A Balanced AU-EU Partnership is the Key to a Successful African Digital Single Market

Africa is on the verge of a digital transformation that could reshape its economy and society. The African Digital Single Market (DSM) is an ambitious initiative under the AU Digital Transformation Strategy for Africa 2020-2030 (DTS) that aims to create a seamless and secure digital space across the continent, where people and businesses can access and offer digital goods and services without barriers. In line with the development of the African Continental Free Trade Area (AfCFTA), the DSM has the potential to boost trade, innovation, inclusion, and growth in Africa and foster regional integration and cooperation.

The DSM would integrate the digital trade aspect of the AfCFTA, allowing seamless sharing of data and smooth flows of e-commerce across the continent. It would also see the harmonization of wider digital infrastructure and services to ensure interoperability across Africa. This should include harmonized spectrum licensing, reframing, and pricing, interoperability of mobile networks, as well as interoperable digital public infrastructure such as digital ID, e-governance services, and digital financial services.

However, achieving the DSM is not without challenges. Africa still faces significant gaps in digital infrastructure, with access to the internet limited or expensive in many African countries. A digital divide between rural and urban Africans and between men and women exacerbates this challenge. These gaps hinder the development of a vibrant and competitive digital economy that can benefit all Africans. Moreover, the DSM requires a harmonized and conducive policy and regulatory environment to support digital transformation and protect the rights and interests of digital users and providers.

In this context, a balanced partnership between the African Union (AU) and the European Union (EU) can play a crucial role in advancing the DSM. The AU and the EU share common values and interests in promoting digital development and cooperation, and the EU is already a key partner of Africa in supporting its digital agenda. The EU can also offer valuable lessons from its own experience with creating a digital single market, such as the importance of harmonizing regulations, promoting competition and innovation, and protecting data privacy and security.

There are three priority areas where a balanced AU-EU partnership could help Africa unlock opportunities and overcome barriers to digital transformation: harmonizing regulations, ensuring cross-regional data flows, and overcoming financial and technical challenges.

Harmonizing regulations

One of the key challenges for the African DSM is to create a harmonized and conducive policy and regulatory environment that can support digital transformation and protect the rights and interests of digital users and providers. Legislation critical to digital trade and wider digital services includes consumer protection, electronic transactions, data protection, and cybercrime laws. However, many African countries either do not have appropriate laws and policies in place, or have not implemented them. Moreover, there is a lack of harmonization of policies, legislations, and regulations across AU Member States, which creates barriers to cross-border data flows and digital trade. For example, AU Member States like Zambia, Rwanda, and Nigeria have strict rules on data localization, which may hinder the aspirations for a DSM. This situation is further exacerbated by the delays in the entry into force of the African Union Convention on Cyber Security and Personal Data Protection (Malabo Convention).

In this regard, Africa can learn from the EU’s experience with creating a digital single market, which has been based on harmonizing regulations across Member States and ensuring a high level of protection for consumers, businesses, and citizens. The EU has adopted several legislative acts to facilitate the free movement of data and digital services within the EU, such as the General Data Protection Regulation (GDPR), the e-Privacy Directive, the e-Commerce Directive, and the Cybersecurity Act. The EU has also developed harmonized standards to ensure the interoperability, quality, and safety of digital products and services. These measures have contributed to creating trust, legal certainty, and a level playing field for the digital economy in the EU.

While there are prominent differences between the AU and the EU regulatory landscapes, there is a potential for the AU to draw from the EU experience. The EU as a ‘standards maker’ can support the AU in establishing common positions on digital trade and the harmonization of AU Member States’ policies and regulations. The EU has experience in regional integration through adopting laws and regulations that cover different countries with diverse legal systems and cultures. Further, the EU is currently expanding its regulatory influence through new initiatives such as the Digital Services Act, the Digital Markets Act, and the proposed Artificial Intelligence Act, which can further shape standards abroad. Given the EU’s experience of building its own DSM, there are clear opportunities for deepened cooperation around the roll-out of the AfCFTA and a future African DSM.

Ensuring cross-regional data flows

Another critical aspect of the African DSM is ensuring cross-regional data flows between Africa and other regions, especially the EU, a major partner and market for Africa. Cross-regional data flows can facilitate digital trade, innovation, and cooperation and support the implementation of the AfCFTA. However, cross-regional data flows are subject to both regions’ legal and regulatory frameworks, which may not be compatible or aligned.

The EU’s strict and comprehensive data protection regime under the GDPR imposes conditions and restrictions on transferring personal data to third countries. The GDPR provides the European Commission with extensive discretion to determine whether to authorize the transfer of data to third countries, based on an adequacy decision or appropriate safeguards. An adequacy decision is a recognition by the EU that a third country provides a level of data protection equivalent to that in the EU. Appropriate safeguards are legal instruments or mechanisms that ensure that personal data transferred to a third country are subject to a level of protection equivalent to that guaranteed within the EU.

The AU does not have a unified approach to the regulation of cross-border data flows, as many AU Member States do not have data protection laws or have data protection laws that are not considered adequate for the free flow of personal data from the EU. Moreover, even with the coming into operation of the Malabo Convention, it may still leave Africa without sufficient data protection laws as the convention is heavily criticized for being outdated.

Therefore, there is a need for the AU and the EU to work together to find ways to enable cross-regional data flows without compromising data protection standards.

Overcoming technical and financial challenges

A third major challenge for the African DSM is to overcome the technical and financial barriers that limit the development and adoption of digital technologies and services in Africa. Africa does not have enough digital infrastructure to provide fast and affordable internet access to its population. For example, there are only 100 local data centers on the continent to respond to the continent’s growing data storage and management needs. Moreover, there are geographical and gender digital divides that exclude many Africans from the benefits of the digital economy. Nearly 300 million Africans live more than 50km from a fiber or cable broadband connection and will not fully benefit from a DSM. Furthermore, only 28% of African women use the internet, compared to 33% of men.

In this regard, the EU can play a vital role in supporting Africa’s digital infrastructure development and bridging the digital gaps. The EU has already launched several initiatives to mobilize public and private investments in digital infrastructure, such as the Global Gateway, which aims to mobilize about €300 billion in quality infrastructure investment through the ‘Team Europe’ approach, including €150 billion for Africa.

Besides these EU-led initiatives, other initiatives supported by various EU Member States and other international donors have direct bearing on the development of an African DSM. For example, the African Development Bank, together with the Bill and Melinda Gates Foundation, France, and Luxembourg, launched the Africa Digital Financial Inclusion Facility to accelerate digital financial inclusion across Africa, including supporting cross-border interoperability of payments infrastructure. The World Bank’s Identification for Development initiatives (ID4D), also supported by European member states, contributes to deploying digital ID systems and civil registration across the continent.

However, despite the growth in relevant initiatives, more collaboration and investment are needed to scale them up and address Africa’s infrastructure needs. The AU and the EU should work together to coordinate their efforts and leverage their resources to achieve greater impact and efficiency. They should also involve other stakeholders, such as private sector actors, civil society organizations, academia, and research institutions, in designing and implementing innovative solutions for Africa’s digital transformation. Doing so can create a strong partnership for a successful African DSM that can benefit both continents.