On the surface, requiring companies to host data locally would seem
an attractive option to foster local industry and data sovereignty. The
question is whether it ultimately does more harm than good.
Last
August, an Indian expert panel committee released its initial
recommendations for the country’s upcoming privacy law, including a
requirement for companies to store Indian user data in servers
physically located in the country. The committee’s recommendations have
touched off a fierce debate on the future of India’s digital ecosystem.
As more African countries push to adapt their legal frameworks to the
Internet age, the same debates are intensifying here.
Kenya’s
proposed Data Protection Bill, for example, would require companies to
store user data in servers physically located in Kenya, and hire local
IT professionals to monitor how the data is managed. In South Africa,
the POPI Act (which becomes effective next year) includes some data
localization requirements. In Cote-d’Ivoire, the launch of Orange’s
Personal Cloud service ignited a public debate on data privacy and the
need for localization requirements.
Data localization
requirements have far-reaching ramifications, mixing issues around
end-user privacy, security, data sovereignty, cloud network architecture
and infrastructure, and market player behavior.
Consistent with
the Xalam research focus, this Market Brief is primarily concerned with
the potential economic impact of such measures, specifically on African
cloud and data center colocation markets.
Can data localization boost African cloud service adoption?
There
is no clear precedent for the impact data localization laws might have
in African markets. To this point, the main markets to have implemented,
or strongly considered pervasive data localization requirements have
been relatively large economies: China, Russia, India. As a block,
African markets would undoubtedly carry similar weight. But Africa is
not a block, and the relatively small size of most markets makes the
consequences (intended, and unintended) of data localization obligations
difficult to read.
Building on data and insights from our data
center research and ongoing analysis of African public cloud markets, we
ran some impact simulations for several markets and attempted some
educated speculation on the potential impact of localization
requirements. A summary of our initial conclusions follows.
Xalam Analytics: Can Data Localization Laws Boost African Cloud and Colocation Markets?
