Ugi Augustine, founder of Nugi Technologies, has warned that the Central Bank of Nigeria’s (CBN) data-localisation directive could strain the country’s data-centre capacity and increase technology costs if infrastructure development fails to keep pace with rising demand.
The directive requires financial institutions and payment service providers to store and process Nigerian payment transaction data on domestic infrastructure by January 1, 2027.
Augustine said Nigeria faces challenges beyond the number of available data centres, including limited capacity, unreliable electricity, inadequate fibre connectivity and shortages of specialised technical personnel.
He warned that the short implementation period could make it difficult for some banks and fintech companies to migrate their workloads safely without exposing their operations to cybersecurity threats or service disruptions.
According to Augustine, data localisation requires more than transferring information to local servers. It also demands reliable power supplies, backup systems, strong cybersecurity measures and disaster-recovery arrangements to ensure uninterrupted financial services.
He further cautioned that a sharp increase in demand without a corresponding expansion in infrastructure could create capacity shortages and pricing pressures, particularly if financial institutions have limited options for compliant hosting services.
However, Augustine said the policy could also create opportunities for investment in Nigerian data centres, cloud services and technology jobs if infrastructure providers expand their capacity.
The challenge for regulators and industry operators is to ensure that compliance does not come at the expense of service reliability, affordability or data security.
As the January deadline approaches, coordinated investment in electricity, connectivity, technical skills and resilient data infrastructure will be essential to achieving the policy’s objectives while protecting Nigeria’s increasingly digital financial system.
Leave a comment