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Digital economy in Africa: National policy and regulatory frameworks

Across Africa, the speed at which governments and financial institutions have advanced rules and regulations to support the growth of digital economies, as well as the focus of these frameworks, varies significantly. Such variations can be found when it comes to e-commerce enabling policies, digital service taxes, regulations covering data flows, or rules for cryptocurrencies. But there are also certain commonalities, such as a shared goal to advance financial inclusion and foster the use of digital financial services.

Read full report Stronger digital voices from Africa: Building African digital foreign policy and diplomacy.


E-commerce, e-transactions, and consumer protection

Growing consensus is emerging on the need to adopt e-commerce-enhancing policies in the context of national development strategies and plans. The existence of e-commerce strategies has been deemed particularly relevant, not only because they help to articulate the application of other norms in the specific context of online trade, but also because they provide strategic vision, which may help to enhance governmental coordination. In some cases, the process leading to the formulation of a national e-commerce strategy has been instrumental to fostering greater public-private cooperation and coordination.1United Nations Conference on Trade and Development [UNCTAD]. (2020). Fast-tracking implementation of eTrade Readiness Assessments. National e-commerce strategies also provide a useful blueprint for diplomats engaging in international negotiations or seeking to establish international cooperation in areas related to e-commerce.

The first sketches of e-commerce policy in the African continent find their roots in national plans for the development of the digital economy. For example, in 2016 Côte d’Ivoire expressed the desire to promote the development of the digital economy and e-commerce through its 2016–2020 National Development Plan.2Republic of Côte d’Ivoire. (2016). Plan National de Développement (National Development Plan). Kenya’s Digital Economy Blueprint outlines the need for e-commerce to expand beyond national boundaries and posits that integrating Africa into a single digital market will create economies of scale and opportunities to grow the local and regional economies. Furthermore, one of the measures proposed in the country’s National ICT Policy is to support the growth of local e-commerce platforms with global reach. 

Senegal has outlined goals related to promoting e-commerce and digital financial services (DFS) in its Digital Senegal Strategy – the national strategy for the digital economy. The government also adopted a National Strategy for the Development of E-commerce, in 2019. 

Across African countries, there is a strong demand on the part of online buyers and vendors for more tailored laws and regulations that would provide greater protection for online operations. Despite this, only 28 countries in Africa (or 52%) had consumer protection laws in place at the end of 2021 (Figure 41).

Figure 41. Online consumer protection legislation worldwide (December 2021).3Based on United Nations Conference on Trade and Development [UNCTAD]. (2021). Online Consumer Protection Legislation Worldwide. Figure redrawn.

The landscape is slightly better when it comes to e-transaction laws that recognise the legal equivalence between paper-based and electronic forms of exchange. At the end of 2021, 33 African countries (61%) had legislation on this issue (Figure 42).

Figure 42. E-transactions legislation worldwide (December 2021).4Based on United Nations Conference on Trade and Development [UNCTAD]. (2021). E-transactions Legislation Worldwide. Figure redrawn.

Data flows 

Cross-border data flows are essential elements of a well-functioning global digital economy. Data from Smart Africa (cited by GSMA) indicates that, in 2021, 26 African countries had no cross-border data flow restrictions, while 26 had adopted conditional flow regimes (i.e. they permit cross-border data flows subject to contractual safeguards, prior authorisation, or adequacy decisions by authorities).5GSM Association [GSMA]. (2021). Africa’s data opportunity. Cross border data flows and IoT.

Some African countries have adopted data localisation requirements for data protection purposes. Section 50 of the Data Protection Act of 2019 in Kenya provides that the Cabinet Secretary may determine certain types of processing which may only be conducted through a server or data centre located in Kenya on the basis of strategic interests of the state or for the protection of revenue.6Republic of Kenya. (2019). The Data Protection Act no.24 of 2019. Moreover, there is a requirement that health data should not be stored outside Kenyan territory. The implementing Data Protection (General) Regulations (2021) clarify that entities which process personal data for the purpose of strategic interest of the state (such as administering the civil registration and legal identity management systems, overseeing systems for administering public finances, offering certain education services, or providing secondary health care) must process such data through a server and data centre located in Kenya, or at least store one serving copy of the concerned personal data in a data centre in Kenya. There is also the possibility that entities which process personal data outside of Kenya and suffer data breaches or violate the act may be required to comply with data localisation requirements.7Kenya Gazette. (2021). The Data Protection (General) Regulations, 2021.

