A Nigerian customer can transfer money through a fintech app in seconds, but the technology supporting that transaction may depend on servers thousands of kilometres away. From checking an account balance to confirming a transfer, financial institutions generate and process large amounts of data every day. Where that information is stored has now become a major concern for the Central Bank of Nigeria (CBN).
On June 15, 2026, the CBN directed banks, payment service providers, mobile money operators, switching companies, and other participants in Nigeria's payments ecosystem to store and manage payment transaction data generated in the country locally. The requirement takes effect on January 1, 2027.
The directive is part of a wider effort to strengthen control over Nigeria's financial infrastructure, improve regulatory oversight and reduce dependence on systems hosted outside the country. But with the deadline approaching, a survey by the National Information Technology Development Agency (NITDA) suggests that the industry has a long way to go.
Only 26 of the 44 financial institutions that responded to the survey's readiness question had either completed the required work or expected to finish before the deadline. That represents 59%. Fifteen said they were unlikely or very unlikely to finish on time, while three could not assess their readiness.
It is more concerning that 22 institutions have not started the implementation process entirely. The findings expose a costly gap between the CBN's expectations and the industry's ability to meet them.
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The CBN data deadline is clear, but the work is far from finished
Data localization means keeping certain information within the country where it was generated. The Central Bank of Nigeria (CBN) wants payment transaction data created in Nigeria to be stored and managed locally. For instance, if someone transfers ₦20,000 from a fintech wallet to a bank, this transaction creates a digital record with all the necessary details to process and verify the payment.
The CBN aims to ensure that this payment data stays within Nigeria's jurisdiction instead of being managed by foreign infrastructure. This does not mean that foreign tech companies can't work with Nigerian financial institutions. However, those using overseas cloud services will need to reconsider where they store and manage their payment data.
This transition is not as easy as just moving files. Financial institutions need to evaluate their current systems, determine which data is affected, find local hosting solutions, migrate their data, and ensure everything continues to function smoothly during the switch.
A survey by NITDA, earlier reported by Technext, highlights the obstacles ahead. While 70% of respondents acknowledged the data and systems impacted by this requirement, just 52% had assessed their current hosting setups. Only 25% secured executive approvals and budgets, 23% found local providers, and 18% had begun migration.
The challenge isn't that institutions do not understand CBN's directives. Many know what needs to be done but still need to finalize funding, partnerships, and technical setups to complete the process.
This is especially tough for fintech companies that rely heavily on international cloud services like Amazon Web Services and Microsoft Azure, which provide computing power and storage without needing their own data centers. Some of these companies also benefit from existing contracts and discounts that help reduce costs.
Shifting workloads may involve renegotiating contracts, covering migration and data transfer costs, redesigning systems, and acquiring new technical skills. While large banks might handle these expenses more easily, it can be a significant financial strain for smaller fintechs.
The urgency of the situation is evident. In September, banking and tech leaders asked for more time and clearer guidelines, stressing that migrating complex systems in just six months could be a challenge. The CTO of FCMB, Blessing Ehize, also expressed worries about the lack of clarity on which data needs to be hosted locally and how hybrid-cloud setups would work.
Nigeria has infrastructure, but can it handle the transition?
The CBN's deadline presents a chance for Nigeria's data center and cloud computing sector. Instead of relying on foreign providers to host essential information, financial institutions can invest more in local infrastructure, benefiting domestic data center operators and cloud companies.
NITDA Director-General Kashifu Inuwa mentioned that Nigerian businesses spend over $850 million a year on cloud services. Keeping more of that money in the country could lead to local investment, job creation, and a stronger digital infrastructure.
Local providers seem to be gearing up for the increased demand. In an interview, UniCloud Africa CEO Krishnan Ranganath suggested that the migration could need between 14 and 30 megawatts of data center capacity. He pointed out that existing facilities have around 20MW available, with another 15MW to 20MW that could be expanded.
However, not everyone is optimistic. Nugi Technologies founder Ugi Augustine has expressed concerns that Nigerian data centers might struggle to meet the volume and reliability needs of financial institutions. He highlighted that capacity and technical expertise are still significant issues.
It's not just about capacity, though. Financial institutions need data centres that can maintain operations during power outages, cyberattacks, and other disruptions. They also require reliable backup systems to handle potential failures at primary sites.
For a fintech company, simply moving payment records to a local server is not enough. If that server fails during peak times, customers may face failed transactions, delays, or service interruptions. A poorly planned migration can create the problems the policy is meant to avoid.
There's also the matter of how the rules apply to systems that mix local and foreign infrastructure. Some organizations might keep certain applications on international platforms while storing regulated payment data locally, known as a split-cloud arrangement. But if these applications abroad need to communicate continually with local databases, it can lead to delays and increase operational challenges.
The CBN has stressed that January 1, 2027, is still the deadline for compliance. At a recent meeting, they emphasized that institutions must consider the entire lifecycle of payment data, including creation, processing, storage, and disposal. They also warned that simply localizing data won't ensure security; businesses must also focus on cybersecurity, disaster recovery, and continuity plans.
For Nigeria, the goal is clear: enhance domestic infrastructure and gain greater control over financial data. However, the success of this initiative will not depend solely on how many servers are set up or how many companies sign local contracts.
It will ultimately be evaluated based on whether financial institutions can transition smoothly without imposing high costs on customers or weakening the reliability of digital payments. If smaller fintech companies struggle while larger ones move ahead, this could deepen the divide between those that can thrive in Nigeria's financial system and those that can't.
The CBN aims to keep payment data within Nigeria, but ensuring that the industry can financially manage this transition is crucial.