AWS (Amazon Web Services), a global leader in cloud computing and a key provider for numerous Nigerian startups and commercial banks has announced it will now accept payments in Naira, in addition to seven other local currencies for European clients.
This change is expected to reduce cloud expenses for many Nigerian companies, which often host their services in AWS’s European region due to its proximity.
This decision arrives at a pivotal moment as local cloud providers are increasingly capturing market share by offering competitive pricing, providing an alternative to AWS and Azure.
In a statement on Monday, AWS highlighted that this change will help customers sidestep foreign exchange fees and payment complications. “By enabling payments in local currencies, customers can bypass the foreign exchange costs tied to international payments,” the company said. “This also eliminates payment barriers in regions where local regulations limit access to foreign currencies.”
This change is crucial for Nigerian businesses, as the naira’s depreciation and economic challenges have led to cloud service costs—typically priced in US dollars—more than doubling since 2023. By accepting payments in naira, AWS provides Nigerian companies with a more seamless and cost-effective solution, addressing a major issue that has prompted many businesses to turn to local cloud providers.
AWS’s decision is set to alter the competitive dynamics in Nigeria’s cloud services sector. Local cloud providers like Nobus, Layer3, and Okra’s new Nebula have focused much of 2024 on establishing themselves as cost-effective, homegrown alternatives to AWS and Microsoft’s Azure.
These local providers highlighted their competitive advantage amid fluctuating foreign exchange liquidity and volatility, which have caused USD-denominated pricing to surge by 2-3 times within a week.
Some local providers even engaged with state and federal government agencies, positioning themselves as key partners in reducing Nigeria’s dependence on USD-denominated services. Their message was clear: choosing local cloud providers is not only a more affordable option but also a means to bolster Nigeria’s economic resilience.
AWS’s move to accept naira payments is a strategic response to the rising popularity of local cloud providers in Nigeria. In January 2023, AWS introduced its AWS Local Zones facility in Lagos to enhance performance and reduce latency for Nigerian businesses, who typically rely on AWS’s European region for services due to its geographical proximity. By adding naira as a payment option alongside this infrastructure, AWS aims to strengthen its presence in the Nigerian market, especially as local providers offer a cost-effective and economically aligned alternative.
By enabling Nigerian companies to pay for cloud services in naira, AWS has gained a competitive advantage. However, the rising presence of local alternatives may still pose a challenge. It’s no longer solely about price—local relevance and helping businesses navigate Nigeria’s complex economic landscape are becoming crucial factors.