CBN Data Localisation Deadline Puts Bank Cloud Spending Under Pressure
Nigeria’s cloud infrastructure has the capacity to support banks as they move payment data and other workloads to local infrastructure under a Central Bank of Nigeria (CBN) data localisation requirement.
However, industry experts say shortages of specialised technology talent, fibre security concerns and the cost of migration could complicate the transition.
The development is putting about ₦200 billion reportedly spent quarterly by Nigeria’s 10 largest banks on cloud and information technology services under fresh scrutiny as financial institutions assess the cost and reliability of moving more workloads to local infrastructure.
The issues were discussed at a technology industry roundtable in Lagos focused on infrastructure, cost, compliance and the future of Nigeria’s digital payments ecosystem.
Nigeria’s electronic payment transactions reached ₦284.99 trillion in the first quarter of 2025, highlighting the growing volume of financial data that local infrastructure must handle.
Ayobami Olajide, head of research at Kickoff Africa, said reliability would be critical as banks migrate their workloads.
“One percent failure rate is not acceptable,” he said.
Local cloud providers have room for more data
Fola Olatunji-David, technical adviser to the chief executive officer of the National Identity Management Commission (NIMC), said Nigeria’s infrastructure development had not been overtaken by the localisation policy.
“It is not a policy that has come from nowhere,” he said.
According to Olatunji-David, he did not believe any cloud provider in Nigeria was operating at full capacity, suggesting that existing providers could accommodate additional workloads from banks and other financial institutions.
He pointed to NIMC’s national identity database, which contains more than 140 million records, including about 100 million biometric records, as an example of large-scale data being managed locally.
He said service quality improved as more services connecting to the database were localised.
However, Olatunji-David identified specialised migration expertise as an important requirement and urged the CBN to ensure professionals handling migration projects are properly certified.
“That is one area that we don’t want to skimp on,” he said.
Banks face cost and technical challenges
Ifeanyi Otudor, head of cloud solutions at MTN Nigeria, said local providers already operate under international standards, including PCI DSS, ISO and SOC 2.
“We are localising. That doesn’t mean that we are local champions. We are local but global players,” he said.
Otudor said MTN had offered some customers moving their workloads about three months of free service to refactor their applications, with commercial charges beginning after successful migration.
The company is also expanding its cloud marketplace through services developed by partners and startups.
For banks, however, the economics of moving data and workloads locally could influence how quickly the transition takes place.
Daniel Babatunde, chief technology officer of Patrick Gold Microfinance Bank, said his bank moved away from Microsoft Azure around 2019 or 2020 partly because of foreign exchange exposure.
Hosting locally in naira reduced the bank’s exposure to dollar-based infrastructure costs, while leased-line connections to NIBSS, Interswitch and Unified Payments improved connectivity compared with IPsec tunnels over the public internet.
However, he said local infrastructure can require greater engineering effort and may not always offer some of the simplified deployment options available on major global cloud platforms.
He advised banks to consider encryption, firewalls, VPNs, leased-line connections to payment processors, IP re-addressing and security-by-design architecture before migrating workloads.
Fibre security becomes another concern
Fibre infrastructure security also emerged as a major concern during the discussions.
Babatunde called for stronger protection of fibre and data-centre infrastructure against vandalism, warning that damage to connectivity could affect the reliability of financial services hosted locally.
“Data now is the new oil. We must protect it the way we protect our pipeline,” he said.
Olatunji-David said telecommunications infrastructure had been designated as critical national infrastructure under a presidential directive and that its vandalisation had been criminalised.
She also pointed to right-of-way coordination, the Federal Government’s Project BRIDGE fibre rollout and satellite connectivity from NigComSat and Starlink as measures that could strengthen infrastructure resilience.
Talent remains a key challenge
Industry participants said the question is increasingly shifting from whether Nigeria has enough local cloud capacity to whether banks can migrate and operate their workloads reliably.
Olajide said the discussions indicated that migration within the remaining compliance window was feasible, but developing enough specialised talent to sustain the infrastructure would take longer.
This means banks will need both suitable infrastructure and skilled professionals capable of moving, securing and managing complex financial workloads.
What the transition could mean for Nigeria’s tech sector
The localisation requirement could increase demand for local cloud services, data-centre capacity, connectivity, cybersecurity and specialised technology professionals.
For banks, the immediate challenge is balancing compliance with cost, reliability and security.
For local technology providers, the migration could bring additional financial-sector workloads and create opportunities to expand their services.
The transition could therefore accelerate the development of Nigeria’s digital infrastructure, but industry stakeholders say the success of the process will depend on adequate technical expertise, reliable connectivity and infrastructure that can support the growing volume of financial data.
