The acceptance of naira payments by Amazon Web Services (AWS) has caused a stir in the Nigerian cloud market. However, local providers like Okra and Nobus Cloud view this move as more of a formality rather than a game-changer. They argue that despite AWS accepting naira payments, the cost structure remains tied to the USD and converted at the prevailing exchange rate, offering no significant competitive advantage in a market concerned with currency fluctuations.
Local providers emphasize that their pricing, which is not subject to foreign exchange swings, remains around 30-35% lower than what AWS charges. Following a sharp naira devaluation in 2023, Nigerian businesses experienced soaring cloud service costs priced in dollars, leading to increased demand for local providers offering naira-based billing at more affordable rates.
In addition to cost, local providers differentiate themselves by offering a tailored approach to the Nigerian market. They question the logic of hosting products in distant countries, emphasizing the importance of developing solutions geared towards African businesses. Data sovereignty is another key factor driving Nigerian businesses and government agencies to prioritize local cloud services, in line with regulatory recommendations and mandates for local data hosting.
Local cloud providers have been engaging with government agencies to become their preferred cloud service providers for sensitive data hosting. This strategic move is gaining traction, with some agencies reportedly transitioning to local providers. The competition in the Nigerian cloud market extends beyond global players like Microsoft Azure to include newcomers like Huawei, which recently launched its local cloud service in Nigeria. Huawei’s established presence in Nigeria’s banking sector and its array of cloud services pose a new challenge to local providers, intensifying competition in the market.