An African startup’s guide to understanding data privacy and protection

Startups and early-stage businesses have a lot on their plates—raising capital, finding product-market fit, scaling, and more. With so much to juggle, it’s easy to push concepts like data privacy and protection to the back burner. But neglecting them early on can put your business at serious risk.

A single data breach could result in hefty fines, damage customer loyalty, ruin investor relationships, and more.

Data privacy and protection safeguard businesses from threats like data breaches, identity theft, and regulatory penalties—issues that can sink a company before it even takes off.

In this article, we’ll break down the key concepts of data privacy and protection, share how to create a privacy policy, and provide actionable tips to help businesses build strong data protection frameworks from the ground up.

Data privacy and data protection are related, but distinct concepts

Data privacy and data protection are closely related, but each plays a distinct role in safeguarding your business. Both terms have specific, specialized meanings in regulatory contexts.

Data privacy refers to a set of policies defining how personal data is collected, stored, and shared responsibly and lawfully. Think of your personal data as a valuable item in your home. Data privacy is like deciding who gets to come inside and look at it—only trusted individuals, like friends or family, should be allowed in. If someone doesn’t have permission, they shouldn’t be able to see, use, or share that data.

Data protection, on the other hand, is about securing that data once it’s been collected. While privacy defines who can enter your home, data protection is like installing a security system—using tools like locks, alarms, and surveillance to keep intruders out. This includes measures like encryption, strong passwords, and firewalls, all designed to protect your data from unauthorized access or breaches.

Why African startups should care about data protection

For startups, ensuring data protection is crucial for building trust.

Customers won’t stick around if they fear their personal data is at risk. Similarly, investors want the assurance that their portfolio companies are operating compliantly, because data protection controls reduce regulatory risks.

Many early-stage teams think they can postpone worrying about data security, but that’s a risky gamble. If you’re building something online, it’s not a matter of if bad actors will try to breach your defenses—it’s when. And when that moment arrives, having a robust data protection strategy can make all the difference between weathering the storm or facing disaster.

There are real-life examples of companies across Africa facing the consequences of data privacy or data protection lapses. In Ghana, a ride-hailing service was fined GHS 1,900,000 for failing to prevent identity theft on its platform. In Kenya, the Office of the Data Protection Commissioner (ODPC) fined an organization KES 500,000 for using a data subject’s image without documented consent. And in Nigeria, the Nigerian Data Protection Commission (NDPC) fined a commercial bank NGN 555,800,000 for non-compliant data processing.

So how can startups ensure effective data protection? It starts with understanding the core principles that form the foundation of strong data protection practices.

Seven principles to keep in mind when handling data

The following seven principles should form the foundation of your data protection policies.

The principle of purpose limitation: Only collect data for a clear, legitimate reason, and only use that data for that specific purpose.

The principle of lawfulness, fairness, and transparency: As a startup, you’ll collect data from customers, employees, or partners. This principle means clearly communicating what data is being collected and how it will be used and stored. Make sure data subjects are aware their data will be processed in accordance with relevant laws and understand how it will be managed, kept, and used.

The principle of data minimization: Collect only the data that is absolutely necessary. For example, if you’re running an e-commerce startup selling water bottles, you likely don’t need a customer’s passport information. More data means more responsibility, and if a breach occurs, you are more vulnerable. Audit your data to ensure all collected information is essential to your operations.

The principle of storage limitation: Only retain data for as long as it’s needed. Keeping data indefinitely creates unnecessary risk. Implement a data retention policy to manage how long each type of data is stored, and periodically delete data that falls outside of the retention policy.

The principle of accuracy: The data you collect must be accurate and kept up to date. Outdated or incorrect data can lead to poor business decisions.

The principle of integrity and confidentiality: You must take responsibility for securing the data you collect. Implement data backup processes to prevent data loss, and implement security measures like encryption, strong password policies, and two-factor authentication to protect against unauthorized access.

The principle of accountability: Your startup must be able to prove compliance with data protection regulations. It’s not enough to have good intentions—you need clear, documented processes. Being able to demonstrate compliance helps protect you against legal consequences if something goes wrong.

