The rise of local cloud providers in Nigeria marks a shift in the country’s tech landscape, with companies increasingly opting for alternatives to global services like AWS and Google Cloud. This change is driven by a mix of economic challenges, such as fluctuating exchange rates, and growing concerns over data sovereignty.
Economic Pressures Prompt the Shift
Nigerian fintech platform Okra, founded by entrepreneur Fara Ashiru in 2020, originally utilized AWS for cloud services. However, the platform faced rising costs as the Nigerian naira lost value, with cloud expenses surging by over 70%. “The bills were staggering,” said Ashiru, highlighting the unsustainability of using US-based cloud providers that did not accept payments in naira.
In 2024, Okra shifted its infrastructure to local data centers in Nigeria and South Africa. This move helped reduce operational costs and prompted the creation of Nebula, a cloud hosting company that offers businesses the ability to pay for services in naira.
The Rise of Local Cloud Providers
Nebula’s emergence is part of a broader trend in Nigeria. Other local providers, including Nobus, Galaxy, Suburban, and Layer3, are positioning themselves as alternatives to AWS, Microsoft Azure, and Google Cloud. By using local cloud providers, Nigerian businesses can avoid exchange rate volatility and ensure their data remains within the country’s borders, a key concern for businesses prioritizing data sovereignty.
Data Sovereignty and Performance Benefits
The shift to local providers isn’t just about cost savings. Nigerian businesses also benefit from reduced latency by storing their data domestically. With Nigerian startups increasingly concerned about where their data is stored, local providers have the edge in offering proximity to users and greater control over data.
“The question of how Nigerian voters’ data should be stored in Europe is vital,” said Bruce Ayonote, CEO of Suburban Cloud. “As long as we continue to ask this question, we will always arrive at the point where we build our own cloud infrastructure.”
Local providers are also improving their offerings. For example, Galaxy Backbone, initially designed for government interoperability, now provides cloud services to both the public and private sectors. The company operates data centers in Abuja and Kano, supporting businesses with a more localized infrastructure solution.
Infrastructure and Colocation Growth
Despite the growth of local providers, challenges remain. Building local data centers is costly and requires significant investments. Many Nigerian startups, like Layer3, are renting space in existing facilities owned by telecom companies, banks, and IT firms.
The demand for colocation services is growing as more businesses seek to maintain local currency payments and reduce operational costs. “We’re seeing more colocation and other services by local cloud providers, driven by the growing digital technology landscape,” said Obinna Adumike, head of converged digital infrastructure at Open Access.
Local Providers vs. Global Giants
While local providers offer significant benefits, there are still some challenges. Companies like GigaLayer, though highly regarded, face issues such as a lack of automation compared to AWS. “Their services are great, but I understand a lot of users might not want to use them because of skill issues,” said Ugochukwu Okoro, CEO of Muster.
Global cloud giants like AWS are adjusting to this shift. AWS recently began accepting payments in naira, a move that experts believe will improve the customer experience for Nigerian businesses. “I think AWS has realized that they must accept naira,” said Iyinoluwa Aboyeji, managing partner at Accelerate Africa.
The Future of Cloud in Nigeria
With the rise of local cloud providers, Nigerian companies are increasingly able to reduce their dependence on global giants while ensuring greater control over their data and costs. This shift reflects the broader trend of data localization worldwide and signals a growing digital ecosystem within Nigeria’s thriving tech sector.
