How can sandboxes spur responsible data-sharing across borders? (Datasphere Initiative)

Arguments

Necessity for moving from a linear approach to a more agile and iterative approach through sandboxes in data governance

Supporting facts:

• Sandboxes are a space to provide a collaborative environment for data testing.

• They can address complex challenges of data governance.

• They enable experimentation with new uses and capabilities and means of governing data.

Topics: data governance, sandboxes, agile approach

---

Sandbox is not a method to deregulate

Supporting facts:

• Sandbox is a space to test innovative technologies and data practices

• Sandbox encourages collaboration and dialogue on how data is used

Topics: sandbox, regulation

---

Regulatory sandboxes should consider financial support for small and emerging companies

Supporting facts:

• Some regulatory sandboxes around the world do offer financial compensation for companies joining the experimental spaces

• Lack of sufficient funding can be a barrier for SMEs

Topics: regulatory sandbox, SMEs, startups, financial support

---

Report

During the discussion, the speakers placed great emphasis on the role of sandboxes in data governance. Sandboxes were described as collaborative environments that provide a space for data testing. They were seen as a valuable tool for addressing the complex challenges that arise in governing data.

By enabling experimentation with new uses and capabilities, sandboxes offer the opportunity to move away from a linear approach and adopt a more agile and iterative method. The need for capacity building in sandboxes was highlighted, with speakers advocating for the promotion of skills and knowledge in this area.

They emphasised that sandboxes can bridge the gap between data operations and regulations, ultimately contributing to more effective data governance. The concept of regulatory sandboxes was also discussed, with speakers expressing the view that sandboxes should not be seen as a method for deregulation, but rather as a framework to test innovative technologies and data practices.

It was suggested that regulatory sandboxes should consider offering financial support to small and emerging companies, as the lack of sufficient funding can be a barrier for these entities. Moreover, the importance of multi-stakeholder collaboration in sandboxes was emphasised. The challenges associated with artificial intelligence, cryptocurrency, pandemic data, sustainability, and climate were noted to transcend borders.

This necessitates the involvement of various stakeholders and multidisciplinary collaboration to develop effective solutions. Additionally, there was a recognition of the need for continued engagement with stakeholders to shape digital collaboration and build agile structures. Issues being dealt with today are international in nature, and it is crucial to establish flexible tools that promote digital collaboration.

In conclusion, the discussion highlighted the instrumental role of sandboxes in data governance and the shift towards an agile and iterative approach. The promotion of capacity building, financial support for smaller companies, and multi-stakeholder collaboration were identified as key factors for success.

Continued engagement with stakeholders was deemed essential for shaping digital collaboration and establishing agile structures.

Arguments

The use of sandboxes can help in the proper implementation of regulatory policies by testing them in a controlled environment

Supporting facts:

• In the wake of COVID-19, the Brazilian government rushed to enforce a presidential provisional measure that required telecom industries to provide personal data for government use, which ended up in the Supreme Court due to privacy concerns.

• Had a sandbox been in place, the measure could’ve been tested and its implications analyzed in a controlled environment, thereby avoiding major issues.

Topics: Sandbox, Data protection rights, Regulatory policies

---

The transparency mechanisms of Norway’s Data Tocnet stood out while initiating the draft for ANPD’s own sandbox

Supporting facts:

• Norway’s Data Tocnet has excellent exit reports from the participants of the sandbox

• They translated everything into English and even did podcasts

Topics: Regulatory Sandboxes, Transparency, Data Protection

---

Transparency mechanisms are essential to build public trust in sandbox initiatives

Supporting facts:

• They plan to externalize and multiply the knowledge obtained from the sandbox to guarantee transparency

Topics: Transparency, Public Trust, Sandbox Initiative

---

Lucas Costa dos Anjos supports the idea of a multi-stakeholder participation board for sandbox in AI regulation.

Supporting facts:

• Brazil has a strong tradition in internet regulation and sees multi-stakeholder participation as an effective way for cooperation from the private sector and better decision making.

