Nugi Technologies founder Ugi Augustine warns that the Central Bank of Nigeria’s January 2027 data localisation deadline could strain data centres, disrupt financial services, and increase technology costs, requiring urgent infrastructure investment in this interview with SAMI TUNJI
Nigeria has approximately 28 data centres either operational or under construction in six states. Is the challenge the number of facilities available or their capacity and technical capabilities to support banks and fintechs on a large scale?
For me, it’s both, but the bigger concern is capacity and reliability. Nigeria does not yet have sufficient data centre capacity to handle the volume of data we generate, and some existing facilities are already at capacity. If there is no room to accommodate the next bank, fintech, or large enterprise that needs to host its data locally, then localisation itself creates a capacity challenge.
Reliability is just as important. We still see situations where systems go down, and transactions are disrupted. You send money; it leaves your account, but the transaction doesn’t complete because something failed somewhere in the supporting infrastructure. That is why I keep emphasising the need for Tier IV infrastructure. It is designed with redundancy and fault tolerance so that if one component or distribution path fails, another can take over without bringing the entire system down.
But we also need more facilities. Nigeria has 36 states, yet data centres are currently concentrated in only a handful. This means a large part of our critical digital infrastructure remains concentrated in a few locations. So the question should not simply be how many data centres Nigeria has. We need more capacity, greater geographic spread, and infrastructure resilient enough to support banks, fintechs, and other businesses at scale.
Can banks and fintechs migrate offshore workloads locally by January 2027 without operational or cybersecurity risks, and what would be a realistic migration timeline?
Three months is a very tight timeline, particularly for institutions with significant workloads currently hosted offshore. Migration is possible, but moving everything within that period without creating operational or cybersecurity risks may be tricky for some banks and fintechs.
This is not simply a matter of transferring data from one location to another. Financial institutions must consider cybersecurity, backups, system availability, regulatory requirements, and business continuity. A rushed migration could introduce the same risks the localisation policy is intended to reduce.
A realistic approach would be phased. Institutions first need to identify affected workloads, assess available local infrastructure, establish the appropriate hosting environment, and then migrate in stages. Systems should be properly tested and, in some cases, run in parallel before decommissioning offshore infrastructure. The timeline will also depend on the size and complexity of each institution’s systems.
The bigger question is whether the local infrastructure is ready to receive those workloads at scale. Where will the data sit, and does that infrastructure have the capacity and resilience to withstand power, connectivity, or equipment failures without disrupting critical financial services? Those issues have to be addressed alongside localisation. Otherwise, we risk meeting a deadline on paper while creating new operational problems.
How much extra data-centre capacity will the CBN directive require, and does Nigeria have sufficient readily available rack space, computing resources and backup infrastructure to accommodate the anticipated demand?
It is difficult to estimate the additional rack or computing capacity required until we know the scale of the workloads that need to move back into Nigeria. However, demand will increase significantly. Every day, Nigeria generates enormous amounts of data through financial transactions, applications, videos, and other digital activity, and a considerable amount of that data is still hosted outside the country.
The question is whether we have enough immediately available capacity to absorb that demand. I don’t think we should assume we do. Capacity is not simply about having rack space. You also need sufficient computing power, connectivity, backup systems and redundancy to support critical workloads reliably.
Even with our own data centre project in Akpabuyo, Cross River State, we are not planning to build once and assume capacity will be sufficient for the next five or ten years. We are taking a modular approach that allows us to build in stages and expand as demand grows.
So beyond asking whether Nigeria has enough capacity today, we need to consider how quickly the industry can add capacity while maintaining the resilience and redundancy these workloads require. Localisation will increase demand, but the infrastructure has to grow with it.
What are the biggest infrastructure barriers to data localisation, and which poses the greatest challenge to meeting the January deadline?
Power is the biggest constraint and probably the most difficult to resolve before January. Nigeria’s unreliable grid makes this a structural problem for data centres, while alternatives such as gas, diesel, and renewable energy significantly increase operating costs at the level of reliability these facilities require.
That challenge has shaped how we are approaching our data centre project. We chose the location partly because of the available energy options. We are close to a waterfall that could support hydro power, we have access to gas, and there is enough land for an 80-megawatt solar farm. Our design is based on four independent power sources because the uptime we are targeting requires that level of redundancy.
The second major constraint is fibre connectivity and international bandwidth. Cross River, for example, has historically faced high data costs, partly due to its distance from the major cable infrastructure concentrated around Lagos. As part of our project, we are exploring the possibility of bringing a subsea cable directly from Europe into Akpabuyo. That could improve connectivity and potentially reduce the cost of bandwidth across the South-South.
Skilled manpower is another constraint. Tier IV facilities require specialised engineers, and much of that expertise is currently concentrated in Lagos or outside Nigeria. That is one reason we are also investing in training, so that more of the technical capacity required to operate this infrastructure can be developed locally.
These are all problems that need attention, but power is the hardest to address within a three-month window because you cannot easily solve a structural energy problem simply because a regulatory deadline is approaching.
How does local data hosting compare in cost with offshore services, and could compliance raise technology expenses and the cost of financial services for consumers?
In the short term, yes, compliance could raise technology costs for some banks and fintechs. Global cloud providers operate at enormous scale and already have mature infrastructure, tools, and services that local providers may find difficult to match on cost.
Migration also has a cost. Institutions must account for computing capacity, connectivity, redundancy, cybersecurity, backups, and business continuity. Those costs do not disappear simply because the data is hosted locally.
Whether those additional costs eventually reach consumers will depend partly on how quickly Nigeria can make local hosting more competitive. Power and connectivity are major components of the cost of running a data centre here. If we can improve grid reliability and make alternatives such as gas, solar and hydro more viable, operators can reduce some of those costs as they scale.
