Over the past few weeks, the fluctuating nature of local internet services has left several subscribers and business owners at their wits end, due to the disruptions to their business operations or their E-commerce activities. The biggest casualties of the down time due to some offshore submarine cable cuts have been Nigerian banks, E-commerce businesses and Small and Medium Scale Enterprises (SMES). The banks have seen a notable increase in the number of failed transactions and some platforms have been off-line intermittently as a result.
Experts suggest that the failure to develop our local Internet ecosystem and foreign hosting of payment platforms or critical services are the two major factors affecting the ability to complete online transactions in Nigeria and if care is not taken, the situation may get worse.
While some banks and retail consumers were affected by the down time due to the recorded submarine cable cuts of SAT3 and WACS, other global organizations such as Google and Facebook amongst others were still able to provide their Nigeria customers content, simply because they had localized their data in local data centers while also connecting to local internet exchanges like IXPN and WAFIX. While their links to their major nodes were also impacted by the submarine cuts, they were able to quickly recover based on diverse routes to which they subscribed or by routing traffic to other cables.
Though connectivity played a big part in customers irritation due to limited access to certain services or delayed transactions, businesses in a country as large as Nigeria cannot underestimate the crucial benefit of local hosting and proximity of their data and transaction engines to the customers they serve. This is especially so for banks, e-commerce businesses and government agencies which increasingly rely on online engines to deliver services. There is the need to enable disaster recovery and seamless business continuity in the face of service disruptions in and outside the country, which would have been hugely beneficial to their business operations.
In addition, the failures also expose the threat to user data given that every POS transaction contains a bounty of users’ data, from spend habits to location, to secure identification numbers, to card owners’ full profile. These failures suggest Nigerian consumer data is transmitted around the globe through foreign countries and foreign servers without full control of how the data is accessed or what legal rights governments have to access that data at those locations. One has to wonder of the security issues regarding foreign hosting, as this offshore ‘data residency’ is a clear infringement on the National Data Protection Regulation (NDPR) created by the National Information Technology Development Agency (NITDA) in 2019. The policy document is designed to guide key stakeholders on data handling in the country.
Even with this directive, many agencies and banks still have a large part of their backup data in many countries, though there are network and data center service providers in Nigeria including MainOne, Medallion Communications Limited, Rack Centre, CWG Plc, Netcom, Layer3 and Galaxy Backbone that are able to provide these services in country among many others.
“One of the challenges of hosting data abroad is that if a company decides to warehouse its data in another country, automatically, the stored data becomes subject to the laws of the foreign country where it is hosted,” Chijioke Eze, Chairman of Value Added Services (VAS) Association of Nigeria said.
The sentiment is clearly supported by the fact that several countries including Russia and South Africa have data localization laws that protect citizens from data piracy and other data related threats. Nigerian regulators need to ensure Nigeria consumers face similar protections in the Digital Age through the formulation of better laws and then enforcement.
How much could Nigeria lose from local companies keeping their data offshore? Could a surprise edict like the current US ban on immigrant visas for Nigerians be placed on online financial services to Nigeria render Nigerian banks unable to service Nigerian customers within our national boundaries? One thing is imperative, it is high time that Nigerian businesses, government departments and agencies invest in and help build up a robust, world class, digital ecosystem leveraging the state of the art data hosting infrastructure and connectivity which already exists in the country to ensure national resiliency of online services.