• Before launching the sandbox, Brazil opened a public consultation to gather inputs.

Topics: AI regulation, Multi-stakeholder participation, Sandbox

---

Report

Sandboxes are essential for testing and implementing regulatory policies in a controlled environment. In Brazil, the rushed enforcement of a presidential provisional measure during the COVID-19 pandemic required telecom industries to provide personal data for government use, sparking privacy concerns.

However, if a sandbox had been in place, the measure could have undergone comprehensive testing and analysis, thereby avoiding major issues. The protection of data is crucial when implementing regulatory policies. The hasty enforcement of the presidential measure led to a Supreme Court case due to concerns about privacy violations.

The Supreme Court ruling emphasized that data protection rights are constitutionally protected in Brazil, highlighting the need to incorporate these rights into policy implementation. Transparency mechanisms play a vital role in building public trust in sandbox initiatives. Norway’s Data Tocnet stands out for its transparency mechanisms.

Their excellent exit reports from sandbox participants and efforts to translate materials into English and create podcasts demonstrate a commitment to sharing knowledge and ensuring transparency. Multi-stakeholder engagement is also important in sandbox initiatives. In Brazil, the involvement of civil society, academia, government, and private sectors has been recognized as crucial to the success of such initiatives.

Multi-stakeholder participation ensures cooperation from the private sector, better decision-making, and a diversity of perspectives. In the field of AI regulation, Brazil embraces multi-stakeholder participation as an effective approach. Before launching a sandbox, Brazil initiated a public consultation to gather inputs from various stakeholders, demonstrating their commitment to inclusive governance.

Lucas Costa dos Anjos supports the idea of a multi-stakeholder participation board for sandbox initiatives in AI regulation. He believes that engaging civil society and conducting public consultations can lead to better government arrangements and regulatory decisions in dynamically evolving areas such as AI.

In conclusion, sandboxes are valuable tools for testing and implementing regulatory policies. The Brazil case highlights the importance of data protection, transparency mechanisms, and multi-stakeholder engagement in sandbox initiatives. By considering these factors, governments can build public trust and make more informed regulatory decisions.

Arguments

There was an increase in the use of cryptocurrencies due to severe inflation and financial restrictions in Zimbabwe. However, regulatory and legal frameworks weren’t sufficient to manage their use.

Supporting facts:

• In 2015, Zimbabwe was facing severe inflation of around 500 billion percent.

• Cryptocurrencies provided an ‘inflation-proof’ solution for Zimbabweans to save and invest their earnings.

• Citizens also used cryptocurrencies for cross-border digital transactions and to send remittances back home.

Topics: Zimbabwe, Cryptocurrency, FinTech, Regulation

---

Regulatory sandboxes are beneficial in providing a safe environment to test fintech innovations and propose amendments where the existing framework may not be sufficient.

Supporting facts:

• Regulatory sandboxes allow for testing the extent to which the existing legal framework works in practice.

• They can also help identify any policy and legal loopholes.

• Regulatory sandboxes can propose appropriate adjustments to current policy and legal structures.

Topics: Regulatory Sandboxes, FinTech, Policy

---

South Africa has an effective approach to regulating crypto assets

Supporting facts:

• In 2020, South African government has set up an intergovernmental fintech working group

• They launched the first regulatory sandbox

• Out of 54 applications only 9 managed to go through the sandbox process

• Two of the applications related to cross-border payments

Topics: South Africa, crypto assets, regulation

---

Regulatory sandboxes help in understanding regulatory requirements and innovations

Supporting facts:

• Through sandbox, fintech working group was able to understand how to regulate use of crypto assets

• They understood the implications on exchange control regulations

• Using blockchain-based platform it was possible to report cross-border transactions in a cost-effective manner

Topics: regulatory sandboxes, innovation, regulatory requirements

---

Designing a regulatory sandbox should factor in the financial side

Supporting facts:

• An applicant needs to have sufficient funding to cover the food testing period

• Startups and small companies might struggle to raise enough funding

Topics: Regulation, Startups, Funding

---

Report

In Zimbabwe, the use of cryptocurrencies increased due to severe inflation and financial restrictions. With the country experiencing inflation rates of around 500 billion percent in 2015, Zimbabweans turned to cryptocurrencies as an “inflation-proof” solution to safeguard their savings and investments. They also used cryptocurrencies for cross-border digital transactions and remittances.