In Rwanda, the concept of data sovereignty has been at the core of the government’s National Data Revolution Policy and requires that national data be hosted locally: ‘Rwanda shall retain exclusive sovereign rights on her national data with control and power over own data.’ The policy mentions, however, the importance of collaborating with regional and international stakeholders in building a data industry, and notes that the government will work on attracting investors in the data industry.8Ministry of Youth and ICT, Republic of Rwanda. (2017). National Data Revolution Policy. The 2021 Law relating to the Protection of Personal Data and Privacy includes requirements for data localisation: Entities may only store personal data in Rwanda, unless they are authorised by the regulator to store such data outside the country.9Official Gazette of Rwanda. (2021). Law no 058/2021 relating to the Protection of Personal Data and Privacy.

In South Africa, the Protection of Personal Information Act regulates the transfer of personal information about a data subject to a third party in a foreign country under a number of conditions.

Some African countries use economic development justifications to introduce data flow restrictions. One such justification is that keeping data locally would contribute to job creation by enabling the growth of the domestic data processing industry.10Kugler, K. (2021). The impact of data localisation laws on trade in Africa. Nigeria is one illustrative example: According to the Guidelines for Nigerian Content Development in ICTs established by Nigeria’s National Information Technology Development Agency (NITDA), telecommunication and networking service companies should host all subscriber and consumer data within the country. Data and information management companies are also expected to host ‘all sovereign data’ locally, unless an approval to store such data outside the country is granted by NITDA. Moreover, ministries, departments, and agencies of the federal governments should ensure that all sovereign data is hosted locally on servers within Nigeria.11National Information Technology Development Agency, Nigeria. (2019). Guidelines for Nigerian Content Development in Information and Communication Technology. 

In April 2021, South Africa published its draft National Policy on Data and Cloud of 2021 for comment.12South Africa Ministry of Communications and Digital Technologies. (2021). Invitation to submit written submission on the proposed National Data and Cloud Policy. In this policy, the South African government seeks to adopt strict data localisation requirements for economic development objectives. 

As these examples indicate, the data governance landscape across the continent is rather fragmented and there is a wide diversity of rules in place when it comes to cross-border data flows. While ensuring an adequate level of data protection (in particular when it comes to personal data) is a commendable policy objective, strict restrictions to data flows pose challenges for cross-border digital trade. And while goals related to the strengthening of national economies can be seen as reasonable, there is a risk that these may turn into protectionist policies, with negative consequences for the functioning of regional and global digital economies. Governments, as well as regional and continental institutions, have the difficult task of trying to foster more harmonisation of data flows policies across the continent, while balancing these various policy interests (protecting data, strengthening national economies, enabling cross-border digital commerce/trade, etc.).

The African Union Data Policy Framework, endorsed in February 2022 by the AU Executive Council, is expected to address some of these challenges. The framework is intended to contribute to the harmonisation of data governance policies across Africa and the establishment of adequate data-sharing mechanisms and frameworks that encourage cross-border data flows while safeguarding people’s rights and fostering innovative data-driven businesses and solutions. Moreover, one of the recommendations outlined in the framework is for the AUC, RECs, and regional institutions to  ‘strengthen links with other regions and coordinate Africa’s common positions on data-related international negotiations’. Another recommendation is for member states to ‘foster a coordinated, comprehensive and harmonised regional approach to global governance challenges associated with the global data-driven digital economy’.13African Union [AU]. (2022). AU Data Policy Framework. 

Digital payments and financial services

Many countries in Africa are experiencing a significant transformation of their financial sectors as they extend financial inclusion and move to DFS. There has been an unprecedented increase in the number of people enjoying access to formal financial services in the continent, which is home to more DFS deployments than any other region in the world.14International Finance Corporation [IFC]. (2018). Digital access: The future of financial inclusion in Africa.

Over the past decade, financial technologies (fintech) have become a significant driving force in the African internet economy, contributing directly to GDP growth while also enabling various other sectors. Fintech startups tend to be the top destination for funding, receiving almost 50% of all tech startup investment in 2021.15Jackson, T. (2022, February 8). 50% of African tech’s $2bn funding pot went to fintech startups in 2021. Disrupt Africa. 

