Effective regulation key to unlocking Africa’s digital economic growth
Restrictive policies and practices continue to impede Africa’s digital economic growth, and the continent has a lot to do to create an enabling regulatory environment and specifically to facilitate secure cross-border data share.
This is according to the Vodacom Group which, together with the African Union Development Agency (AUDA-NEPAD), this week released a policy paper entitled “Enabling Policy Frameworks for Digital and Data Services for Expanded Economic Growth and Development – A Focus on the SADC Region”
The paper highlights that one of the keys to unlocking Africa’s digital economic growth, and resulting digital financial inclusion, is to create an enabling regulatory environment that supports the secure flow of data between jurisdictions.
This is vital if Africa is to actively participate in the global digital economy.
Research organisers say over half of the world has moved online to access products and services they used to seek out in the physically pre-COVID-19. In March 2020, at the start of the pandemic, global internet usage surged by 50% to 70%, according to Forbes online.
“AU Member States looking to establish and maintain thriving economies should not be myopic about cross-border data, based on the opportunity that secure sharing can bring,” notes Stephen Chege, Chief Officer for External Affairs at Vodacom Group.
The company adds that based on data from McKinsey, the ability to transfer, store, and process data across borders is estimated to have increased global GDP by 10.1% over the past decade.
Backed by an enabling regulatory framework, SMEs stand to benefit the most, now able to compete with larger, established firms on a more-level playing field.
Chege explains: “If you look at the current business landscape, it’s clear that companies with access to online marketplaces and global payment networks are now able to reach consumers across the world. This is an important opportunity for Africa’s SMEs.”
Considering small companies provide up to 80% of jobs across the continent, according to the Centre for Strategic & International Studies, supporting them will have a positive, knock-on effect on unemployment levels.
Vodacom Group and AUDA-NEPAD propose a regional approach, enabled by collaborative cross-border data sharing, to allow “near real-time visibility of the flow of food and essential goods at a global and local level”.
They add that in order to build a viable digital economy, policy makers should prioritise the secure and easily facilitated flow of cross-border data through an enabling regulatory environment.
Unfortunately, many AU Member States are not yet facilitating this flow.
To address this, AU members are advised to look at tackling the three main barriers: overly restrictive data-localisation requirements, unclear and underused adequacy requirements or decisions, and a lack of standardisation in policy and legislative terminology.
A statement released to the media reads: “The proposed way forward, that allows for free data flows in a secure way to protect consumers and businesses alike, is that we should: accelerate implementation of the principles of Africa's regional economic integration framework (under the African Economic Community); advance regional cooperation through appropriate policies; kick-start regional cooperation by entering into trade agreements to allow for, among others, cross-border data transfers; and prioritise regulatory reform in this regard."
"By following the proposed steps, we will be able to reap the benefits of a digital economy that will open many new opportunities for trade and business, while also introducing significant socio-economic benefits. This is the first step on a path to a sustainable, digital-forward future for Africa.”