Successful application of data localization laws is possible only if the country has an IT infrastructure mature enough to store all sensitive data, which is usually not the case in developing countries. This paper proposes a model for building local cloud infrastructure in developing countries compliant with data localization laws. The infrastructure will be developed gradually by adding location-aware commodity hardware nodes placed within the country’s borders over a more extended period. Each node is considered a volunteer for a period defined by the participation policy. This kind of policy describes the formation of a cluster of geographically close nodes that might all be disposed of and replaced after the defined period expires. The government authorities take responsibility for motivating national universities and firms that do business inside the country’s borders to take the key role in provisioning computing and storage nodes for a more extended period specified by the participation contracts and policies. In return, authorities guarantee a set of benefits such as tax reductions and funds for R&D. The authorities should make laws and regulations that follow the gradual development of the local cloud infrastructure by introducing soft data localization first. Hard data localization will replace soft data localization at the moment of infrastructure maturity.