Lobbying Efforts for Government Hosting Preference
Five Nigerian cloud companies are actively engaging with the government to become the preferred choice for hosting sensitive government data. This information was shared by two individuals with direct knowledge of the matter, as reported by TechCabal. The lobbying efforts stem from the 2019 National Cloud Computing Policy, which advocates for prioritizing local cloud service providers as the primary option.
Potential Impact on Cloud Adoption and Costs
If these talks are successful, it could mark a significant shift towards increased adoption of local cloud solutions, especially amid the rising costs caused by the naira devaluation. One insider revealed that some government agencies are currently spending up to $500,000 monthly on cloud services. The shift to local providers could mitigate these costs and support the national economy.
Formation of a Local Cloud Consortium
Several local cloud companies are considering forming a consortium to strengthen their position. Discussions for this consortium began in April 2024, although specific names have not been disclosed. This consortium aims to garner government support, which would subsequently encourage private companies to also host their data locally.
Current Hosting Landscape
A 2021 report indicated that over 70% of government ministries, departments, and agencies (MDAs) currently host their data on major international cloud providers such as AWS and Microsoft Azure. This reliance on foreign providers highlights the potential impact of a successful lobbying effort by local companies.
Expansion of Lobbying to Other Sectors
Local cloud providers are also engaging with Mobile Virtual Network Operators (MVNOs) and pension fund administrators (PFAs) to promote local data hosting. Two sources confirmed these discussions, indicating a broad strategy to increase local hosting across various sectors.
Economic Benefits and Cost Advantages
The push for local cloud patronage is partly driven by the doubling of cloud costs over the past year due to the naira devaluation. Most Nigerian companies currently rely on AWS, Microsoft Azure, and Google Cloud, with costs denominated in dollars. Local providers argue that shifting to local services not only offers a cheaper alternative but also helps reduce the country’s foreign exchange burdens.
An industry insider highlighted the economic benefits, stating, “If data is hosted locally, you generate more revenue locally, and the money stays within the economy.” To further incentivize companies, local providers are considering offering discounts for those who choose to host their data domestically.
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Growth Projections for Nigeria’s Data Center Market
Local cloud providers are positioning themselves for significant growth in Nigeria’s data center market, which is projected to reach $578.1 million by 2029. This anticipated boom coincides with rising investments in data centers across Nigeria, driven by the demand for data storage solutions following the arrival of eight subsea cables.
Rising Investments in Data Centers
Airtel is spearheading the development of five hyper-scale data centers across Africa, with the first located in Lagos. Kasi Cloud Limited, a local provider, initiated the construction of a $250 million Tier IV data center in 2022. Additionally, MTN Nigeria announced plans to complete a second data center in Lagos by December 2024.
Conclusion
The ongoing lobbying efforts by Nigerian cloud companies to secure government endorsement for hosting sensitive data underscore a strategic move to enhance local cloud adoption. By addressing the economic challenges posed by the naira devaluation and offering competitive advantages, local providers aim to transform Nigeria’s data hosting landscape. The potential formation of a consortium and the broad engagement with various sectors reflect a comprehensive approach to achieving this goal, positioning Nigeria for substantial growth in its data center market.
