The Role Of Regulation In Securing Africa’s Digital Future

Africa targets a digitally interconnected future and is working on achieving this by leveraging different technologies. In this journey, the role of regulation in supporting Digital Public Infrastructure (DPI) cannot be overlooked.

While countries across the continent are accelerating digital ID systems, digital payment platforms, and broader public service digitization, gaps in regulation continue to slow down progress and pose real risks. According to Yodahe Zemichael, Executive Director of Ethiopia’s National ID Program, regulatory frameworks around DPI remain fragmented, inconsistent, and often outdated, in part due to the early stages of building integrated and interoperable DPI ecosystems.

“Africa’s regulatory landscape for DPI is still evolving, with gaps in data privacy laws, cybersecurity policies, and cross-border coordination,” said Zemichael. “While countries like Ethiopia, Kenya, and Nigeria have made strides with privacy legislation, strong enforcement varies, and regional alignment is missing.”

The absence of unified regulation affects both efficiency and trust in digital systems. The lack of harmonized regulatory frameworks continues to slow cross-border digital payments, and platforms like digital IDs and social services struggle to achieve seamless interoperability. Fragmentation policy environments also complicate efforts to scale digital innovations continent-wide.

Balancing Protection and Innovation

A strong regulatory environment should protect users while also enabling innovation. For DPI to thrive, Zemichael recommends the adoption of robust data protection laws, basic cybersecurity standards like breach reporting, and alignment with global standards such as ISO 27001.

Regulations need to protect users’ data without holding back innovation. The goal is to strike a balance between strong protections and enough flexibility for innovation and regional collaboration,” he said.

Countries also need to improve enforcement capabilities and ensure that frameworks are adaptable to emerging technologies, and support real-world interoperability and innovation. This is especially important in building trust, which is central to mass adoption of DPI services.

The Economic Case for Better Regulation

The benefits of effective regulation go beyond safety and compliance. Clear and transparent regulations reduce transaction costs, promote investment, and unlock broader economic participation.

“A clear, predictable regulatory environment makes it easier to attract investors and grow businesses. It also lowers costs for people to access services, helping more individuals and small businesses join the formal economy,” Zemichael explained.

The successful implementation of digital IDs and payment systems, supported by coherent frameworks: Digital ID, and Personal Data Protection laws, can unlock access to credit, savings, and other essential financial services, particularly for underserved populations.

Enabling Cross-Border Collaboration

Cross-border trade and digital payments are top priorities under the African Continental Free Trade Area (AfCFTA). Regulatory harmonization across countries is a key enabler.

“Regulatory harmonization is critical for enhancing cross-border digital payments in Africa to reduce transaction friction,” said Zemichael. “A unified regulatory system would improve Ethiopia’s integration into the regional digital economy.”

He further noted that Ethiopia’s central bank is working on payment system frameworks.While regulatory progress varies by country, continued efforts to align nationally with regional partners remain a priority.Initiatives like the African Union’s (AU) Data Policy Framework offer hope

The Central Bank and Fintech Equation

Central banks have a pivotal role in building DPI. Beyond overseeing financial stability, they must engage fintechs and innovators through mechanisms like regulatory sandboxes.

“Central banks play a crucial role by setting interoperability standards and overseeing digital currencies like Central Bank digital currencies (CBDCs). Regulatory sandboxes can allow controlled innovation while maintaining oversight,” noted Zemichael.

Such collaboration ensures that regulation supports—not stifles—new ideas that can scale DPI, particularly in the fintech space.

Advancing Financial Inclusion Through Regulatory Reform

Zemichael points out that reforms such as Electronic Know Your Customers (eKYC) and tiered licensing have transformative potential. Ethiopia’s integration of its national digital ID, Fayda, into banking services is a case in point.

“eKYC enables remote onboarding, while tiered licensing lowers entry barriers for fintechs. The National Bank of Ethiopia (NBE) has announced plans to make Fayda mandatory for all banking transactions by 2026,” he noted.

This type of reform makes digital financial services more accessible to rural and unbanked populations, evolving IPS into Inclusive Instant Payment Systems (IIPS).

Global Inspiration, Local Action

Africa doesn’t have to reinvent the wheel. Regulatory best practices from India’s Unified Payments Interface (UPI), Europe’s Single Euro Payments Area (SEPA), and Brazil’s Pix offer replicable models. Closer to home, Ghana’s Ghana Interbank Payment and Settlement Systems (GhIPSS) and Nigeria’s Inter-Bank Settlement System (NIBSS) demonstrate how African innovation can scale.

“Adopting global best practices such as UPI’s open APIs, SEPA’s rulebook, and Aadhaar-linked services can transform Africa’s payment ecosystem,” said Zemichael.

Building Inclusive Governance

Finally, for DPI to truly serve the public, regulatory governance must be inclusive. Governments should invite input from licensed payment providers, fintechs, and civil society.

“African governments can ensure fair access and meaningful input by establishing governance boards that include licensed payment providers,” said Zemichael. “NBE could form advisory committees with these providers to integrate their insights into policy and project decisions.”

Public-private partnerships and open-source platforms also offer practical pathways to co-create secure, scalable infrastructure.

By investing in smarter, more collaborative regulatory frameworks, African governments can unlock the full potential of DPI—driving financial inclusion, powering digital trade, and enabling inclusive growth across the continent.