>> She would pay AWS in dollars even as Okra earned in naira because American cloud providers did not accept payments in local currency at the time. The payments to AWS gradually skyrocketed as the naira depreciated around 70% against the dollar between 2020 and 2024.
So this is really a forex hedging problem.
Although there's an interesting twist with the local colo et al. competition who presumably have capital costs still denominated in foreign currencies (e.g. servers, generators, etc).
What should a foreign-currency-denominated cloud pricing do, when a customer's local currency depreciates?
It should be really not that hard to price in local denominations. Netflix charges different subscription costs in different countries and they have their infra built on other cloud providers.
Cost of hardware is constant. And the generator, fuel, local electricity, wages etc. CAN be denominated in local currency if the datacenter is local. Obviously if you’re using a server in the US region while sitting in Nigeria, you have no other discourse than pay USD, but for other regions, you should be able to charge in local currencies.
So if AWS prices in naira, and the naira loses 70% against the dollar, does AWS change their pricing? Or just take a 70% haircut on their Nigerian revenue?
I get local businesses want cost stability, but it seems like inflation will happen both ways: it'll just take longer to cascade through the supply chain with local-owned, local-priced providers.
So this is really a forex hedging problem.
Although there's an interesting twist with the local colo et al. competition who presumably have capital costs still denominated in foreign currencies (e.g. servers, generators, etc).
What should a foreign-currency-denominated cloud pricing do, when a customer's local currency depreciates?