However, the regulatory and legal frameworks in place were insufficient to manage the use of cryptocurrencies. On the other hand, regulatory sandboxes were deemed beneficial in addressing fintech challenges. Sandboxes provided a safe environment to test innovations and identify policy and legal loopholes.

They also proposed suitable adjustments to existing policy and legal structures. Regulatory sandboxes helped to understand the need for amendments to the current framework. In contrast to Zimbabwe, South Africa took a different approach to regulating fintech and cryptocurrencies. The country did not outright ban the use of cryptocurrencies, serving as an example to other African nations.

South Africa’s approach demonstrated the potential benefits of embracing fintech and cryptocurrencies for economic growth and reducing inequality. Despite the introduction of a fintech regulatory sandbox in Zimbabwe in 2021, there were still restrictions in the crypto space. The sandbox aimed to allow testing of financial innovations but did not include crypto assets.

This highlighted the gap in the Zimbabwean fintech space, specifically regarding crypto asset regulation. In contrast, South Africa made significant progress in regulating crypto assets through an intergovernmental fintech working group and the launch of the country’s first regulatory sandbox in 2020.

The sandbox process reviewed 54 applications, with only 9 successfully testing through. Two of these applications were related to improving cross-border payments efficiency. Regulatory sandboxes played a crucial role in helping South Africa understand the regulatory requirements and implications of using crypto assets.

They assessed issues like money laundering and terrorism funding potential. The sandbox testing also demonstrated the possibility of compliant and cost-effective cross-border transaction reporting using blockchain technology. However, financial requirements for entering a regulatory sandbox can be challenging for startups and small innovators.

Limited funding could hinder their participation, potentially inhibiting innovation in the fintech sector. In conclusion, the case of Zimbabwe and South Africa highlights the importance and challenges of regulating cryptocurrencies and fintech innovations. While Zimbabwe faced difficulties due to inadequate regulatory frameworks, South Africa demonstrated a more progressive approach by not banning cryptocurrencies and implementing regulatory sandboxes.

However, both countries still face gaps and limitations in their fintech spaces, particularly regarding crypto asset regulation. Addressing these gaps while striking a balance between regulation and innovation is crucial for the sustainable growth of the fintech sector in Africa.

Arguments

Data protection conversations are on the rise in Kenya, with regulations being mainly focused on personal data.

Supporting facts:

• Data Protection Act in Kenya established in 2019

• A lot of work happening around personal data space

Topics: Regulation, Data Protection, Personal data

---

Regulatory sandboxes are seen as effective ways to handle the nuances around data governance.

Supporting facts:

• Stakeholders pushing for harmonised data governance structure

• Proposed body, the AI taskforce, will discuss frameworks and the policies for AI

Topics: Regulatory sandboxes, Data governance, Emerging tech

---

Fintech space is leading in the use of sandboxes in Kenya.

Supporting facts:

• Capital Markets Authority in Kenya has already established a structure for fintech to explore regulations and market adaptation

Topics: Fintech, Regulatory sandboxes

---

The importance of multi-stakeholder participation within the regulatory sandboxes

Supporting facts:

• Example of M-PESA’s evolution aided by the different stakeholders participation

Topics: Regulatory Sandboxes, Multi-stakeholder Participation, International Collaboration

---

The need for harmonizing cross-border regulations and practices

Supporting facts:

• The difficulty of harmonizing across regional or continental structures in the African continent

Topics: Cross-border Regulations, International Collaboration, Continental Structures

---

Inclusion and participation are important in digital infrastructure discussions

Supporting facts:

• Civil society space is often not included in these discussions

• Private sector or governments generally control these conversations

Topics: Digital Infrastructure, Inclusion, Data Governance

---

Report

Data protection conversations are gaining momentum in Kenya, with a particular focus on personal data. The introduction of the Data Protection Act in 2019 demonstrates the country’s commitment to safeguarding personal information. There is also substantial ongoing work in the personal data space, indicating a heightened awareness of the need to protect individuals’ data.

