ADEYEMI ADEPETUN writes that in an era defined by the rapid proliferation of data collection and analytics, African governments need to leverage technological advancements to enhance regulatory frameworks and drive economic inclusion.

Data is the new form of capital for economies in the 21st century. As the world moves toward a digital economy, harmonised data governance frameworks that unlock data’s economic and societal benefits are paramount.

African nations have made significant strides in data governance but have experienced uneven results. With data at the heart of the African Continental Free Trade Area agreement, its negotiations phase is the perfect opportunity to leverage the power of using and sharing data, if governments can provide the leadership to achieve it.

A recent report from the Information Technology and Innovation Foundation (ITIF) found that a one-point increase in a nation’s data restrictiveness could, over five years, cut its gross trade output by seven per cent, slow economy-wide productivity by 2.9 per cent and increase the prices of goods and services for industries that rely on data for their day-to-day business by 1.5 per cent.

Data has become critical in achieving economic growth, increasing competition, and spurring innovation. Governments, businesses and individuals need robust data policy frameworks so they can extract the economic benefits of using and sharing data. Such frameworks should feature high data protection standards that guarantee adequate use of personal data, maintain public trust and safeguard privacy, without creating unnecessary data use and sharing barriers.

Against this backdrop, the 2024 RegTech Africa Conference with the theme: ‘Harnessing Partnerships for Africa’s Prosperity – Bridging the Data Trust Gap,’ which gathered participants across Africa, looked deep into the matter.

Setting the tone for the two-day conference and exhibition, which brought in speakers from across the continent, the Chief Executive Officer of RegTech, Convener of the programme, Cyril Okoroigwe, said data collection and analytics are having a profound impact on African governments, bolstering regulatory frameworks and fostering economic inclusion, rapidly reshaping the financial landscape and offering unprecedented opportunities for millions to engage in the formal economy.

He said the potential impact of data collection and aggregation in the digital financial ecosystem by regulators and governments is profound. However, for any data-backed mechanisms to achieve their full potential, strides need to be made in data protection and sovereignty.

Reeling out some statistics, Okoroigwe said Sub-Saharan Africa leads the world in Mobile Money use with data from GSMA’s State of the Industry Report on Mobile Money 2023 showing that the region has 218 million active accounts.

Okoroigwe said this is roughly half of the global total, which stands at 401 million. Further, he said when one looks at the number of transactions made via mobile money platforms, Africa has seen growth of 600 per cent in the last 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.

Challenges confront drive
While the promise of data-driven transparency and compliance in Africa’s digital financial ecosystem is immense, Okoroigwe said several challenges need to be addressed to maximize its impact.

According to him, this includes issues like data privacy and security concerns, digital literacy, and the need for regulatory collaboration across borders.

Referencing a recent report from Hogan Lovells, the RegTech boss said only 36 out of 54 African countries have put in place some data protection laws or regulations.
He said to promote the emergence of an African data ecosystem, realize its full potential, and open the door for development and innovation a strong and comprehensive regulatory framework must be established.

“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 at 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.

The place of partnership
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, “therefore requires utmost protection.”

Abdullahi said 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.

“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, challenges which is an acceptable ingredient for innovation,” he stated.

He said NITDA would strengthen policy implementation and legal framework, which will ensure 100 per cent completion of DPI regulatory instruments by 2025, the launch of five sector data exchange frameworks by 2026; 100 per cent completion of PKI framework by 2024 and 100 per cent cyber insurance framework developed 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 policies of 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 would in few weeks unveil a digital literacy framework.

She revealed that NITDA works with other organisations including the CBN, NDPC, and FCCPC to see how some of the laws governing trust in the country would not be abused.

According to her, NITDA’s collaboration also involved working with the academia to deepen research and create awareness on issues that bother trust.

“We realised that in 2019 when we issued the Nigeria Data Protection Regulation, we were able to make some wins. It is one of our most celebrated regulations in Nigeria. Learning from that, we realized that we had to renew our social contract with the Nigerian populace and we equally realised that we were looking at regulation in Nigeria from a rule-based approach, but we discovered that regulation essentially should influence business and enable the business environment to boost trust. So, we issued a regulatory intelligence framework that guides us in deploying regulatory interventions and initiatives in Nigeria, which will scale businesses.

“The regulatory intelligence framework was built on three pillars of awareness, intelligence and dynamism,” Hassan stated.

Perspectives from abroad
Bridging the data trust gap requires intense consumerism, according to the CEO of the Consumer Council of Zimbabwe, Rosemary Shumirayi, who has been the hallmark of the council.
Shumirayi noted that the consumer council in Zimbabwe relates with consumers to bridge the trust gap.

She equally emphasized the need for regulators to always engage with consumers. “Regulators must be open to engaging with consumer advocacy groups to bridge gaps in financial advocacy,” she noted.
Shumirayi added that regulators should be open to collaboration.

On her part, the Executive Director, the Consumer Advocacy and Empowerment Foundation (CADEF), Prof. Chiso Ndukwe-Okafor, four things are critical in data trust, policy advocacy to ensure data protection; consumer education to ensure rights are not abused; collaboration with stakeholders across all value chain and participation in research to identify gaps in data management.

Inclusion is key
Emphasising the importance of financial inclusion in bridging the data trust gap, the Managing Director and Chief Executive Officer of 9PSB, Branka Mracajac, reiterated that financial inclusion is the key enabler to poverty reduction and economic prosperity in Nigeria and entire Africa.

Mracajac emphasised that financial inclusion remains a key focus in Nigeria and Africa, playing a significant role in reducing poverty and fostering prosperity among the people.

According to her, achieving the desired results requires a conscious effort by industry players to make financial products and services available, accessible, and affordable for all unbanked and underserved individuals as well as businesses, regardless of age, gender, geographical region, or socioeconomic status.

She added that financial inclusion also aims to empower people through financial literacy programmes and provide them with tools such as savings accounts and other payment options to participate in formal financial systems.

She noted that as the country strives to grow financial inclusion, several roadblocks persist, including lack of access to financial services, low financial literacy among the populace, prohibitive costs of financial services, and lack of trust in financial institutions.

Mracajac urged stakeholders and various industry players to adopt the localisation of financial literacy and education, reduce the minimal cost of accessibility for people, and simplify products and processes.