I am someone who is very skeptical of unnecessary regulation. I do not support the government reaching into the sphere of private business, because I believe they can tend to exacerbate rather than fix market problems (or failures). I have made that case in an earlier post.
But data is different. If we are to move forward as a country, taking advantage of our current technological nexus means accepting the critical nature of data, recognizing its ability for value creation, and acting accordingly with this information. Part of what makes data different is that the usual case for leaving markets alone assumes both sides can bargain. Individual users cannot bargain with Meta over how their data is used: they often accept the terms or they leave, extensive literature supports this claim. Most notably is Daniel Solove and Woodrow Herzog’s paper which delineates how mass data scraping, especially for training AI models, completely bypasses any pretense of notice and choice, exposing the inadequacy of individual consent frameworks in the modern data economy. And as AI and machine learning depend more heavily on data, how that resource is managed will carry real consequences for society.
Furthermore, the value data generates also gives the government a reason to claim some of it for the public’s benefit. For a country with a population as large as Nigeria’s, that value could become a meaningful source of government income. Currently, the Nigerian government does not appear to receive significant value from its citizens’ data. That value is neither captured in Nigeria through local business, nor through the tax system. Instead much of it appears to flow overseas, into the pockets of global digital platforms.
This argument rests on one premise: that data is a critical national resource. In this essay, I defend that premise using basic economics and the way the United Nations and the African Union describe data. How the state should do about capturing value from data, whether through licensing, ingenious taxation, or revenue sharing, is a question for later pieces.
Data is a critical national resource
The global economy has increasingly become an interconnected digital economy, fueled as much by data as by oil. In 2017, The Economist argued that data had replaced oil as the world’s most valuable resource. That framing sits awkwardly in Nigeria, whose economy still leans heavily on oil, but that is exactly why it deserves our attention.
Consumer data is used by companies to optimize their operations and increase profitability. By analysing consumer behavior, firms can identify market trends, optimize pricing strategies, improve product development, and develop more effective advertising strategies. These capabilities generate substantial economic returns, increasing returns in investment, by about 15-25%. Thus, making the collection, processing, and commercialization of consumer data an increasingly important component of contemporary business activity.
As I have argued before, much of the value from the data extracted from citizens by global digital platforms appears to be captured by foreign firms. The question of value capture matters because participating in the digital economy does not guarantee that a country benefits in proportion to the value created within its borders. For example, In 2021, the United Nations Conference on Trade and Development (UNCTAD) argued in its Digital Economy Report that despite developing countries generating and offering crucial data services for global firms, they risk remaining primarily sources of data, while global digital corporations keep control over the processing, commercialization, and resulting economic gains from this data. From a development perspective, capturing a greater share of this value could help strengthen domestic digital capabilities, support local innovation, and ensure that participation in the digital economy contributes to broader economic development.
In February 2022, the African Union’s Executive Council endorsed a continental Data Policy Framework that treats data as a strategic asset and lists sovereignty among its guiding principles. The framework is frank about Africa’s position. It notes that African states have largely been “standard takers” rather than standard makers in global digital governance, that near-monopoly positions, reinforced by mergers such as Facebook’s with WhatsApp, make it nearly impossible for local firms to compete, and that digital and data services have contributed little to national revenue. Its answer is not to wall data off. It calls for data to cross borders as freely as possible, especially within Africa, while insisting that the benefits be distributed equitably and that governments build the capacity to govern data in their citizens’ interest.
This is an important distinction: I am not advocating for laws to further restrict the free flow of data, rather a system that allows the Nigerian government to participate in the value captured from its citizen’s data. This could be in the form of laws and methods of regulation or new institutions. Essentially, Nigerian policymakers need to stop treating the terms on which foreign platforms use our data as settled. If African policymakers themselves regard data as a strategic asset, then letting foreign platforms capture nearly all of its commercial value is a policy choice, not a given.
Where this leaves us
Data is not just a byproduct of our online lives. It is an input that companies turn into revenue, and the countries that supply it have, so far, captured very little of that return. Recognizing data as a critical national resource doesn’t settle what Nigeria should do about it. It does mean the question deserves a place in our policy conversation. In the next piece, I turn to that question: what a workable model for sharing in this value could look like, and how it can answer the fair concern that the government may not be trusted to manage it.