There is also a wider opportunity. Nigeria will need significantly more computing capacity for cloud services, artificial intelligence and other data-intensive applications. If local operators can provide that infrastructure at competitive rates, more of the money currently spent on computing infrastructure abroad can remain within the Nigerian economy.
I would not assume that localisation means permanently higher technology costs. There may be higher costs during the transition, but the longer-term outcome depends on whether we use the resulting demand to build a competitive local industry.
Could the directive create capacity shortages, allowing a few local data-centre operators to raise prices as financial institutions struggle to find compliant alternatives?
Yes, that is a real risk if demand grows much faster than supply. If more organisations are required to host their data in Nigeria, but only a small number of facilities have the capacity and meet the required technical standards, those institutions will have limited alternatives. That can create both capacity and pricing pressure.
That is why localisation has to be considered alongside infrastructure development. The objective should not be to have two or three operators handling most of the country’s critical financial data. We need more capacity, greater geographic distribution, and enough credible providers so institutions have genuine alternatives.
Competition is important here. As more operators enter the market and existing operators expand, institutions will have more choice, and the market will be better placed to deliver competitive pricing.
Localisation can create an opportunity to strengthen Nigeria’s digital infrastructure, but only if supply can meet the new demand. Regulation, infrastructure investment and skills development therefore need to move in tandem.
What technical standards should the CBN enforce to ensure data localisation strengthens security and resilience rather than moving financial data from advanced offshore systems to weaker domestic infrastructure?
That’s a really good question. For critical financial workloads, institutions should be required to demonstrate redundancy across power, connectivity and core systems, and to maintain appropriate backup and disaster-recovery arrangements. There should also be clear standards for encryption, cybersecurity monitoring, physical security, access controls and the ability to detect and respond to breaches.
Access to sensitive information should be restricted to authorised personnel, with clear records of who accessed what and when. Employees and contractors handling sensitive data should also face strict data-handling requirements and be held accountable for breaches.
Most importantly, these standards should be tested, not just documented. Institutions and their hosting providers should be able to demonstrate that systems can keep operating when equipment, power, or connectivity fails, and that data can be recovered when something goes wrong. Localisation should improve resilience and regulatory oversight, not simply change server addresses.
With data centres concentrated in a few states, what systemic risks do power outages, fibre cuts and disasters pose to Nigeria’s financial system, and what level of geographic redundancy should banks maintain?
If too much critical infrastructure is concentrated in a small number of locations, a major power failure, fibre cut, natural disaster, or other disruption can have consequences far beyond the affected location.
A bank serving customers in Uyo, for example, should not depend on every critical system or piece of infrastructure in Lagos or Abuja. Banks should maintain geographically separated primary and backup environments, with sufficient independence between them so that a major failure at one location does not take down both.
That means thinking carefully about power sources, fibre routes and other dependencies as well. Two data centres in different locations do not provide sufficient redundancy if both ultimately depend on the same critical infrastructure.
Over time, I would like to see more of this infrastructure distributed across Nigeria’s geopolitical zones. This reduces concentration risk, brings computing infrastructure closer to other parts of the country, and strengthens the financial system’s resilience. Data localisation should therefore consider not only whether data is hosted in Nigeria, but also how securely it is distributed within Nigeria.
What challenges have you encountered in developing a Tier IV data centre in Calabar, and what changes are needed to attract high-grade data-centre investments beyond Lagos?
We once went to a 561-megawatt gas power station in Odukpani to resolve an internet problem. When we got there, we discovered that rodents had eaten through some of the cables in the ceiling. This major power facility had also experienced significant gas and power challenges over the years.
For me, that illustrates how difficult it is to build high-grade infrastructure outside Nigeria’s major commercial centres. The resources may be available, but the supporting infrastructure and ecosystem you need to use those resources reliably are not always there.
With a Tier IV data centre, you cannot rely on a single power source or a single fibre connection. You need redundancy across power and connectivity. You need access to equipment, specialised engineers, maintenance capability and reliable fibre routes. When you build outside Lagos, you may have to solve several of those problems yourself.
For investment to spread to other parts of Nigeria, those supporting systems have to improve. States can also help by making land acquisition, permits, and rights-of-way easier, while the federal government can support investment in power and national fibre infrastructure.
There is no reason for data-centre investment to be concentrated almost entirely in Lagos. But investors need to know that when they move elsewhere, they will not have to build the entire supporting ecosystem themselves.
Beyond January 2027, could the directive drive growth in Nigeria’s cloud and data-centre industry, or become merely a compliance exercise? What must the CBN and other agencies do to deliver meaningful results?
It can genuinely catalyse a larger Nigerian cloud and data-centre industry, but that will not happen simply because a localisation deadline has been set. The directive creates demand. What happens next depends on whether Nigeria can create the conditions for infrastructure investment to respond to that demand.
Between now and January, the priority should be clarity and coordination. Financial institutions and infrastructure providers need to understand exactly what is required, which workloads are affected, and what technical standards local infrastructure must meet. The CBN also needs to coordinate with other agencies responsible for data protection, telecommunications, power, and digital infrastructure so institutions don’t face conflicting requirements.
Beyond the deadline, we need predictable regulation, better access to finance and a clear framework that enables both Nigerian and international technology companies to invest. We also need to address the underlying constraints in power, fibre connectivity and skilled manpower.
If we get those pieces right, the directive can create enough sustained demand to support new data centres, cloud infrastructure, and eventually greater hyperscaler investment in Nigeria. If we focus only on whether institutions have moved their data by January, it risks becoming a compliance exercise primarily.