The DFS sector is growing in Africa to serve the population that is currently unbanked and financially excluded. The sector is enabling African countries to leapfrog from physical retail banking to online payments. Paired with rising mobile connectivity, individuals living in rural areas with poor physical banking infrastructure and limited access to fixed-line internet access are increasingly able to use mobile devices for financial transactions.16Motobi, O. & Grzybowski, L. (2017). Infrastructure deficiencies and adoption ofmobile money in sub-Saharan Africa. Information Economics and Policy 40.

The COVID-19 pandemic further accelerated the shift to digital finance in many economies. In Africa, governments have enacted regulations to support the adoption of DFS, used them as a way to enable emergency cash transfer programmes, and encouraged the use of cashless and contactless modes of payment to reduce the risk of virus spread, while customers increasingly used phones to pay merchants. 

Compared to other policy areas, the level of development and policy coherence when it comes to frameworks for digital payments and financial services is remarkable in some countries in the African continent. 

Ghana has been one of the countries to set forth a comprehensive set of policy initiatives designed to deepen financial inclusion and accelerate the shift to digital payments, based on three key instruments. The National Financial Inclusion and Development Strategy, developed in collaboration with the World Bank, aims at increasing financial inclusion to 85% of the population by 2023, helping create economic opportunities and reducing poverty. The strategy also outlines goals related to the alignment of national policies and regulations with international standards and principles.17Republic of Ghana. (2018). National Financial Inclusion and Development Strategy. 

The Digital Financial Services Policy aims to create a resilient, inclusive, and innovative digital ecosystem. The Cash-Lite Roadmap, designed in collaboration with the UN-based Better Than Cash Alliance, puts forward concrete steps to build an inclusive digital payments ecosystem.18Ministry of Finance, Ghana. (2020.) Digital Financial Services Policy. This includes better access to financial services, enabling regulation and oversight, and promoting consumer protection.19Republic of Ghana. (2020). Towards a cash-lite Ghana. Building an inclusive digital payments ecosystem.

The Kenyan National Payments Strategy 2022–2025 sets a forward looking approach, aiming to ‘support a payments system that meets the diverse needs of customers, especially with respect to financial inclusion and shared prosperity’.20Central Bank of Kenya. (2022). National Payments Strategy 2022–2025. Another goal of the strategy is to foster a supportive policy, legal, and regulatory framework that is robustly enforced across existing and emerging players in the payments ecosystem. 

The strategy also notes the need to ensure alignment to relevant international standards and global best practices and outlines the central bank’s commitment to engage in dialogue with regional and global stakeholders to ensure that the payment framework remains adaptive and relevant in the view of emerging trends and regulatory debates. 

Taxing digital services

Several African countries have introduced various types of digital service taxes (DSTs). For instance, since January 2021, Kenya applies a 1.5% DST for income derived or accrued in the country from services offered through a digital marketplace.21Kenya Revenue Authority. (n.d.). Introducing Digital Service Tax. Nigeria requires companies that offer digital services in the country (resident or non-resident) to pay a tax of 6% of the annual turnover of their business in Nigeria.22Oyeniyi, A. (2022, March 4). Nigeria captures foreign tech firms in its tax net. Quartz Africa. In 2020, Tunisia introduced a 3% tax on the turnover generated by non-residents from the sale of computer applications and the provision of digital services.23Asquith, R. (2021, November 25.) Tunisia VAT on foreign digital services. VATCalc. Starting in 2022, Ghana has a levy of 1.5% on electronic transactions, targeting in particular mobile money transfers.24Ghana Revenue Authority. (2022). Electronic transfer levy.

In South Africa, income earned by non-resident providers of electronic services is subject to value added tax (VAT).25South African Revenue Service. (2019). FAQs: Supplies of Electronic Services. VAT on digital services is imposed in a few other countries, including Côte d’Ivoire, Egypt, Ghana, Kenya, Nigeria, Rwanda, and Tunisia.26Asquith, R. (n.d.). Global VAT & GST on digital services to consumers. VATCalc. Uganda at a point imposed a tax on social media websites, which was later replaced with a tax on data packages.27Kafeero, S. (2021, July 3). To control speech, Uganda is taxing internet usage by 30%. Quartz Africa.

In 2020, the African Tax Administration Forum (ATAF) published a Suggested Approach to Drafting Legislation on Digital Sales Tax Services. The document was ‘intended to provide African countries with a suggested structure and content for their [DST] legislation’, taking into account various DST frameworks in place in other jurisdictions, but adapted to local realities and needs.28African Tax Administration Forum [ATAF]. (2020). ATAF publishes an approach to taxing the digital economy. 


