Africa’s digital market is a rapidly growing space. Affordable, cost-effective, and universal digital access can play a key role in Africa’s growth and development. The Covid-19 pandemic has accelerated the velocity and effectiveness of technology innovation and adoption, forcing the world to reconsider the role of information technology as a tool for economic growth and prosperity. The African continent is no exception. Africa is looking for digital solutions to increase productivity and drive growth. However, as the continent’s digital landscape witnesses several significant developments, there is a need to address some structural and infrastructural gaps. Preserving personal data and preventing its misuse remains a hurdle for Africa. Therefore, data localization becomes a must in such a context for Africa.
What is data localization?
Data localization refers to storing data within a country’s borders and processing it locally. This means that personal or financial data collected by websites is stored within the country rather than in a cloud created by companies located outside of the country. Data localization is needed to address security and privacy concerns that arise when data leaves a country’s borders.
Africa’s digital market space
Africa’s technology sector is exciting and growing at a fast speed, with the potential to bring many new opportunities for the continent. Almost half a billion Africans are currently online, and another 300m are projected to join their ranks by 2025. According to a report by the International Finance Corporation and Google, Africa’s internet economy has the potential to add US$180 billion to Africa’s GDP by 2025.
Several countries such as Kenya, Ghana, and Rwanda are on track to achieve universal access by 2030. In addition, online sales in Africa are growing at around 25 percent year-on-year, which is one of the highest rates in the world. More than 10 million people are starting to buy online each year.
All of this provides Africa with a window of opportunity. However, the continent is also grappling with issues like cyber security, data protection, and fintech regulation that need to be addressed to fully reap the benefits of its growing technology sector.
Africa & data localization
According to a report, Sub-Saharan African governments enacted 60 measures to boost technological innovation in the wake of the pandemic with several measures focused on expanding access to digital tools. However, as of 2021, only 28 African countries had “comprehensive” personal data protection laws, and only 11 countries had substantive laws on cybercrime. Moreover, digital issues, such as digital privacy, intellectual property (IP) protection, and cybersecurity, are only nominally addressed in trade agreements. The Centre for Strategic and International Studies analyzed six African trade agreements, including the AFCTA, and found that only three incorporated “vague or general provisions” on IP protection, while none alluded to cyber security or data protection.
Importance of data localization
The phrase “data is the new oil” is often used to express how data is essential to a nation’s economic success. Data localization is critical for developing countries, including Africa, to protect personal data, enforce laws, ensure national security, and enhance economic edge. Furthermore, if a country’s data is considered a national resource, the government may tax the revenue generated from the data, similar to the inflow and outflow of goods and services, ultimately contributing to the country’s economic development.
However, for this to happen, Africa needs to overcome a few challenges. For example, more data centers, need to be built, which will require massive electricity consumption and skilled labor. According to a report, currently, Africa accounts for only 1 percent of global data center capacity. Furthermore, according to the African Data Centres Association, roughly two-thirds of that capacity is located only in South Africa.
Data localization is a remedy not just for the misuse of personal information but also for a range of issues related to the economy, politics, and national security. Governments around the world have realized the importance of protecting data within their own countries. This realization has come in the wake of the various data scandals, as well as revelations made by Cambridge Analytica, who are alleged to have influenced voting outcomes based on available data. In light of all this, digital security is extremely important for a fast-growing digital economy like Africa. It’s high time for African leaders to come together in the interest of data localization, which can have a profound impact on its economy and national security.