*Banks, top universities route traffics internationally

By Juliet Umeh

Despite Nigeria’s ambitious push for digital transformation, key institutions, especially banks and universities, route their traffics through foreign exchanges bypassing the country’s Internet Exchange Point, IXPN.

According to Statista, Nigeria is projected to spend approximately $1.11 billion on public cloud services by 2025, a figure expected to rise significantly as digital transformation initiatives deepen across sectors.

In a major milestone, IXPN recently surpassed 1 Terabit per second (1Tbps) in aggregate peak domestic internet traffic for the first time. This achievement marks a significant leap in Nigeria’s internet infrastructure development and highlights the critical role of local internet exchanges in driving economic growth, innovation, and connectivity for millions of Nigerians.

However, the persistent lack of connection by major institutions has created a silent economic leakage. Nigeria loses billions of naira annually due to inefficiencies, increased latency, and an unnecessary reliance on international bandwidth.

IXPN was established to localize internet traffic, improve speeds, reduce costs, and enhance resilience within Nigeria’s digital ecosystem. It enables internet service providers, content providers, and institutions to exchange data directly within the country, rather than routing it through international channels.

 Disconnecting from progress

IXPN’s Managing Director, Mr. Muhammed Rudman, revealed that Nigeria’s banks and universities—the bedrock of commerce and innovation—are largely absent from the exchange.

An analysis of Nigeria’s autonomous system numbers shows that only 37% are connected to IXPN, while 63% remain unconnected. By category:

Internet Service Providers (ISPs): 85 connected; 55 unconnected

Higher Education Institutions: Only 1 connected; 23 unconnected

Banks: Only 21% connected; 79% unconnected

Rudman stated: “Our top universities and almost all our banks are routing their traffic internationally. They buy expensive international bandwidth and ignore the local infrastructure that could serve them better and cheaper.”

This detour comes at a significant price. Every time a student accesses educational content or a bank processes a financial transaction, data that could have been routed locally travels to Europe or America and back—adding cost, time delays, and increased exposure to cyber risks.

“These institutions spend millions of dollars annually buying international capacity,” Rudman noted.

“We estimate that Nigeria loses over $72 million yearly in unnecessary international bandwidth purchases from banks alone.”

In a country where every naira counts, this is a startling revelation. Yet, beyond the financial implications, there are even deeper risks.

 A matter of sovereignty and security

Routing local internet traffic abroad exposes Nigeria to cybersecurity threats and reduces control over national data governance. For financial institutions and universities handling sensitive data, the risks are profound.

“Data sovereignty is compromised,” Rudman warned. “If our universities are hosting research data abroad, we’re giving foreign entities access to knowledge that should be protected locally.”

 Why the disconnect?

Experts attribute the situation to a mix of poor awareness, rigid procurement policies, and misaligned digital strategies.

“Many ICT heads in banks and universities are unaware of the benefits IXPN offers,” Rudman explained. “Legacy systems, built without local exchange considerations, also pose a challenge.”

Infrastructure disparity is another hurdle. While IXPN operates in 10 cities including Lagos, Abuja, and Kano, some institutions cite lack of proximity as a reason for not connecting. Rudman counters that virtual connectivity via VPNs or dedicated lines can easily bridge these gaps.

 Missed opportunity in education

The impact on Nigeria’s education sector is particularly concerning. Students often struggle with slow access to digital content—video lag, platforms crash, and e-learning initiatives falter. Much of this stems from the high latency caused by routing traffic abroad unnecessarily.

 “Imagine a Nigerian student trying to access a YouTube video uploaded by a Nigerian creator, and the video has to travel to Europe and back. That’s inefficient,” Rudman stressed.

As Nigeria strives to digitize education and build a knowledge-driven economy, bypassing local infrastructure undermines national goals.

 What Needs to Change?

Rudman calls for stronger regulatory intervention and policy support:

“NITDA and NCC need to mandate public institutions to peer locally or at least issue clear policy guidance. Government could also offer subsidies to incentivize local connectivity.” he said.

Collaboration is equally important. IXPN is ramping up stakeholder engagement through workshops, webinars, and direct consultations to raise awareness and drive adoption.

As Nigeria aspires to become a leading digital economy, it must align its infrastructure, policies, and institutions with local solutions. Connecting banks and universities to IXPN is not just about saving money, it’s about fostering innovation, securing national data, and ensuring seamless digital experiences for all.

“It’s time we stopped exporting our internet traffic,” Rudman concluded. “Let’s keep it local, faster, safer, and cheaper.”