The adoption rate for cryptocurrencies and crypto assets is high and steady growing across Africa. Local businesses are developing a strong network of payments and services using blockchain technology and digital tokens. The 2022 Global Crypto Adoption Index placed Nigeria, Morocco, and Kenya among the top 20 countries worldwide by cryptocurrency adoption.29Chainalysis. (2022, September 14). The 2022 Global Crypto Adoption Index. Chainalysis.

One of the main reasons behind the high adoption rate of crypto services is related to the high cost of remittance under traditional financial services. Data for the fourth quarter of 2021 indicates that Africa is the region with the highest average remittance costs (7.83% of the sent amount).30International Fund for Agricultural Development. (2022). MobileRemit Africa. By contrast, blockchain-based payments tend to be seen as a cheaper way to send money from abroad to families and communities.

Apart from remittances, cryptocurrencies are often also used for peer-to-peer (P2P) financial transactions. The aforementioned Crypto Adoption Index places Kenya in fifth place in a ranking of countries by P2P exchange trade volumes, with Nigeria and Morocco also among the top 25 countries worldwide.

While Africa’s cryptocurrency market is the smallest among all world’s regions, the continent is recording a fast and significant growth: US$105.6 billion worth of crypto assets between July 2020 and June 2021, accounting for 1,200% crypto value growth.31Fries, T. (2021, September 23). Africa’s crypto market has grown by $105.6 billion in the last year. World Economic Forum. This makes the region quite attractive for international firms: In 2020 and 2021, some of the biggest names associated with cryptocurrency, online payments, and blockchain technology (e.g. Binance, Stripe) announced that they will place development centres in Africa or otherwise become more present in the region. At the same time, the region’s own companies are aiming to expand their presence in international markets. One example is Luno, Africa’s largest cryptocurrency exchange, which in early 2022 was looking into establishing a legal presence in the USA.32Changole, A. & Prinsloo, L. (2022, February 4). Biggest crypto exchange in Africa sets sights on U.S. expansion. Bloomberg.

Several countries have started looking into regulatory issues surrounding crypto markets. In Nigeria – where 33% of the population either owns or uses cryptocurrencies33Buchholz, K. (2021, February 18). These are the countries where cryptocurrency use is the most common. World Economic Forum. – the central bank issued a statement in 2021 directing commercial banks and other regulated financial institutions not to deal, trade, or facilitate the use of cryptocurrencies.34Central Bank of Nigeria. (2021). Letter to all deposit money banks, non-bank financial institutions and other financial institutions. However, in May 2022, the Securities and Exchange Commission published a set of Rules on Issuance, Offering Platforms and Custody of Digital Assets, outlining registration requirements for digital assets offerings and custodians, among other provisions.35Security and Exchange Commission, Nigeria. (2022). New rules on issuance, offering platforms and custody of digital assets. 

In South Africa, a report issued in 2021 by the Crypto Assets Regulatory Working Group indicates the country’s intention to bring crypto assets into the regulatory remit ‘in a phased and structured approach’ across three main areas: anti-money laundering and combating the financing of terrorism, cross-border financial flows, and application of financial sector laws.36Crypto Assets Regulatory Working Group, South Africa. (2021). Position Paper on Crypto Assets. In 2022, both the South African Reserve Bank and the Financial Sector Conduct Authority indicated that work was ongoing on developing a regulatory framework for the cryptocurrency industry.37Malinga, S. (2022, August 22). FSCA sets ball rolling on crypto regulation in SA. ITWeb.  

Kenya’s central bank issued a warning in 2015 about the risks associated with the use of un-regulated digital currencies.38Central Bank of Kenya. (2015). Caution to the public on virtual currencies such as bitcoin Over the years, the bank has also warned financial institutions against conducting crypto-transactions.39Kitimo, A. (2022, March 22). Kenya’s central bank warns of risks in crypto. The East African. Central financial institutions in countries such as Angola, Ghana, Botswana, Egypt, and Guinea have also issued warnings outlining risks associated with cryptocurrency trading and stressing the need to ensure full compliance with anti-money-laundering and other regulations. 

