Analysis

It is terrifyingly sobering to consider that Hugo Grotius, historiographically considered, acting out a fundamentally TWAILian charge. Yes, he was not simply a young lawyer writing legal opinions. In fact, his point of view can be better appreciated when one considers that the supremely arrogant Treaty of Tordesillas had purported to share the world’s oceans between Spain and Portugal – Prof Anghie during the lecture chuckled at the ridiculous assertion of a certain property right to sea routes, once discovered. I dare say, the same will repeat with space routes in the not too distant future.

On a Saturday evening in Singapore in March 2022 – or as is in these days of webinars, evening, afternoon, morning as wherever one is on this fragile third rock from the Sun - Prof Anthony Anghie cheekily – yes, there’s a delightful cheekiness in his voice as one does when they know they intend to remind the Emperor of his nakedness – describes his critique of the eurocentric narrative of the foundation of international law by asking his audience to contemplate a few visual images that exemplify this narrative.

Recent developments in the cryptocurrency space have brought the 1942 Churchill words to the fore. Is this the beginning of the end of traditional currency? Or the end of the beginning of digital currency? In April 2021, the Central African Republic (CAR) signed a law adopting bitcoin as an official local currency, alongside the CFA franc. This was part of the country’s broad-based plans to solve exchange rate challenges and integrate cryptocurrencies into its financial system. The signing made the CAR the first African country and the second in the world after El Salvador (which took a similar step on September 7, 2021) to adopt bitcoin as a legal tender. However, CAR’s bitcoin experiment was a controversial move and sparked a backlash from regional and international financial organizations like the Bank of Central African States (BEAC) and the International Monetary Fund (IMF). However, the CAR’s Presidency believes that the move will “open up new opportunities” for the country. In this paper, I examine some of the political and economic implications of the “Bitcoin” experiment in CAR by answering two questions: is the adoption economically viable? Or is it an attempt to undermine the French-backed CFA franc and close ties with Russia?

In a 2018 paper, Casella and Formenti rely on work undertaken by the United Nations Conference on Trade and Development (UNCTAD) to illustrate the differences between the FDI patterns observed among large multinational enterprises (MNEs) depending on their ‘internet intensity’. They map UNCTAD’s digital framework into a conceptual matrix positioning digital categories on the basis of their internet intensity (the internet intensity matrix or IIM), along two dimensions: production and operations, on the one hand, and commercialization and sales, on the other. The IIM distinguishes between purely digital multinational enterprises, non-digital MNEs and a group of ‘mixed model’ MNEs which falls somewhere between the two extremes. Their subsequent analysis and findings is where things get interesting: as it turns out, digital MNEs have a share of foreign sales that is more than 2.5 times the share of foreign assets compared to traditional, non-digital MNEs. In other words, digital firms do not tend to invest a great deal in markets abroad in order to secure foreign sales. This is despite the fact that many of the world’s largest digital MNEs often make in excess of half of their sales abroad.

Kenya should consider the impact of strict data localization measures on digital trade. Kenya should also sign and ratify the Malabo convention before requiring other countries to do so as a means of meeting the adequacy requirement its data protection regulations proposes. This action will signify Kenya’s commitment to intra-African partnership and will enhance cooperation in the continent. In addition, Kenya should consider concluding reciprocal (bilateral) data protection agreements with specific countries to promote trade as it settles its broader international and regional treaty framework position.

The unrestricted movement of data is a key enabler of the digital economy. However, the development of data protection and data localisation policies is becoming one major area of concern for international trade and investment. Among the mechanisms for protecting individuals is data localisation. This requires that data or a copy thereof (both personal and non-personal) should only be stored and processed locally and should not be exported for processing. The import of this, for instance, is that all data generated within Nigeria must be confined to the boundaries of Nigeria, effectively restricting the flow of data. While localisation of data has significant economic and social benefits, it is also associated with several unintended (negative) consequences, especially from an economic perspective. This is especially true for developing countries like Nigeria that is moving towards greater data localisation with several policies skewed in that direction. This contribution briefly examines the implications of Nigeria’s increasing move towards data localisation on its regional obligations for the promotion of free trade in Africa.

A holistic and collaborative approach to data protection and inclusive economic growth is capable of spurring sustainable development, and reducing new patterns of inequalities occurring within South Africa and between South Africa and other nations in the context of the digital economy.

Rules on cross-border data flows are no exception to this general trend. Moreover, given that the WTO rulebook was mostly written in the 1990s prior to the rise of the data driven economy, multilateral trade rules by and large do not regulate cross-border data flows, a fact which has contributed to rules on this front – demand for which has only increased as economies have become more data intensive – being set nationally and even sub-nationally, but also regionally, and in PTAs and FTAs. At the same time, trends such as the rise of what is often referred to as ‘surveillance capitalism’ has brought the issue of personal data protection on privacy grounds into sharper focus around the world. With this background context in place, this essay looks at the intersection of economic integration and personal data protection with a view to informing ongoing debates on what AfCFTA rules on cross-border data flows might look like.

The limit of cross border flow of personal data is broadly referred to as data localisation and is often justified based on five main concerns. These include the protection of personal data, access to data by local law enforcement, ensuring national security, advancing local economic competitiveness and levelling the regulatory playing field. However, a closer look at these justifications reveal the impact of data localisation on free trade, increase in transaction costs and the efficiency of corporations, stifling of innovation, and hampering of economic growth. With global data flows raising global GDP, it is necessary to ask, what policy trade-offs are necessary to balance the legitimate concerns of countries against the unintended consequences that the impact of data localisation causes? There are four issues relating to the economic impacts of data localisation that emerging regulation in Africa needs to address. These are data ownership and its value, competition, trade, and foreign direct investment.

Taxing the digital economy has been on the international tax agenda for almost 30 years, revolving about how to tax an industry increasingly based on intangibles, scale effect, and market reach without a physical presence. But following Crawford and Joler’s concept of extractivism (2020; 2021), the digital economy is not only about BATX or GAFAM, but also about material resources, human labor, and data. The article analyses those long-forgotten elements of the Digital Economy’s true value chain, and, as the most recent two-pillar-based reform of the Inclusive Framework does actively exclude them, how those elements could be considered in the reform process.