Regulatory sandboxes are being recognized as effective solutions for navigating the complexities of data governance. Stakeholders in Kenya are advocating for a harmonized data governance structure, acknowledging the value of a coordinated approach in managing and protecting data. The proposed establishment of the AI taskforce further emphasizes this commitment by exploring frameworks and policies for artificial intelligence within regulatory sandboxes.

The fintech sector is leading the way in utilizing regulatory sandboxes in Kenya. The Capital Markets Authority has already implemented a framework for fintech companies to explore regulations and adapt to market requirements. This proactive approach showcases the sector’s dedication to staying ahead in the evolving field of financial technology.

The telecommunications industry is also pushing for the integration of regulatory sandboxes, as demonstrated by the support from the Communications Authority. This industry’s proactive stance aligns with the growing recognition of the effectiveness of regulatory sandboxes in fostering innovation and managing emerging technologies.

Additionally, the open policy guideline for emerging tech regulatory sandboxes encourages public participation, further reinforcing the positive attitude towards these mechanisms. Multi-stakeholder participation is deemed crucial within regulatory sandboxes. The evolution of M-PESA, aided by the involvement of various stakeholders, exemplifies the benefits of collaboration and diverse perspectives in driving innovation and positive outcomes.

This highlights the importance of inclusivity and engagement among different actors in shaping regulatory sandboxes. Harmonizing cross-border regulations and practices within the African continent presents challenges due to differing regional and continental structures. Streamlined and coordinated efforts are needed to create harmonized regulations.

Endorsing a multi-stakeholder approach at regional and continental levels is strongly recommended to maximize the value gained from regulatory sandboxes. Inclusion and participation are vital aspects of digital infrastructure discussions. The civil society space is often excluded from these dialogues, with conversations typically controlled by the private sector or governments.

Recognizing the value of diverse perspectives, inclusive participation is essential to ensure that digital infrastructure development caters to the needs and concerns of all stakeholders. Finally, Africa’s voice must be amplified in international settings, particularly in discussions surrounding data governance.

Ongoing conversations around the digital compact underscore the need for an African perspective. Actively engaging in international discussions enables Africa to contribute unique insights and advocate for its interests, ensuring decisions made at the global level reflect the continent’s specific challenges and priorities.

In summary, Kenya is witnessing a rise in data protection conversations, recognizing the significance of personal data security. Regulatory sandboxes are viewed as effective tools for managing data governance, with the fintech sector leading their implementation. Multi-stakeholder participation is key to driving innovation within regulatory sandboxes, and efforts are underway to harmonize cross-border regulations and practices.

Inclusion and participation are essential in digital infrastructure discussions, and Africa must assert its voice at the international level to shape decisions around data governance that better suit its needs.

Arguments

Mistrust stems from concerns that national public policy objectives could be compromised if data transcends borders

Supporting facts:

• Data underpins every aspect of today’s global economy, be it day-to-day business operations or the delivery of essential government services

• Despite the core role of data in facilitating economic activity and innovation, there is a growth of mistrust in data and data flows

Topics: Data Transcending Borders, National Public Policy, Data Governance

---

Data flow restrictions could lead to GDP loss and job losses

Supporting facts:

• Data flow restrictions have been estimated to lead to possible GDP loss across the European Union of about 79 billion euros per year

• Localization measures on Internet of Things applications and machine learning could lead to investment losses and job losses

