Nigerian telcos back CBN's data localization directive for banks, fintechs

Nigeria's telecommunications sector has thrown its weight behind a Central Bank directive mandating that banks and fintech companies store payment transaction data on local servers. The Central Bank of Nigeria (CBN) issued the directive, set to take effect in January 2027, as part of broader efforts to enhance oversight of the nation's rapidly expanding digital payments landscape.

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We cannot continue to outsource that to other jurisdictions. The more we host our data locally, the better for us.

Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), emphasized the importance of data sovereignty. He stated that Nigeria must manage its entire data value chain, from collection to storage and integrity assurance, rather than outsourcing it. "We cannot continue to outsource that to other jurisdictions. The more we host our data locally, the better for us," Adebayo told the News Agency of Nigeria.

Local hosting, Adebayo explained, would enable end-to-end data management and guarantee the integrity of critical information. He highlighted that storing data outside Nigeria increases communication requirements, latency, and retrieval costs. "For every transaction involving data hosted outside our shores, communication has to take place from your location to the host and back. It increases latency and also increases the cost of data retrieval," he said.

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For every transaction involving data hosted outside our shores, communication has to take place from your location to the host and back. It increases latency and also increases the cost of data retrieval.

Adebayo dismissed concerns about the country's infrastructure readiness, asserting that Nigeria possesses substantial data center capacity. He pointed out that several Nigerian-owned facilities already host data for international organizations. "If people overseas can host their data here, why can’t we host our own data here?" he questioned, adding that local hosting would reduce reliance on foreign infrastructure and bolster national control over data security.

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If people overseas can host their data here, why can’t we host our own data here?

Furthermore, Adebayo noted the financial benefits of local hosting, including payments in local currency, which would mitigate exchange rate pressures and lower long-term operating expenses. He confirmed Nigeria has approximately six Tier III data centers, with more under development, stressing that capacity, not just the number of facilities, is key.

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No one can protect your house better than yourself. You have more at stake in terms of security and safety than somebody else hosting your data.