Nigerian entrepreneur Fara Ashiru launched her fintech platform, Okra, in 2020 using AWS.

As US-based cloud providers did not accept payments in naira, she had to pay for services in US dollars. As the naira lost about 70% of its value between 2020 and 2024, Okra’s cloud expenses soared. “The bills were staggering,” Ashiru told Rest of World. With Nigeria’s economic challenges, the model became unsustainable.

To cut costs, Okra moved its cloud infrastructure to local data centres in Nigeria and South Africa in 2024. Later that year, the cloud operations spun off into Nebula, a separate company offering businesses cloud hosting with payments in naira.

Nebula is part of a growing trend of Nigerian cloud providers offering alternatives to AWS, Microsoft Azure, and Google Cloud. Companies like Nobus, Galaxy, Suburban, and Layer3 are positioning themselves as local options for businesses looking to avoid exchange rate volatility and keep data within the country. Several startups have already shifted to these providers.

Besides cost savings, local cloud services help Nigerian businesses store data domestically, reducing latency and addressing concerns over data sovereignty. As debates over data control intensify globally, many businesses are prioritising local storage.

International cloud providers appear to be adjusting to this shift. In January, AWS began accepting payments in naira, stating that local currency options improve customer experience.

Industry experts see this as a practical move. “I think AWS has realised that they must accept naira because if you don’t accept naira you are wasting your time,” said Iyinoluwa Aboyeji, managing partner at Accelerate Africa. “We regularly advise our portfolio companies to look out for local solutions where possible and manage major costs like [cloud] in naira.”

AWS, Microsoft, and Google did not respond to requests for comment.

Nigeria’s tech sector includes over 19,000 startups, with 1,400 venture-backed firms that have collectively raised nearly $28 billion.

Despite their dominance, AWS, Azure, and Google Cloud have concentrated their African data centres in South Africa. Microsoft set up a Johannesburg facility in 2019, with expansion plans for Kenya. AWS followed in 2020, and Google Cloud recently joined them in Johannesburg. AWS launched a small local zone in Lagos in 2023, but none have full-scale data centres in Nigeria.

Data localisation is becoming a priority as governments push to keep data within their borders. Nigerian startups shifting to local cloud providers see this as an advantage. “How does it sound for Nigerian voters’ data to be stored in Europe?” asked 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.”

This emphasis on data sovereignty could help Nigerian cloud providers gain traction even as AWS adjusts its pricing. “We are keying into our data sovereignty narrative,” said Chidi Okpala, head of media at Galaxy Backbone. Initially built for government interoperability, Galaxy Backbone now provides cloud services to both public and private sector clients, operating data centres in Abuja and Kano.

Performance is another factor driving the shift. Suburban Cloud’s Abuja facility helps clients like Netflix and Google reduce latency. “Latency is a big issue when it comes to cloud business and these global companies know that they have to build some forms of proximity to their users,” Ayonote said.

Building data centres is expensive, often requiring millions of dollars. Some Nigerian startups are addressing this by renting space in existing facilities owned by telecom firms, banks, and IT companies. “We run our cloud services out of third-party data centres in Nigeria,” said Oyaje Idoko, founder of Layer3. “We currently have three availability zones operating out of two data centres in Lagos and one in Abuja.”

Demand for colocation services is growing. “We’re seeing more colocation and other services by local cloud providers, driven by the growing digital technology landscape, increasing demand and most importantly, the need for payment in local currency,” said Obinna Adumike, head of converged digital infrastructure at Open Access.

Despite these advantages, local cloud providers face challenges. Infrastructure gaps and less automation than global competitors remain hurdles. Ugochukwu Okoro, CEO of property tech firm Muster, noted that while he prefers working with Nigerian cloud provider GigaLayer, it lacks AWS’s automation.

“Their services are great, but I understand a lot of users might not want to use them because of skill issues. I have to manually integrate our system gradually, something most of my engineers can’t do because they are used to the seamless plug-and-play offered by AWS,” he said.

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