a critical role in maintaining connectivity for many businesses.

Nigeria’s data centres now function as highly interconnected hubs linking these international cable systems with internet exchanges, telecommunications operators and enterprise customers.

Operators also argue that this growing connectivity strengthens the business case for hyperscale cloud providers to establish local infrastructure.

“The directive sends a signal to the world that data sovereignty and localisation matter,” Coker said. “It will encourage the global cloud providers to bring their own infrastructure into Nigeria over time.”

Agogbua shares that view.

“The question is not whether local operators can match global providers,” he said. “The question is whether global providers will partner with local operators to unlock the Nigerian market. We believe they will.”

Such partnerships could fundamentally reshape Nigeria’s cloud ecosystem.

Rather than replacing AWS, Microsoft or Google, local data centres could become the physical foundation upon which those companies deploy local cloud regions, allowing customers to continue using familiar services while meeting the CBN’s localisation requirements.

“This could mean a significant signal and boost for investors in Nigeria’s digital infrastructure market,” Johannisson said. “It means we can repatriate much of the digital compute currently exported abroad, bringing it back into the country and creating new markets in the process. But if executed well, it is a boost to national resilience and sovereignty.”

What local hosting brings

Beyond compliance, operators see wider economic implications.

Agogbua described the directive as “the single most consequential policy signal for Nigeria’s digital infrastructure sector in a decade.”

Reversing offshore hosting could unlock significant new investment in data centres, cloud infrastructure and related digital services.

Local hosting could also improve application performance. Instead of routing payment requests to servers thousands of kilometres away in Europe or South Africa, applications hosted domestically could deliver dramatically lower latency, according to Agogbua.

“The question Nigerian fintechs should ask is not whether local hosting costs more,” he said. “It is what it costs today to run mission-critical systems on infrastructure located thousands of kilometres away.”

The benefits extend beyond financial services. Once sufficient cloud infrastructure is in place, government agencies, telecom operators, healthcare providers, and manufacturers could all leverage the same ecosystem.

“Financial services is the wedge,” Agogbua said. “Government, telecoms, healthcare, education, and manufacturing follow.”

Can Lagos carry the country’s payments system?

One recurring concern is geographic concentration.

Most of Nigeria’s commercial data centres are located in Lagos, raising concerns that keeping critical payment data in one city could create risks if Lagos experiences a major outage, security incident, or natural disaster.

However, the country’s digital infrastructure is gradually becoming more geographically distributed. Beyond Lagos, Galaxy Backbone (GBB), a government-owned technology services company, operates a Uptime Institute Certified Tier III national shared services centre/data centre in Abuja and a Uptime Institute Certified Tier IV data centre in Kano. 

“We’ve built infrastructure locally that is world-class, and GBB will be glad to work with financial institutions in Nigeria in hosting their data in our Datacentres under global standards of operations,” Chidi Okpala, the company’s Head of Corporate Communications, Galaxy Backbone, told TechCabal in a telephone interview. 

Equinix has also expanded outside Lagos with a $22 million Tier III-certified facility in Port Harcourt, signalling a gradual diversification of Nigeria’s data centre footprint.

Industry executives argue those fears are overstated.

“Lagos is better positioned than many people realise,” Agogbua said, noting that multiple international submarine cables, interconnected facilities and independent operators already provide redundancy comparable to availability zones used by hyperscale cloud providers elsewhere.

Coker added that OADC is already evaluating expansion into cities including Abuja and Port Harcourt as customer demand grows.

“We have a core-to-edge strategy,” he said. “Over time, we’ll build additional facilities at strategic locations across the country.”

Olubayo Adekanmbi, chief executive of Data Science Nigeria, a non-profit AI and data science organization, believes the policy reflects a broader shift in how governments increasingly view financial data.

“This transaction data is becoming security data,” he said.

As digital payments increasingly intersect with fraud investigations, anti-money laundering enforcement and financial intelligence, keeping sensitive transaction records within national jurisdiction becomes less about business efficiency and more about national security.

He also believes industry concerns about technical capacity may be overstated.

“Capacity has increased much faster than many people realise,” Adekanmbi said, arguing that advances in cloud technologies and artificial intelligence have significantly improved engineering productivity across the sector.

He nevertheless acknowledged Nigeria’s broader infrastructure realities.

Power constraints remain significant, broadband coverage is still expanding at 56% penetration, and digital infrastructure continues to develop. But he argues these limitations should not delay efforts to establish stronger national control over critical financial infrastructure.

The biggest uncertainty may ultimately be timing.

The directive gives financial institutions roughly six months to complete what could become one of the largest technology migrations in Nigeria’s financial history.

Coker believes many organisations have already anticipated stricter data sovereignty requirements as global regulations increasingly move in that direction.

Agogbua agrees that the timeline is demanding but achievable.

“The institutions that start now will find it manageable,” he said. “Those that wait will struggle.”

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