Nigeria Moves To Break Dependence On Foreign Cloud Services

The Federal Government is stepping up efforts to expand Nigeria’s local cloud computing capacity as it seeks to strengthen the country’s digital infrastructure, improve data resilience and reduce the vulnerability of businesses to disruptions in international connectivity.

The move comes as Nigeria and other West African countries continue to contend with the risks associated with reliance on international telecommunications infrastructure, following a major outage in March 2024 that disrupted internet services across the region after damage to four undersea cables.

Under the emerging cloud localisation framework, the government has established a technical working group comprising local technology providers and global cloud companies to develop standards and policies for the growth of the country’s cloud ecosystem.

The framework is expected to address key areas including data classification, standards for cloud service providers and digital quality assurance, as the government seeks to create a more structured and competitive environment for cloud computing services in Nigeria.

The initiative is also expected to support greater participation by domestic technology companies while attracting additional investment from international cloud providers.

The National Information Technology Development Agency (NITDA) and Galaxy Backbone are separately working on initiatives aimed at providing lower-cost cloud services to startups and smaller businesses, including payment options denominated in naira.

The expansion of local cloud capacity could help reduce operating barriers for Nigerian businesses that currently depend heavily on foreign-hosted infrastructure and often face exposure to foreign exchange movements, international connectivity constraints and external service disruptions.

It could also increase competition within Nigeria’s cloud market by creating room for more local providers to develop infrastructure and services tailored to the needs of businesses operating in the country.

However, the government has yet to provide details of specific incentives that may be offered to encourage private-sector investment in local cloud infrastructure and data-centre capacity.

The push for cloud localisation is taking place against the backdrop of rising demand for digital services, as Nigerian businesses increasingly rely on cloud-based platforms for financial services, e-commerce, telecommunications, enterprise applications, data storage and other critical operations.

Resilience becomes a business issue
Beyond data sovereignty and cost considerations, the government’s cloud localisation drive is increasingly being viewed as a business continuity issue.

In March 2024, damage to four undersea telecommunications cables caused widespread connectivity disruptions across West Africa, affecting banks, telecommunications operators and other digital businesses that rely on international connectivity for their operations.

The incident highlighted the risks faced by companies whose critical digital infrastructure and services are dependent on international links, particularly when alternative routes and locally hosted infrastructure are limited.

While additional international cable capacity can improve connectivity and reduce pressure on existing infrastructure, local hosting remains important because it determines how much digital activity can continue when an external international connection is disrupted.

One of the major infrastructure projects expected to contribute to Nigeria’s connectivity capacity is Orange’s planned 20,000-kilometre submarine cable linking Nigeria, other parts of Africa and Europe.

The new cable infrastructure is expected to provide additional international capacity and improve the resilience of connectivity between Africa and global markets.

However, increased international bandwidth alone may not fully address the risks associated with connectivity failures.

Businesses also require sufficient domestic data centres, cloud infrastructure and locally hosted applications to ensure that critical services can continue operating when international links are interrupted.

This has made the development of local cloud infrastructure increasingly important to Nigeria’s broader digital transformation agenda.

With more data and applications hosted within the country, businesses could potentially maintain access to critical services even when international connectivity is temporarily affected, while also gaining greater control over data management and infrastructure costs.

The government’s technical working group is therefore expected to play an important role in establishing a framework that balances the interests of global cloud companies with those of domestic providers and users.
A clearer regulatory environment, coupled with investment in data centres, broadband infrastructure, cybersecurity and reliable electricity, could help Nigeria build a more competitive domestic cloud ecosystem.

For startups and small businesses, access to lower-cost cloud services in naira could also reduce some of the financial pressures associated with paying for international technology services in foreign currency.

The success of the localisation drive, however, will ultimately depend on the ability to attract significant private-sector investment and provide the infrastructure required to operate cloud facilities at scale.