Africa stands at a crossroads. Data, the lifeblood of the 21st-century economy, is a potential goldmine. But a patchwork of regulations and lingering trust issues threaten to bury this treasure.
The continent has made strides in data governance, but it’s not enough. The recent RegTech Africa Conference offered a glimpse of the immense potential and challenges we face.
Can African nations leverage the power of data sharing to unlock a new era of economic and social prosperity? This is not just a technical question; it’s a question of leadership and building trust across borders and with citizens.
A recent report from the Information Technology and Innovation Foundation (ITIF) reveals that a one-point increase in a nation’s data restrictiveness could, over five years, reduce its gross trade output by seven percent, slow overall productivity by 2.9 percent, and raise the prices of goods and services for data-dependent industries by 1.5 percent.
Data is essential for economic growth, enhancing competition, and driving innovation. To leverage the economic benefits of data usage and sharing, governments, businesses, and individuals need robust data policy frameworks. These frameworks should include high data protection standards to ensure proper use of personal data, maintain public trust, and protect privacy without creating unnecessary barriers to data usage and sharing.
In this context, the 2024 RegTech Africa Conference, themed ‘Harnessing Partnerships for Africa’s Prosperity: Bridging the Data Trust Gap,’ brought together participants from across Africa to delve into these issues. The event was headlined by key platinum sponsors like UBA, 9PSB, MainOne, and Network International, among others.
Data for prosperity, but trust is paramount:
At the moment, mobile money transactions in Africa are already booming, making them even safer and more inclusive. Cyril Okoroigwe, CEO of RegTech and convener of the programme, rightly points out that data-driven progress hinges on trust. We need strong data protection laws across the continent, not the current patchy coverage. Only 36 out of 54 African countries have them; that’s a gap screaming to be filled.
Okoroigwe further emphasised the significant impact of data collection and analytics on African governments. These technologies are strengthening regulatory frameworks, promoting economic inclusion, transforming the financial landscape, and providing unprecedented opportunities for millions to participate in the formal economy.
Okoroigwe highlighted that for data-backed mechanisms to reach their full potential, advancements in data protection and sovereignty are crucial. He cited statistics from the GSMA’s State of the Industry Report on Mobile Money 2023, noting that Sub-Saharan Africa leads the world in mobile money usage, with 218 million active accounts, roughly half of the global total of 401 million. Furthermore, he mentioned that mobile money transactions in Africa have grown by 600 percent over the past five years.
According to him, the next step needed to cement this growth and ensure it has a significant impact on financial inclusion numbers in the region is to enhance the application of data technologies in the sector by regulators.
“Data is an asset in any financial ecosystem. It has the potential to empower consumers, policymakers, and financial service providers alike by fostering transparency and informed decision-making. By harnessing the power of data, regulators can effectively monitor the activities of financial institutions and detect irregularities, safeguarding against fraudulent schemes and ensuring fair business practices,” he stated.
Okoroigwe said improving compliance by players in the digital financial ecosystem will also go a long way in helping Africa unlock its future. He stressed that traditional compliance mechanisms can be cumbersome and time-consuming, posing challenges for startups and smaller players; however, data-driven compliance offers a streamlined approach that is not only efficient but also cost-effective.
He explained that through data analytics, compliance processes can be automated, reducing the burden on financial institutions while improving accuracy and effectiveness. He said this not only facilitates smoother operations for service providers but also ensures a safer and more secure environment for consumers.
Despite the immense potential of data-driven financial services in Africa, challenges remain that could hinder their full impact, according to Cyril Okoroigwe, CEO of RegTech. These challenges include data privacy and security concerns, a lack of digital literacy among the population, and the need for stronger collaboration on regulations across African borders.
“By embracing data analytics, African countries can leapfrog into a new era of financial services, where innovation thrives and consumers’ needs are met responsibly. However, collaboration among all stakeholders remains crucial to address challenges and create an enabling environment for data-driven financial solutions to flourish.
“As Africa paves the way towards a more transparent, inclusive, and compliant digital financial ecosystem, the continent stands on the precipice of unlocking its true economic potential. It is incumbent upon us all to seize this opportunity and work towards a brighter, more prosperous future for Africa and its people,” he stated.
Building bridges, not walls:
Regulations are crucial, but they can’t exist in a vacuum. NITDA’s efforts in Nigeria are a great example. Their collaborative approach, engaging with organisations like the Central Bank and consumer advocacy groups, fosters understanding and prevents loopholes.
On his part, the Director-General of the National Information and Technology Development Agency (NITDA), Kashifu Inuwa Abdullahi, who said NITDA won’t relent in its efforts to ensure that the Federal Government’s development agenda for the ICT sector is realised in due time, noted that data has become a critical aspect of any development and “therefore requires utmost protection.”
Abdullahi said that with NITDA‘s eight-pillar agenda for the sector’s transformation, Nigeria would see great strides in data management.
Represented by the Director of Corporate Planning and Strategy Department, NITDA, Dr. Aristotle Onumo, Abdulahi said partnerships will be key in bridging the data trust gap in the country and that this will require government and regulatory cooperation, private sector engagement, academic and research collaboration, and civil society and community engagement.
He revealed that NITDA’s realignment with the renewed hope agenda of President Bola Tinubu has been anchored on principles including clarity, collective responsibility, commitment to excellence, and challenging the status quo.
“Our strategy is therefore to create digital value for the future through partnership and collaboration. We considered our factor endowment, which is our population demographics, Internet and mobile penetration, and challenges, which are acceptable ingredients for innovation,” he stated.
