The Central Bank of Nigeria (CBN) has warned financial institutions against cybersecurity and operational risks associated with growing dependence on cloud computing and third-party technology providers, stressing that data localisation alone cannot guarantee the security of the financial system.
Lamido Abubakar Yuguda, deputy governor, financial system stability at the CBN, gave the warning at the CBN-National Information Technology Development Agency (NITDA) Executive Regulatory Dialogue on the implementation of the National Sovereign Cloud Initiative (NSCI) and data localisation in Lagos on Wednesday.
Yuguda said the resilience of Nigeria’s financial system increasingly depended on the reliability and security of the digital infrastructure supporting financial services, as digital payments, fintech, mobile money and digital banking continued to expand.
He said financial institutions and their critical technology providers must maintain robust cybersecurity, business continuity, disaster recovery and risk management arrangements to ensure that essential financial services remain secure and available.
“Localisation alone does not guarantee security,” Yuguda said, emphasising that banks and other regulated institutions must strengthen their operational resilience as they increasingly rely on cloud computing and external technology providers.
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He added that responsibility for managing risks associated with third-party technology providers remained with regulated institutions, making effective governance and oversight of such relationships essential.
The CBN expects regulated institutions to ensure that critical payment transaction data is stored and managed within Nigeria in line with applicable regulatory requirements and the January 1, 2027 implementation timeline.
According to Yuguda, the objective is to enhance regulatory visibility, strengthen resilience and safeguard critical financial data while ensuring that the financial system continues to benefit from efficient and reliable technology.
He said the sovereign cloud initiative should not constrain innovation or isolate Nigeria from global technological developments, but should provide the security, resilience and regulatory certainty needed to support investment and sustainable growth.
“We must strengthen digital sovereignty while remaining globally competitive; enhance security without constraining innovation; and promote localisation while ensuring that the financial system continues to benefit from efficient and reliable technology,” he said.
Inuwa Abdullahi, director-general and chief executive officer of NITDA, said Nigeria needed greater control over the digital infrastructure on which its economy and financial system depended to protect essential services from external disruptions.
Abdullahi asked what would happen if a major submarine cable disruption or geopolitical crisis prevented Nigerian banks from accessing critical digital infrastructure hosted outside the country.
He said such a disruption could raise serious questions about the ability of citizens to transfer money, businesses to receive payments and banks to continue processing transactions.
“These questions are not technical. They are matters of our national economic security, financial stability and digital sovereignty,” he said.
Abdullahi said the initiative was intended to strengthen Nigeria’s capacity to deliver essential digital services without excessive dependence on external infrastructure, adding that digital sovereignty did not mean isolation or building every technology locally.
He said NITDA and the CBN were working together to make the financial sector the first to comply with the national sovereign cloud initiative, while encouraging collaboration among financial institutions, telecommunications companies, technology providers and the wider innovation ecosystem.
According to him, Nigerian technology companies have the capacity to support the transition, while the government intends to work with global technology providers and major cloud service providers to develop the required infrastructure.
He also said an assurance framework would help establish confidence in providers and their compliance with the requirements of the national sovereign cloud architecture.
The framework would draw on existing international certifications while exploring the development of national certification options to ensure that infrastructure deployed in Nigeria meets the country’s requirements.
Abdullahi added that the initiative was also intended to reduce the risk of institutions becoming locked into a particular technology provider, vendor or country, giving them greater flexibility in choosing their technology partners.
He said the implementation process would require engagement with banks, data centre operators and system integrators to identify existing capacity, address challenges and determine the support needed to meet regulatory requirements.
Yuguda said the CBN would continue to work with NITDA and other stakeholders to align financial-sector requirements with national digital infrastructure standards, noting that the implementation of the initiative required collaboration across regulatory and industry boundaries.
He urged stakeholders to focus on infrastructure readiness, cybersecurity, resilience, implementation challenges, regulatory expectations and the management of third-party and concentration risks.
The CBN said its objective was to build a digital financial ecosystem that supports innovation without compromising security, strengthens national control over critical infrastructure without isolating the country, and remains resilient enough to sustain public confidence.
Hope Moses-Ashike
Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks.
She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings.
Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.
