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Nigeria’s data-centre infrastructure has sufficient capacity to support the Central Bank of Nigeria’s (CBN) new payment-data localisation requirement, according to industry executives and government officials, although they warned that specialised skills shortages, cost pressures and vulnerabilities in fibre infrastructure could complicate implementation.
The assessment was made during a three-hour roundtable in Lagos, where senior representatives from MTN Nigeria Communications, Patrick Gold Microfinance Bank and the National Identity Management Commission (NIMC) examined the practical implications of the CBN’s data-localisation requirement for banks, fintechs and other payment service providers.
Payment firms face 2027 localisation deadline
The roundtable was organised by SPARK, organisers of the African Technology Expo, in partnership with B4B Partners. The session, titled “Making Data Localisation Work: Infrastructure, Cost, Compliance & the Future of Nigeria’s Digital Payments Ecosystem,” was held physically in Lagos and streamed online.
The discussion comes ahead of the January 1, 2027 deadline set by the CBN for payment industry participants to comply with the localisation requirement.
Under a circular issued on June 15 by the CBN’s Payments System Supervision Department, financial institutions and other participants facilitating payments in Nigeria are required to store and manage payment transaction data generated within the country in Nigeria, in line with applicable Nigerian data-protection laws.
The requirement comes as Nigeria’s digital payments market continues to expand. Electronic payment transactions reached N284.99 trillion in the first quarter of 2025, representing a 17.7% increase from N234.49 trillion recorded a year earlier, according to data attributed to the Nigeria Inter-Bank Settlement System (NIBSS).
Point-of-sale transaction value also increased significantly during the period, reaching N10.45 trillion.
The growing volume of transactions means local infrastructure must be capable of storing and processing increasing amounts of payment data while maintaining the reliability expected across banks, fintechs, payment switches and other financial service providers.
Localisation requires more than moving data
Ayobami Olajide, Head of Research at Kickoff Africa and moderator of the session, said the scale of technology spending by financial institutions demonstrates why data localisation should be treated as a strategic infrastructure exercise rather than a routine technology upgrade.
He said Nigeria’s 10 largest banks spend close to N200 billion per quarter on cloud and information technology services.
“One per cent failure rate is not acceptable,” Olajide said.
The migration process therefore requires institutions to establish where relevant data is currently stored, processed and backed up, while determining which workloads need to be moved or redesigned.
The localisation requirement does not necessarily mean that every banking or fintech workload hosted on international cloud platforms must be transferred wholesale to Nigerian infrastructure. Instead, institutions need to assess their specific payment-data obligations and ensure that storage, processing, backup and related controls comply with the applicable requirements.
NIMC says local capacity can support transition
Fola Olatunji-David, Technical Adviser to the CEO of NIMC, said the localisation requirement was not being introduced without an existing domestic infrastructure base.
“It’s not a policy that has come from nowhere,” he said. “I don’t think there’s any cloud provider in the country today that is operating at 100 per cent capacity.”
Olatunji-David cited NIMC’s national identity database as an example of large-scale localised data infrastructure. He said the database contains more than 140 million records, including about 100 million biometric records.
According to him, the localisation of the identity database has also improved service quality because most of the systems accessing the data are connected locally.
He nevertheless urged the CBN to pay attention to the skills required to execute complex migrations, including the use of certified migration personnel.
“That is one area that we don’t want to skimp on,” he said.
The availability of specialised expertise could become an important part of compliance implementation as financial institutions assess cloud architecture, cybersecurity, data governance, application dependencies and migration risks.
Cloud providers prepare for financial-sector demand
Cloud infrastructure providers are also positioning themselves to support businesses preparing for the new requirements.
Ifeanyi Otudor, Head of Cloud Solutions at MTN Nigeria, said local providers already operate against international standards including PCI DSS, ISO and SOC 2.
He said MTN provides some customers undertaking migrations with about three months of services at no cost to allow them to refactor their applications, with commercial charges beginning after the migration is successfully completed.
The offer, he said, is available to “anyone who shows up.”
MTN is also developing its cloud marketplace through partner-built services aimed at startups. Such services could become increasingly relevant to smaller fintechs and payment companies seeking local infrastructure without significantly increasing their technology expenditure.
However, moving payment workloads from international hyperscalers to domestic infrastructure can involve considerably more than transferring stored data.
Applications may depend on specific services provided by global cloud platforms, meaning migration can require changes to application architecture, networking, security controls and connections between different systems.
Local hosting can reduce foreign exchange exposure
Daniel Babatunde, Chief Technology Officer of Patrick Gold Microfinance Bank, provided an example of a financial institution that had already moved away from an international cloud platform.
The bank migrated from Microsoft’s Azure platform around 2019–2020, partly because of exposure to foreign-currency costs. Hosting infrastructure in naira reduced the need to price the bank’s technology requirements against the dollar.
Babatunde said the migration also improved latency through leased-line connections to NIBSS, Interswitch and Unified Payments, replacing IPsec tunnels that had previously operated over the public internet.
“We may not have all the one-click install that we get from a whole lot of cloud providers,” he said.
He advised technology executives considering migration to assess critical technical and security requirements before moving workloads.
These include encryption of data at rest and in transit, firewall provisioning, VPN and leased-line connectivity to payment processors, IP re-addressing and security-by-design architecture.
The assessment is particularly relevant for payment institutions because changes to infrastructure can affect connections to banks, switches, processors and other systems that must remain available for transactions to be completed.
Fibre security becomes a data-localisation concern
Beyond data-centre capacity and migration costs, Babatunde identified the protection of fibre networks and data-centre infrastructure as another important consideration.
“Data now is the new oil,” he said. “We must protect it the way we protect our pipeline.”
The concern is linked to the increasing dependence on domestic connectivity. Keeping payment data physically within Nigeria does not by itself guarantee service availability if fibre links connecting data centres, financial institutions, payment processors and other critical infrastructure are disrupted.
For payment companies, therefore, data localisation introduces a broader infrastructure question: whether the networks connecting local data systems are sufficiently resilient to support uninterrupted financial services.
Olatunji-David said telecommunications infrastructure has been designated as critical national infrastructure and that its vandalisation has been criminalised.
He also pointed to coordination on right-of-way through Lagos State’s infrastructure agency, the federal Project BRIDGE fibre rollout and satellite connectivity provided by NigComSat and Starlink as measures that can contribute to stronger network resilience.
As the January 2027 compliance deadline approaches, financial institutions will therefore need to consider data residency alongside architecture, cybersecurity, connectivity, cost and specialist skills.
For the payments industry, successful localisation will depend not only on where transaction data is stored, but also on whether the domestic infrastructure and expertise supporting that data can deliver the security, resilience and availability required by Nigeria’s rapidly expanding digital payments ecosystem.
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