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The Development of E-commerce in Kenya

Introduction

The Kenyan Government through the Communications Authority of Kenya (CA) is committed to facilitate the development of the information and communications sector (including broadcasting, multimedia, telecommunications and postal services) and electronic commerce. Pursuant to CAP 411A of the laws of Kenya, the government is committed to facilitating the growth of electronic commerce (e-commerce) in the country.

Definition of Electronic Commerce

Electronic commerce or e-commerce is the trading or facilitation of trading in products or services using computer networks, such as the Internet among others. E-commerce may be categorized as either domestic, when it takes place within a country’s borders, or cross-border, when it occurs across international borders. The keyword here is “trade”.

Simply put, the government’s intention is to make it easier for Kenyans to engage in online trade, locally or internationally.

Government Ministries Involved

Which government ministries have an interest in the growth of trade in Kenya? It could be argued all of them but the ministries with a direct stake are the ministries of: Information and Communications Technology, Industrialization; Devolution; Foreign Affairs and International Trade; Tourism; East African Community; Labor & Social Protection; Mining and Health. Each of these ministries is a stakeholder in matters of trade and all need to work together where interests overlap. One such area of overlap is e-commerce.

 

Background

E-commerce in Kenya is more common than most of us are aware. A joint 2016 National ICT Survey between the Authority and the Kenya National Bureau of Statistics (KNBS) National ICT Survey established that 39% of private enterprises are engaged in e-commerce. Though the survey focused only on private enterprises and did not take into account households, for the first time it was possible to determine e-commerce penetration levels at the national level.

The Internet is the e-commerce market place. Buyers and sellers meet, and goods and services are exchanged. Payment for purchases may be made online or separately through the mobile money or banking networks which also rely on electronic data networks. Therefore without the facilitation of an efficient Internet and data network, e-commerce would not exist.

For a long time now, the Authority has been facilitating the growth of e-commerce. E-commerce penetration would not be where it was today were it not for a stable telecommunications licensing environment where multiple data carriers offer services at relatively competitive rates leading to widespread access to Internet.

Potential for E-commerce

A majority of Kenyans could potentially engage in e-commerce depending on of a number of factors such as purchasing power, availability of suitable products online, awareness of available opportunities, levels of literacy and degree of confidence in online trade platforms.

Unfortunately, no data currently exists indicating, which factors are impeding the growth of e-commerce and to what extent each of these factors is acting as a hindrance. It therefore becomes extremely difficult to try and develop policies on promoting e-commerce growth yet basic consumer data does not exist e.g. should the country’s focus be on domestic e-commerce or should it be on international e-commerce, which could generate foreign exchange.

It is also not easy for Kenyans to readily engage in online buying and selling. Unlike in some countries where consumer buying and selling rights on the Internet are explicitly protected, Kenya has not enacted laws to offer this sort of protection. In Kenya, online trade platforms are not regulated under the Kenya Information and Communications Act (KICA) as they do not constitute electronic services as envisaged under the act and are therefore not licensable. This means consumers cannot enjoy protection under the Consumer Protection Regulations, 2010, which apply in instances where the Authority’s licensees offer services.

However, in other jurisdictions like the United Kingdom, specific regulations exist to protect consumers when engaging in online transactions. These regulations, which were operationalized under the UK Department for Business, Energy and Industrial Strategy, are the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations, 2013. Such regulations also need to be enacted in Kenya to build consumer confidence in online transactions leading to further development of e-commerce.

In Kenya so far, KICA has elaborately provided for the development of online payment platforms through the protection accorded to consumers in Part VI (A) of the Act which deals with electronic transactions and cyber security. The Sections under Part VI (A) comprehensively provide for a secure environment where consumers can comfortably engage in making online payments whilst knowing they are protected by the law. One of the ways this is apparent is the online payment of taxes, which has greatly eased cross border trade. The Kenya Revenue Authority, which track payment of taxes and the entry and movement of transit goods has deployed computer systems across the country. This leads to revenue assurance as well as making it easier to do business with neighboring countries.

The Authority has also concentrated a lot of effort in putting in place protective mechanisms for the courier industry, which is responsible for delivery of items purchased, online. E-commerce guidelines for courier operators are in place and these seek to ensure high levels of professionalism when conveying customer items. These guidelines call for couriers to implement processes and procedures for adequate security of consumer packages as well as the implementation of track and trace services of couriered items.

Already great strides have been covered in the establishment of a National Addressing System (NAS) for the country. The Authority has taken the initiative to spearhead the work in this area by creating and funding a task force to deliver on the NAS. A well-designed NAS will lead to growth and adoption of e-commerce by making it easier for deliveries to be made directly to consumers.

In terms of building capacity, the Authority’s efforts in funding broadband connectivity to public secondary schools will have an impact on improving literacy levels and exposing a greater proportion of the population to the concept of trading on the Internet. This program should therefore be encouraged due to its long-term benefits.

Global Efforts on E-commerce

On the global front, the Universal Postal Union (UPU) has introduced the concept of e-commerce hubs where the public postal operator in certain countries is charged with the responsibility of establishing a facility to serve as a regional clearinghouse for international packages. The facility comprises a warehouse, sorting and dispatch center as well as customs services. The distribution of packages is then done through the public postal operators’ network. Projects on e-commerce hubs have been initiated in South Africa to serve the Southern African region, as well as Tunisia to serve the North African region. The UPU has initiated discussions with Kenya on establishing an East African hub and further engagement is needed at national as well as regional levels to determine the appropriateness of the concept for the region.

 

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