While many financial authorities across Africa took a cautionary approach in relation to cryptocurrencies (in line with what could be described as a global trend), in May 2022 the Central African Republic became the second country in the world (after El Salvador) to accept bitcoin and other cryptocurrencies as legal tender along with the national fiat currency (CFA franc). A bill to this effect was passed by the parliament and signed into law by the country’s president regulating the use of cryptocurrencies in online trade and electronic transactions and stipulating that such exchanges are not subject to tax.40Jackson, K. (2022, April 11). Central African Republic passes bill to make bitcoin legal tender. CNET. The Bank of Central African States (BEAC), the Banking Commission of Central Africa, the International Monetary Fund, and the World Bank raised concerns over the decision.

Central bank digital currencies

In October 2021, Nigeria became the first African country to launch a central bank digital currency (CBDC) pilot: eNaira, issued by the Central Bank of Nigeria. Simply described by the bank as ‘the digital equivalent of the cash Naira’, eNaira is expected to contribute to encouraging financial inclusion, supporting a resilient payment system, facilitating diaspora remittances, and reducing the cost and improving the efficiency of cross-border payments.41Central Bank of Nigeria. (n.d.). Design Paper for the eNaira.

In South Africa, the Reserve Bank has been experimenting with a wholesale CBDC (wCBDC), but remains cautious about the policy and regulatory implications of such a currency and is of the view that further reflection and analysis are needed to unpack the legal status of a wCBDC and the treatment of wCBDC wallets as accounts with the central bank, among other issues.42South African Reserve Bank. (2022). Project Khokha 2. Exploring the implications of tokenisation in financial markets.

The Bank of Ghana announced in August 2021 that it is piloting a CBDC, with the overall goal of promoting diverse digital payments, while ensuring a secure and robust payment infrastructure in the country.43Bank of Ghana. (2021). Bank of Ghana partners with Giesecke+Devrient to pilot first general purpose Central Bank Digital Currency in Africa. 

Kenya’s National Payments Strategy 2022–2025 tackles the possibility of Kenya issuing a CBDC and notes that the central bank would ‘need to carefully examine a number of important issues such as current legal, regulatory and supervisory frameworks, existing infrastructure, governance and risk management, central bank resources, and the core central bank legislation’. Issues of trust, safety and security, consumer protection, and regional cooperation and global convergence would also have to be considered. 

Several other countries have announced that they are exploring the launch of their own CBDCs: Egypt, Eswanti, Madagascar, Mauritius, Morocco, Namibia, Rwanda, Tanzania, Tunisia, Uganda, Zambia, Zimbabwe (Figure 43). BEAC might also start exploring the introduction of a CBDC for its six member states (Cameroon, Central African Republic, Chad, Equatorial Guinea, Gabon, and Republic of the Congo), as encouraged by its Board.44Mieu, B. & Hoije, K. (2022, July 22). Central African regional bank seeks common digital currency. Bloomberg. 

Digital currencies come with both challenges and opportunities. They could pose challenges to financial stability and raise privacy and security risks. But CBDCs could also facilitate a broader take-up of digital payments and contribute to more inclusive and convenient financial services and systems. This makes digital currencies particularly attractive for African countries, supporting their efforts towards inclusive finance, and allowing them to bring innovation in their financial systems and better adapt to the realities of the expanding digital economy.

CBDCs status October 2022
Figure 43. CBDCs’ status (October 2022).45CBDC Tracker. (2022). Today’s Central Bank Digital Currencies Status.

Digital businesses across Africa: Success stories

Africa is the home of several successful digital businesses, such as:

  • Cellulant. A pan-African payment solutions company providing local and global payment solutions integrating mobile money, local and international cards, and banks.
  • Jumia. Founded in 2012 in Nigeria, Jumia evolved into Africa’s leading e-commerce platform.
  • Luno. The cryptocurrency exchange with hubs in South Africa and Lagos, Luno has over 10 million customers in more than 40 countries. 
  • M-PESA. Launched in 2007 by Kenya-based Safaricom and Vodafone, the mobile phone-based money transfer service is now available across multiple African countries, as well as beyond the continent, in countries such as Germany, China, and the UAE.  
  • Paystack. The financial payments company became one of Nigeria’s most successful startups when it was acquired for over US$200 million by Stripe. 
  • Wave. Based in Senegal and the USA, this mobile money provider became the first unicorn in Francophone Africa in 2021. 
  • Yellow Card. One of the biggest fintech companies in Africa, Yellow Card operates as an online payments company and a cryptocurrency exchange.