Controversy over proposed internet and data changes for South Africa

South Africa’s Draft National Policy on Data and the Cloud courts controversy, and therefore needs further clarity, say legal experts at law firm Werksmans.

“Data generated in South Africa shall be the property of South Africa, regardless of where the technology company is domiciled”. These simple words represent some of the most controversial measures proposed by the government’s draft national policy on data and cloud, Werksmans said.

“The draft policy recognises that one of the greatest advantages of data is the value it generates after it is processed into information and knowledge and that the capacity to use and transform data into information and knowledge lies in the hands of mega technological digital companies,” the firm said.

With a vision towards a data-intensive and data-driven South Africa, once the draft policy is finalised, it is envisaged that it will apply to all three levels of government, organs of state, private sector and the general public, Werksmans said.

“Furthermore, the draft policy will also apply to multinational firms, particularly those who have invested in data and cloud infrastructure and services such as data centres in South Africa, but even in instances where they are not registered as legal entities in South Africa.”

The draft policy also proposes that the government stores its data in government-owned data storage centres rather than rely on foreign companies that have set up large storage facilities in South Africa.

However, it is not exactly clear how the government would enforce compliance with the rules contained in the draft policy given that government could very well lack the skills, capacity and finance to set up and manage these large storage facilities, Werksmans said.

Fundamental misunderstanding

What is of particular concern with the draft policy is that it does not take cognisance of the fact the internet is borderless and consequently, laws that try to own and regionalise data would inevitably be defective, Werksmans said.

“Additionally, to the extent that government is in fact empowered to take ownership of all data generated in South Africa, this could fly in the face of intellectual property rights – which rights specifically protect and enforce the rights of the creators and owners of inventions, writing, music and other works.

“This could also impact negatively on foreign investment in the sector as government would be seen as alienating the technology industry in this space, which industry has already invested significant capital and infrastructure.”

One would think that the draft policy is in fact a move towards data localisation by the government, Werksmans said.

“It is generally known that the debate in relation to data localisation increased after revelations by Edward Snowden regarding surveillance programs in the United States.

“Since then, various governments in Europe and around the world have expressed the desire to be able to control the flow of residents’ data through technology.

“Criticism is however ever-present against governments, being accused of using data localisation laws as a surveillance tool against their citizens, while governments almost always argue that it is in the interest of boosting local economic activity.”

  • Commentary by Ahmore Burger-Smidt (director) and Dale Adams (associate) Werksmans Attorneys.

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Controversy over proposed internet and data changes for South Africa