Topics: Data Flow Restrictions, Economic Impact, GDP, Job Loss

---

Regulatory sandboxes can support innovative, digitally enabled products and services

Supporting facts:

• Such regulatory flexibility can enable live market testing and entry

• Reduces the time to market for new innovations

• It drives consumer benefits and has broader spillovers in the market

Topics: Regulatory sandboxes, Innovation, Digitally enabled products

---

Reduced regulatory uncertainty can facilitate financing for smaller firms with innovative products

Supporting facts:

• Supports conduct testing

• Helps smaller firms with innovative products

Topics: Reduced Regulatory Uncertainty, Financing, SMEs

---

Regulatory sandboxes allow for dialogue with stakeholders to build trust

Supporting facts:

• The process of developing regulatory sandboxes itself facilitate dialogue

• Understanding is built which helps in finding consensus for innovative collaborations

Topics: Regulatory Sandboxes, Stakeholders, Trust Building

---

Multi-stakeholder conversations produce better implementation results.

Supporting facts:

• These are conversations where different experts from the same companies sit together to discuss issues from various perspectives.

• By doing this, everyone has a voice and can work together to make the regulation happen, making it easier to implement.

Topics: Data Governance, Regulation, Implementation

---

Report

Data serves as the foundation of the global economy, supporting both business operations and the delivery of essential government services. However, there is a growing mistrust in data and data flows, driven by concerns that sharing data across borders could compromise national public policy objectives.

This negative sentiment is further compounded by the potential economic impact of data flow restrictions, such as estimated GDP losses of around 79 billion euros per year in the European Union alone. These restrictions can also result in job losses and diminished investment in areas like Internet of Things applications and machine learning.

To address these challenges and unlock the significant benefits of data, it is argued that there should be a move towards flexible, technologically neutral frameworks. These frameworks should prioritize the effective protection of privacy and security. It is worth noting that over 50% of global GDP is already digitized, with digital technology driving growth across all industries.

Removing restrictive data policies could result in an average productivity gain of approximately 4.5% for countries, according to the World Bank. Regulatory sandboxes are seen as a positive approach to support innovative digitally enabled products and services. These sandboxes offer regulatory flexibility, allowing for live market testing and entry, thus shortening the time to market for new innovations.

The benefits extend to consumers and have broader spillover effects in the market. Reducing regulatory uncertainty is another positive measure that can facilitate financing for small firms with innovative products. By providing a clear regulatory framework, these firms can navigate the landscape more easily and secure the necessary funding to bring their ideas to fruition.

Building trust with stakeholders is crucial for effective data governance. Regulatory sandboxes, in and of themselves, foster dialogue and understanding, leading to consensus on innovative collaborations. This inclusive approach ensures that all stakeholders have a voice and can work together to build trust and address concerns.

Promoting policies that enable responsible and interoperable cross-border data transfers, access, and sharing is of paramount importance. Such policies not only reinforce trust but also boost data-driven innovation. It is emphasized that there are significant societal and economic benefits to be gained from data sharing while protecting individual rights.

Additionally, multi-stakeholder conversations are highlighted as essential for successful implementation of data governance regulations. These conversations involve experts from different companies discussing issues from various perspectives. This approach ensures that everyone is heard and can contribute to smoother regulatory implementation.

Lastly, the buy-in from various stakeholders is emphasized as crucial for successful implementation. By involving stakeholders early in the process and giving them a voice, buy-in is established, and stakeholders are ready to take action once the regulations are in place.

This saves time and resources, as there is no need to start from scratch when regulations are established. In conclusion, the growing mistrust in data and data flows necessitates addressing these concerns to leverage the full potential of data for the global economy.

This can be achieved through flexible data frameworks, regulatory sandboxes, reduced regulatory uncertainty, trust-building with stakeholders, responsible cross-border data sharing, and involving multiple stakeholders in the implementation process. These measures will enable the beneficial use of data, while safeguarding privacy and security, promoting innovation, and driving economic growth.