Nigeria Spends $850 Million Annually on Foreign Cloud Services

Nigeria is undergoing a significant digital transformation, with businesses, startups, and government agencies increasingly adopting cloud computing to drive innovation and efficiency. However, this shift comes at a cost, as the country spends at least $850 million annually on foreign cloud providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). This substantial outflow of capital raises the question of whether local cloud providers can offer better solutions tailored to Nigeria’s unique needs.

Cloud computing is crucial for modern businesses, providing scalable storage, computing power, and application hosting. It allows companies to save on costly on-premises infrastructure while gaining agility and efficiency. In Nigeria, the adoption of cloud services is rapidly increasing, with the Nigerian Cloud Computing Market expected to reach $1.03 billion by 2025 and $3.28 billion by 2030, growing at a compound annual growth rate (CAGR) of 25.98%. Cloud facilities enable advanced technologies like AI, IoT, and big data analytics, helping Nigerian businesses compete globally. For startups, cloud services level the playing field, while for enterprises, they streamline operations. Government agencies use cloud solutions to digitise services, enhancing efficiency and accessibility.

Despite these benefits, Nigeria faces unique challenges in cloud adoption. Unreliable internet in some regions and frequent power outages increase reliance on costly generators. Additionally, data sovereignty is a growing concern, as the Nigeria Data Protection Regulation (NDPR) mandates local storage for sensitive data, especially in finance and government. Local cloud solutions could address these issues more effectively by providing reliable, compliant, and cost-effective services.

Foreign providers currently dominate Nigeria’s cloud market, with AWS, Azure, and GCP controlling 65% of the global market. These providers offer comprehensive services, including over 200 products from computing to machine learning, with competitive pricing. However, their African presence is limited, with most data centres located in South Africa. This geographical distance increases latency for Nigerian users, affecting the performance of cloud-based applications. Additionally, the cost of foreign cloud services is a significant hurdle, as they are billed in dollars. The naira has lost 70% of its value against the dollar since 2020, inflating costs for Nigerian businesses.

Local cloud providers are emerging as viable alternatives to foreign hyperscalers. Galaxy Backbone, Layer3, Suburban Cloud, Nobus, and the newly launched MTN Cloud are making significant strides in the market. MTN Cloud, unveiled in June 2025, is backed by a 4.5 MW Tier III data centre in Lagos and offers self-orchestrated cloud services priced in naira. This local solution allows developers and businesses to manage resources end-to-end via cloud.mtn.com, a first for Nigeria. Other local players, such as Galaxy Backbone, Layer3, Suburban Cloud, and Nobus, offer naira-based pricing, shielding users from forex volatility and ensuring NDPR compliance by storing data locally.

Local providers understand the Nigerian market and offer culturally relevant support, which is a major advantage for SMEs with limited IT expertise. MTN Cloud, for example, integrates automated APIs for faster deployments, rivalling global hyperscalers in agility. Local providers are closing the gap in several ways, offering robust security, tailored IaaS and SaaS, and budget plans that attract startups. However, hyperscalers lead in breadth, with unmatched services and AI tools. Pricing is a strong point for local providers, as MTN Cloud’s naira-based model undercuts dollar-based hyperscalers, making it a critical factor for SMEs.

Nigeria’s cloud ecosystem faces structural challenges, including undersea cable cuts that disrupted businesses reliant on foreign hosting. Local data centres, like MTN’s Dabengwa facility, ensure continuity. However, power and internet reliability remain issues, and Nigeria needs significant investment in digital infrastructure to overcome these challenges. Government policies, such as NITDA’s 2019 Cloud First Policy and the Central Bank’s data localisation rules, promote local providers and strengthen their position in the market. Yet, inconsistent power and broadband access hinder progress.

Nigeria’s $850 million cloud spend underscores the stakes involved. Local providers like MTN Cloud and Galaxy Backbone offer compelling alternatives, delivering affordability, compliance, and low latency. Hyperscalers provide unmatched scale and innovation but at a higher cost. A hybrid approach may be ideal, allowing businesses to use local providers for compliance and cost savings while tapping hyperscalers for global workloads. MTN Cloud’s launch signals Nigeria’s push for digital sovereignty. With increased investment in infrastructure and skills, local providers could rival global giants, balancing local resilience with global capabilities.