CBN data rules to drive digital infrastructure expansion

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Nigeria’s new directive requiring banks, fintechs and payment service providers to store locally generated transaction data within the country is expected to accelerate investment in data centre infrastructure, according to the Chief Executive Officer of Open Access Data Centres, Ayotunde Coker.

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The Central Bank of Nigeria had ordered deposit money banks, microfinance banks, mobile money operators, payment processors, switching companies and other licensed players in the payments ecosystem to host all payment transaction data generated in Nigeria on local servers from 1 January 2027.

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The directive, contained in a circular issued by the Payments System Supervision Department of the CBN and signed by its director, Rakiya Yusuf, also introduced new requirements on market structure, beneficial ownership disclosure and systemic oversight for operators in the financial payments industry.

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Coker said in a virtual media parley that the policy is expected to significantly strengthen the case for investment in Nigeria’s digital infrastructure, particularly data centres, cloud services and interconnection platforms, as demand for local storage capacity increases.

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He noted that while regulatory timelines may appear tight, operators typically respond by assessing migration options, including infrastructure upgrades, equipment procurement and system reconfiguration to ensure compliance without service disruption.

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“If your regulator tells you to do something by 1 January in six months, you get your head down and work out what you need to do,” he said, adding that companies would need to evaluate whether to “lift and shift” systems or invest in new infrastructure to meet the requirement.

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Coker argued that concerns around data security in local data hosting are often overstated, saying that modern data centres operate under strict physical and operational security standards comparable to global benchmarks.

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He said security in data centres is primarily physical and environmental, while cybersecurity responsibilities remain with service providers and platform operators.

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“There is a work standard to how data centres are. Physical security protocols are very high and meet global standards,” he said.

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The OADC chief also rejected suggestions that local data hosting could weaken privacy protections or expose customer information to misuse, arguing that governance and enforcement, rather than location, determine data security outcomes.

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Nigeria currently hosts about 17 operational data centres, with nine additional facilities under development, reflecting rapid expansion in the sector.

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The growth has been driven by increased digital payments activity and rising demand for cloud services from banks, fintechs and large enterprises.

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Between 2021 and 2025, the sector has seen accelerated investment, including expansions by Rack Centre, MTN’s Dabengwa data centre, Digital Realty and Equinix, which have collectively committed significant capital across Africa.

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OADC has also announced plans to invest about $500m in African data centre infrastructure, while Airtel’s Nxtra project, its first hyperscale facility, is expected to go live by the first quarter of 2026.

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Coker said the CBN directive will further reinforce these expansion plans by increasing demand for storage, cloud capacity and interconnection services.

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“When the demand for cloud services grows, it drives demand for interconnection services and additional data centre space,” he said.

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He added that the policy is likely to strengthen investor confidence in Nigeria’s digital infrastructure sector by providing clearer regulatory direction and accelerating long-term capacity planning among operators.

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The CBN has said the new rules are designed to enhance oversight of Nigeria’s fast-growing digital payments ecosystem and ensure better regulatory visibility as electronic transactions continue to expand rapidly across the country.

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