Nigerian startups are paying more for cloud services, which store sensitive data, as the Naira falls. Startups’ main expenses are cloud fees and personnel salaries, and some founders want to switch to domestic cloud providers.
With pay-per-use invoicing, cloud computing prices are dependent on consumption and monthly payments. Startups must pay for backend and mobile app processing. Google partner Incentro sued Twiga, a Kenyan e-commerce firm, for $2 million cloud services contract, highlighting the financial ramifications of legal battles. Monthly cloud service prices might reach $84,000 for the organisation.
Foreign exchange volatility and devaluation in Nigeria have increased such costs. After the FX market limitations were lifted in mid-2023, the Naira crashed, raising the price of a $1000 cloud subscription by 107%.
One HR-tech startup paid up to $80,000 per month for cloud costs. Another Nigerian financing startup cited a $2000 monthly spend.
Companies like Tradebuza are trying to figure out these mysteries as USD cloud costs climb. Companies idolise Amazon Web Services, Microsoft Azure, and Google Cloud Platform, which complicates matters. When complimentary credits run out, companies find it hard to switch to the regular payment plan.
Business Lab Africa’s founder Abolore Salami likes the main clouds’ steadiness. The growth is encouraging, but Salami discovered that almost half of entrepreneurs were concerned.
Startups worry about significant market churn and are unwilling to pass on these costs to customers while researching remedies. Finding alternatives locally is preferable. Nobus Cloud Services, MainOne Cloud, Web4Africa, Galaxy Backbone, Layer3 Cloud, and Zoho Cloud, an Indian option, take Naira.
Although local suppliers are resilient, they may not be able to match the functionality of major cloud providers. Others claim local alternatives may struggle to supply services as smoothly as global alternatives due to a lack of complex infrastructure. While overcoming these problems, “going local” becomes more relevant.
