Regulating implications of data protection in Africa

In a rapidly changing digital economy, data has become the focal point of regulation by states in the race towards maximizing the potential of the digital economy. In some African states, these data protection laws and regulations limit the cross border flow of data with various unintended consequences. The limit of cross border flow of data is broadly referred to data localisation and is often justified on the basis of five main concerns. These include the protection of personal data, access to data by local law enforcement, ensuring national security, advancing local economic competitiveness and leveling the regulatory playing field. However, a closer look at these justifications reveal the impact of data localisation on free trade, increase in transaction costs and the efficiency of corporations, stifling of innovation, and hampering of economic growth. With global data flows raising global GDP, it is necessary to ask, what policy tradeoffs are necessary to balance the legitimate concerns of countries against the unintended consequences that the impact of data localization causes?

This question was assessed through various themes with a focus on the applicable laws and regulation in Nigeria, South Africa, and Kenya. While these countries are used as case studies, the strategic approach of this study is to influence policy making at sub-regional and regional level.

The Mandela Institute, a centre in the School of Law of the University of the Witwatersrand with leading researchers undertook the research with Dr Fola Adeleke leading the project. The project was funded by Facebook and the output for this research project contained hosting of webinars and development of research reports and policy briefs.

The first webinar introduced the research project on the regulatory implications of data protection in Africa. This included describing the rise of the data economy as well as its characteristics, the omnipresent information asymmetries and the extent to which artificially intelligent machines and those that control them are far more capable of extracting value from massive amounts of raw data than human beings are. It also explored concepts around the rise of “winner-take-all” or “winner-take-most” markets and what this means for the competitiveness of markets; value creation in the data economy; the “digital divides” between and within countries and what these mean for the distribution of benefits in the data economy.

Guest speakers for the webinar were:

• Fola Adeleke, Senior Lecturer, School of Law, University of the Witwatersrand
• Rachel Adams, Senior Research Specialist, Human Sciences Research Council
• Alex Beyleveld, Senior Researcher, Mandela Institute, University of the Witwatersrand

Policy Briefs developed and discussed in the webinar were:

Beyleveld, A. (2021). Data Protection in Kenya, Nigeria and South Africa in the 2020s and Beyond (Policy Brief 1). 

The second webinar explored arguments around states’ justification for introducing data localization requirements, including those related to foreign surveillance; privacy and security; and economic development. In addition, arguments that oppose “data nationalism” was explored, with reference to the unique challenges that confront South Africa’s policy makers, including a lack of ICT infrastructure and serious power constraints. In particular, the polycentric and sometimes perverse consequences that may result from data localization was set out.

Guest speakers for the webinar were:

• Ololade Shyllon, Privacy Policy Manager, Middle East & Africa, Facebook
• Sizwe Snail, Commissioner, Information Regulator
• Shanelle van der Berg, Research Fellow, Department of Public Law, Stellenbosch University
• Gabriella Razzano, Senior Research Fellow, Research ICT Africa

Policy Briefs developed and discussed in the webinar were:

van der Berg, S. (2021). Data Protection in South Africa: The Potential Impact of Data Localisation on South Africa's Project of Sustainable Development (Policy Brief 2).

The third webinar focused on country commitments in international treaty frameworks and the intersection with data protection. With the ratification of the Africa Continent Free Trade Agreement (AfCFTA), Africa has been turned into a single free trade area, however, leading African economies including Nigeria and Kenya have adopted data localisation laws that could potentially hamper the success of trade in Africa’s digital economy. The speakers explored the national policy domains in Kenya and Nigeria and then examined the interaction of national policies with the treaty commitments of each country, identifying a number of priority issues that states should take into account for future regulation and implementation.

Guest speakers for the webinar were:

• Lukman Abdulrauf, University of Ilorin
• Oyeniyi Abe, Afe Babalola University
• Malcolm Kijirah, Victorlee, Kenya

Policy Briefs developed and discussed in the webinar were:

• Kijirah, M and Wangari Thuo, E. (2021). Data Protection and Data Localisation in Kenya: Potential Economic Impact and Effect on Kenya's Commitments in various Regional Treaty Frameworks (Policy Brief 3).
• Abdulrauf, L and Abe, O. (2021). The (Potential) Economic Impact of Data Localisation Policies on Nigeria's Regional Trade Obligations (Policy Brief 4).

The fourth webinar focused on competition policy, data ownership and data protection. Several priority issues sit at the intersection of these policy domains. These issues include data governance, access, portability, interoperability and African regulatory capabilities in these domains.The discussions explored regulatory capacity and recent policy discussions in Kenya, South Africa and Nigeria. Furthermore, this webinar explored the concept of data ownership and state attempts to exercise control. The webinar discussed how, instead of being a random association, the merging of ideas of data ownership and localisation – when explored together – help outline some of the clear political and technical challenges in the approach to data governance.

Guest speakers for the webinar were:

• Jonathan Klaaren, WISER, Wits University
• Gabriella Razzano, OpenUp
• Fola Adeleke, Wits University

Policy Briefs developed and discussed in the webinar were:

• Klaaren, J. (2021). Competition Policy and Data Protection in Africa (Policy Brief 5).
• Razzano, G. (2021). Data Localisation in Kenya, Nigeria and South Africa: Missteps in the Valuing of Data (Policy Brief 6).

The fifth webinar concluded the research project and looked at the most frequently proffered rationales for data localisation, most of which seek to change the definitional contours of the economic characteristics of data, including through seeking to render it a rivalrous commodity (data is generally seen by economists to be non-rivalrous in nature), internalising privacy protection (data markets left to their own devices tend to result in the externalisation of privacy concerns) and rendering data completely excludable (data is mostly viewed as being partially excludable at best). This webinar also looked at what data localisation laws and policies mean for the facilitation of foreign direct investment and cross-border trade in Africa and examined what this means for future data localisation law and policy choices in Kenya, Nigeria and South Africa.

Guest speakers for the webinar were:

• Alexander Beyleveld, Mandela Institute, Wits University.
• Kholofelo Kugler, University of Lucerne.
• Michael Fleischer, Webber Wentzel.

Policy Briefs developed and discussed in the webinar were:

• A. (2021). Data Localisation in Kenya, Nigeria and South Africa: Regulatory Frameworks, Economic Implications and Foreign Direct Investment (Policy Brief 7 ).
• K. (2021). The impact of data localization laws on trade in Africa (Policy Brief 8).

The final policy brief Adeleke. D. (2021) Exploring policy trade-offs for data localisation in South Africa, Kenya and Nigeria (Policy Brief 9) reflects on the findings of the country reports and policy briefs produced under the research project. It identifies policy trade-offs in the areas of competition, trade and foreign direct investment where data governance approaches need to be reconciled with the unique features of the data economy.