More than 50 per cent of Nigeria’s financial industry is prepared to comply with the Central Bank of Nigeria’s data localisation requirements, according to the apex bank.
The disclosure highlights progress towards strengthening the country’s digital infrastructure and ensuring that payment transaction data generated within Nigeria is properly managed under local regulatory requirements.
The CBN made the announcement during an Executive Regulatory Dialogue organised in collaboration with the National Information Technology Development Agency.
The event focused on the National Sovereign Cloud Initiative and data localisation, bringing together financial regulators and technology stakeholders to discuss the country’s digital infrastructure.
According to Vanguard’s report published on October 29, the Director of the CBN’s Payment System Supervision Department, Dr Rakiya Yusuf, disclosed that a survey conducted by the apex bank showed that more than half of the financial industry was ready to comply.
She expressed optimism that the remaining institutions would make progress following clarifications provided during the regulatory dialogue.
The CBN expects all relevant institutions to be on board by January 2027.
Why data localisation matters
Data localisation refers to requirements that certain categories of information generated within a country must be stored and managed locally, subject to applicable regulations.
For Nigeria’s financial sector, the policy is particularly important because banks, fintech companies, payment service providers and other financial institutions process large volumes of electronic transactions every day.
These transactions generate information that supports banking operations, payment processing, customer services and financial monitoring.
The CBN wants institutions to strengthen local control over payment transaction data while ensuring that the financial system remains secure and reliable.
The policy is also connected to broader discussions about digital sovereignty.
Digital sovereignty refers to a country’s ability to maintain appropriate control over its critical digital infrastructure, data and technology systems.
For Nigeria, strengthening this capacity could reduce excessive dependence on external infrastructure and improve the country’s ability to manage important financial information.
CBN warns against deliberate non-compliance
Yusuf explained that the apex bank’s immediate priority was to support financial institutions in achieving compliance.
However, she warned that institutions deliberately avoiding the requirements could face sanctions.
The position indicates that regulators intend to encourage compliance while retaining enforcement measures for organisations that refuse to meet their obligations.
Financial institutions may therefore need to review their existing technology arrangements, data storage systems and relationships with third-party service providers.
They may also need to invest in infrastructure capable of meeting the applicable requirements.
Such adjustments could involve additional operational costs, particularly for organisations that currently depend heavily on offshore data storage arrangements.
National Sovereign Cloud Initiative
The Deputy Governor of the CBN responsible for Financial System Stability, Lamido Yuguda, also addressed the importance of strengthening Nigeria’s digital infrastructure.
He said the National Sovereign Cloud Initiative should not prevent innovation or isolate the country from international technological developments.
Instead, he explained that the initiative should provide the security, resilience and regulatory certainty required to support investment and sustainable growth.
The Director-General of NITDA, Kashifu Abdullahi, also assured financial institutions that Nigeria’s technology ecosystem had the capacity to support the implementation of the initiative.
He explained that digital sovereignty should involve developing local technological capacity while remaining competitive in the international market.
He also highlighted the risks associated with external disruptions, including submarine cable outages and geopolitical developments.
Such disruptions can affect financial services when institutions depend heavily on infrastructure located outside the country.
Implications for banks and fintech companies
The policy could create opportunities for Nigerian data centre operators, cloud service providers, cybersecurity companies and other technology businesses.
Financial institutions may require additional local infrastructure to support data storage, disaster recovery and payment processing.
This could encourage investment in technology facilities and create opportunities for companies offering digital infrastructure services.
However, successful implementation will require reliable electricity, strong cybersecurity systems, adequate technical expertise and consistent regulatory guidance.
Banks and fintech companies must also ensure that compliance does not weaken the quality, speed or reliability of their services.
The January 2027 deadline is therefore an important milestone for Nigeria’s financial technology sector.
As institutions continue preparations, the CBN’s priority will be to strengthen data protection and digital sovereignty without undermining innovation and financial stability.