He said NITDA would strengthen policy implementation and the legal framework, which will ensure 100 percent completion of DPI regulatory instruments by 2025, the launch of five sector data exchange frameworks by 2026, 100 percent completion of the PKI framework by 2024, and a 100 percent cyber insurance framework by 2025.
Abdullahi further stressed that Nigeria, through NITDA, is keen on strengthening cybersecurity and enhancing digital trust, saying that the agency would facilitate cybersecurity collaboration, implement threat detection and mitigation, launch an e-trust initiative, and implement national PKI.
He said NITDA would forge strategic partnerships and collaboration, saying the target is to have six global platforms participate by 2027 and ensure that about 400 diaspora Nigerians are engaged by 2027.
On her part, Policy Advisor to DG NITDA, Bashira Hassan, said the agency is doing a lot to ensure that the policies of the government are implemented.
Speaking during a panel session, Hassan said the issue of trust is critical to bridging gaps in Nigeria and other parts of Africa.
According to her, NITDA engages in advocacy programmes to educate the populace about their rights, saying the agency will unveil a digital literacy framework in a few weeks.
NITDA is not going it alone. To ensure data trust regulations are effective and not misused, they’re working closely with organisations like the Central Bank of Nigeria (CBN), the National Planning Commission (NDPC), and the Federal Competition and Consumer Protection Commission (FCCPC). This collaborative effort fosters a comprehensive understanding of the legal landscape and prevents potential loopholes.
Building trust goes beyond regulations. NITDA also recognises the importance of research and education. By partnering with academic institutions, they’re deepening research on trust-related issues and raising public awareness. This two-pronged approach tackles both the creation of sound regulations and the public’s understanding of them.
Learning is a continuous process. NITDA acknowledges this by constantly reevaluating its strategies. Their experience with the well-received Nigeria Data Protection Regulation of 2019 highlighted the need for a shift from a purely rule-based approach. Now, their focus is on regulations that not only govern but also empower businesses to build trust within the ecosystem. This new approach is guided by their “regulatory intelligence framework,” built on awareness, information gathering, and adaptability. This ensures their regulations remain relevant and effective in a constantly evolving digital landscape.
“The regulatory intelligence framework was built on three pillars of awareness, intelligence, and dynamism,” Hassan stated.
Education is key:
Building trust goes beyond regulations. Educating the public is paramount. NITDA’s digital literacy framework and Rosemary Shumirayi’s emphasis on consumer engagement are steps in the right direction. People need to understand their rights and how data is used.
Bridging the data trust gap requires significant consumer engagement, according to Rosemary Shumirayi, CEO of the Consumer Council of Zimbabwe. Shumirayi, a prominent figure in the council, emphasised the importance of connecting with consumers to build trust.
Shumirayi highlighted that the Consumer Council of Zimbabwe actively engages with consumers to address the trust gap. She stressed the necessity for regulators to continuously interact with consumers. “Regulators must engage with consumer advocacy groups to address financial advocacy gaps,” she stated, advocating for open collaboration.
Professor Chiso Ndukwe-Okafor, Executive Director of the Consumer Advocacy and Empowerment Foundation (CADEF), outlined four critical elements for building data trust: policy advocacy to ensure data protection, consumer education to prevent rights abuse, collaboration with stakeholders across the value chain, and participation in research to identify gaps in data management.
This collaborative spirit needs to extend beyond borders. The African Continental Free Trade Area (AfCFTA) offers a golden opportunity for data sharing. But without trust between nations, this potential remains unrealized.
Financial inclusion: The missing piece
Financial inclusion is the cornerstone of unlocking Africa’s data potential. Branka Mracajac, CEO of 9PSB, hits the nail on the head. Data-driven financial services can only thrive if everyone has access. Localised financial education and simplified processes are crucial to bridging the gap.
To achieve this, industry leaders must work together. Financial products and services need to be not only available but also accessible and affordable for everyone, regardless of background. This means overcoming challenges like geographical barriers and high costs.
Financial literacy programmes also play a crucial role. By empowering people with knowledge and tools like savings accounts and digital payment options, we can encourage participation in the formal financial system.
Mracajac’s call for localised financial education and simplified processes is a step in the right direction. By addressing these roadblocks, stakeholders can build trust, unlock Africa’s data potential, and propel the continent towards a brighter future.
A brighter future awaits
Africa has the potential to leapfrog into a new era with data as the fuel. But collaboration, robust data governance, and a commitment to trust are the keys to unlocking this potential. Let’s seize this opportunity and build a future where Africa’s data empowers its people and propels the continent towards a brighter tomorrow. Here’s how we can achieve this:
Champion transparency and accountability: Data governance frameworks should be clear, accessible, and regularly reviewed. This foster’s public trust and encourages responsible data use.
Invest in digital literacy programmes: Educating citizens about data privacy and security empowers them to make informed decisions about their data. This fosters a data-driven society where individuals are active participants, not passive subjects.
Prioritise innovation and entrepreneurship: A thriving data ecosystem requires a supportive environment for startups and innovators. By nurturing these businesses, Africa can develop home-grown solutions to its unique challenges.
Embrace collaboration across sectors: Public-private partnerships and regional cooperation are essential for tackling complex data governance issues. By working together, African nations can develop a unified approach that benefits the entire continent.
By implementing these steps, Africa can harness the power of data to transform its economies, improve lives, and become a global leader in the data-driven age. The future is bright, but it requires a collective effort to bridge the data trust gap and unlock Africa’s true potential.
Babatunde Kareem writes from Lagos.
