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Nigeria loses an estimated $850 million annually because of its reliance on foreign cloud infrastructure, according to a study by Luminate, a technology-focused organisation examining digital infrastructure and artificial intelligence development in Africa. The findings have renewed calls for greater investment in local data centres, cloud computing services and domestic technology capacity.
The report was discussed by Luminate Chief Executive Officer Melanie Hui at the Build 2026 Conference in Abuja on Wednesday, October 21, 2026. Hui said Nigeria and other African countries risk losing significant economic value when businesses depend heavily on overseas infrastructure to store data, operate digital services and develop artificial intelligence applications.
Cloud computing has become an essential part of modern business operations, enabling companies to host websites, manage customer information, operate online stores and run software without maintaining all their own physical servers. Nigerian businesses across banking, e-commerce, telecommunications and technology increasingly depend on these services to support their operations.
However, when companies purchase cloud services from foreign providers, a substantial portion of their spending may flow outside the domestic economy. This can limit opportunities for Nigerian technology companies to generate revenue, develop specialised expertise and create jobs in the local digital infrastructure sector.
The growing adoption of artificial intelligence is making the issue more significant. AI applications require computing power, data storage and reliable internet connectivity, creating additional demand for cloud infrastructure. Without sufficient local capacity, Nigerian businesses may continue to depend on international providers for services that could potentially be supplied by domestic operators.
Nigeria has begun pursuing initiatives to expand its digital infrastructure. The Federal Government has announced plans targeting $750 million in cloud investment and a fibre-optic rollout covering approximately 90,000 kilometres. These initiatives are intended to improve connectivity and strengthen the infrastructure needed to support digital businesses.
Nevertheless, establishing competitive local cloud services requires substantial investment, dependable electricity, skilled workers, strong cybersecurity and reliable network connections. Providers must also demonstrate that their services can meet the performance and security requirements of businesses operating in regulated industries.
For small and medium-sized enterprises, stronger local infrastructure could eventually improve access to digital tools and support the growth of online businesses. However, the actual benefits will depend on pricing, service quality and whether domestic providers can compete effectively with established international companies.
The findings underline the importance of treating cloud infrastructure as an economic investment rather than merely a technical requirement. Expanding local capacity could help Nigeria retain more digital spending, develop its technology industry and prepare businesses for the growing use of artificial intelligence.
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