Supervisory Authorities (SAs) enforce data protection

These data protection principles are enforced by regulators known as Supervisory Authorities (SAs). Data protection regulations vary by country and industry, and SAs are independent authorities responsible for ensuring compliance with these regulations.

SAs check if companies are following the rules, provide advice on data protection, and handle complaints. They have the authority to investigate data breaches and take action if needed.

It’s important for companies to know which SA governs them and what regulations apply in their country. For instance, in Nigeria, companies must complete a yearly data protection compliance audit, while in Kenya and Ghana, businesses must obtain a Data Controller and/or Data Processor license, renewed every two years.

While SAs manage enforcement at a national level, within companies, the Data Protection Officer (DPO) is responsible for ensuring data protection laws are followed. In small startups, the DPO could be the Head of Legal or Head of Security. What’s important is that someone is responsible for data protection from the start, until an expert can be hired or the necessary skills can be developed in-house.

A privacy policy will help your company comply with data protection laws

Another way startups can comply with data protection laws is by having a privacy policy. This policy explains how the company collects, stores, shares, uses, and deletes personal data, along with the security measures used to protect it.

Any startup that collects personal data from employees, customers, or others must have a privacy policy. Data protection laws require companies to display a clear and easily accessible privacy policy wherever personal data is collected or processed.

A privacy policy is a startup’s obligation to customers and policies must be easy for individuals (or data subjects) to understand. For example, if you’re selling goods to French citizens in France, your privacy policy should be written in French.

Having a privacy policy can also help if a customer or merchant raises a complaint about how your business handles data. You may be able to refer to the terms in your privacy policy to reduce liability.

What to include in your privacy policy

There’s no single way to create a privacy policy, but these essential elements can help you get started.

Consent of the data subject: Your privacy policy must explain how you obtain consent from users to collect and use their data. Consent means giving users a real choice about sharing their information. For example, if users can’t access your services without providing data, you’ll need another lawful reason to process it. If there’s no choice, it’s not genuine consent.

Effective date of the policy: Always include the date your privacy policy takes effect and note any updates. This shows users how up-to-date your privacy practices are and demonstrates your commitment to keeping their data safe.

Company information: The privacy policy should clearly outline what your company does and who the policy applies to (e.g., employees, vendors, website visitors). Include contact details for your Data Protection Officer (DPO) or privacy team, so users can easily reach out with concerns or questions.

What information is collected and how: You need to be specific about the types of data you collect and how you collect it. This includes personal details, cookies, and any other data collected through the company’s website or app.

Lawful basis for processing personal data: Every data collection must have a legal basis, whether it’s consent, fulfilling a contract, legal obligation, public or individual’s interest, or legitimate business interests. Your policy should outline which applies to each data type.

How the data will be used: Explain precisely how you plan to use the data. Are you using it to improve services, personalize experiences, or send marketing emails? Be clear, so users know why their data is being collected and how it benefits them.

Who receives the data: Be transparent about who you share data with and where. This could include service providers, government authorities, or law enforcement. If your business sells data (although this is often illegal), make sure it’s disclosed in the policy.

User rights: Your policy should list the rights users have under data protection laws, such as the right to access, correct, or delete their data, and explain how they can exercise these rights.

Data security and retention: The privacy policy should outline how the data will be protected, including security measures like encryption and access controls, as well as how long the data will be retained.

Policy updates: Data practices change over time. Ensure your privacy policy is updated whenever there are changes in how data is collected, used, or shared. Staying current helps maintain user trust and regulatory compliance.

Build trust from day one with strong data protection

No matter how early you are in your startup journey, it’s never too soon to prioritize data privacy and protection. Setting up a solid data protection program early helps you avoid potential risks and strengthens customer and partner trust. These early investments will pay off as your startup scales.

At Paystack, we’re here to help with any questions about data protection and privacy. Feel free to reach out to me at [email protected]. As Paystack’s Data Protection Officer, I’m available to assist with any follow-up questions related to data protection and privacy for African startups. 💙