Kenya’s electronic commerce market is primed for major growth in the next five years as mobile internet performance continues to improve, a proposed national addressing system comes into existence, and people become more comfortable with digital transactions.
That’s according to Dr. Rutendo Hwindingwi, divisional director for Sage East and West Africa, who says that Kenya’s enthusiastic adoption of person-to-person mobile payments creates a solid base for the growth of mobile and electronic commerce. “We’re seeing more and more Kenyans go online, thanks to cheaper smartphones and mobile data,” he adds. “Combine that with Kenyans’ comfort with electronic transactions after years of using mobile data, and we can expect to see digital shopping and commerce really start to take off.”
According to the Communications Authority of Kenya, the e-commerce market in Kenya was worth around Ksh.4.3 billion in 2014. But with internet penetration of 82.6% and 35.5 million users (according to the authority), Kenya is one of the African countries best placed for a digital commerce explosion, says Dr. Hwindingwi. Sh3billion in mobile transactions already take place in the country each day, according to statistics from the Communications Authority.
Dr. Hwindingwi says that most digital transactions in Kenya will take place via smartphones and mobile broadband because of low fixed-line and PC penetration. However, the mobile experience has improved dramatically in recent years and it has become simple and enjoyable to shop from a smartphone. With mobile money providers like M-PESA now adding APIs for smartphones to their products, they are opening up a range of new m-commerce applications and services.
“This is particularly significant given the low penetration of credit and debit cards in Kenya – a factor that has inhibited e-commerce. Kenyans excluded from the formal banking system have lacked safe, easy and convenient ways to pay and be paid,” he says. “We hope to see mobile wallet solutions come to market that make it easy for customers to make digital payments.”
Another significant factor is the Communications Authority of Kenya’s commitment to creating a robust national address system in the short to medium term. Up until now, the lack of an efficient address system has made it difficult for couriers to deliver goods bought online to their customers’ hands.
Kick-starting e-commerce ventures
Dr. Hwindingwi says that Small & Medium Businesses are as able to take advantage of the digital commerce wave as larger businesses. Platforms such as Facebook make it easy for entrepreneurs to interact with customers, while affordable, packaged offerings like Sage Online Tools make it easy to construct and launch a marketing and mobile-ready e-commerce site.
What’s more, mobile functionality on iOS, Android and Windows smartphones for Sage solutions can empower Small & Medium Businesses to mobilise their business processes. These mobile applications put customer and employee information in the palm of a sales representatives’ hand and enable him or her to take customer facing processes truly mobile – anytime, anywhere.
For example, visualise being able to immediately check stock levels while standing next to a customer who found the business online, from a mobile device, then placing an order, running an invoice and accepting a payment – with all of these functions happening simultaneously via the cloud to sync with the accounting package.
“The future is mobile and at Sage we are giving our customers the power to grow and manage their businesses from the palm of their hand. Consumers are mobile ready and want to use convenient mobile services to pay and interact with the companies they do business with,” says Dr. Hwindingwi. “Given the incredibly high mobile readiness of Kenyans, e-commerce and m-commerce are bound to grow in leaps and bounds in the next few years.”
Kenya Plans New Bill to Reign in On Internet Firms
Kenya's Information minister is working on a bill that will bring over the top services such as Whatsapp and Facebook under regulation amidst complains by telecom operators over unfair playing field.
ICT secretary Joe Mucheru said the new National ICT Sector Policy Guidelines will also dictate the practices within which mobile virtual network service operators (MVNO) such as Equitel will operate.
Locally, telecom firms have complained of Facebook, WhatsApp and Viber eating into their revenues despite not being subjected to local taxes. The telcos also say that OTTs do not have infrastructure locally yet they compete unfairly by offering same voice and text services.
In setting up the new plan, three working groups at the ministry will oversee infrastructure issues, new emerging issues as well as applications and content.
"We want the final draft complete by June, the policy should be up and running by early next year," said Mr Mucheru at a briefing Thursday, "we are taking into account rapid industry changes as we meet performance target obligation of the ministry of reviewing the National ICT Sector Policy Guidelines of 2006 as per the ministry's 2014/2015 performance contract."
The review if successful will see Kenya make history among global nations as it finally settles on regulating OTT players, a topic that has been controversial.
The entry of US video streaming service Netflix as well as US online taxi firm Uber, saw controversies stalk regulators as existing players demanded a fair playing field. Mucheru said that these firms will be clustered within three sectors for ease of regulations and effective operations.
"We are currently having court cases that do not make sense, the new policies will ensure that such cases are avoided," said Mucheru, "For instance how do we punish OTT players when they are here for business, which is good for us?"
In state governance, the policy will dictate a central office controlling all ICT functions. This was earlier proposed but has been tough to implement.
The government now training at least 400 fresh ICT graduates annually to ensure that they bring in new expertise in state agencies and ministries, for efficiency and cost cutting.
High-Speed Fibre Cable to Connect Kenya, S.Sudan
Kenya and South Sudan will be connected to a high-speed fibre optic cable within the next two years enhancing communication and inter-border trade.
The two governments are implementing the optic fibre cable system as part of the Eastern Africa Regional Transport, Trade and Development Facilitation Project.
The project will also build a road linking the two countries from Eldoret to Lodwar and Juba and a common border post built at the interconnection of the two countries.
"As you are all aware, roads and information superhighways are two of the most effective means of realising accelerated development of any modern economy. Today we are witnessing the implementation of both at the same time in this region," Shared Services Director at the ICT Authority Robert Mugo said during the project commissioning in Lodwar town, Turkana to inaugurate the project on the ground.
South Sudan will similarly extend the cable from the Kenya-South Sudan border to Juba.
The ICT Authority is implementing the Kenyan-side of the project through a World Bank fund estimated at a cost of Sh2.6billion, while the Sudan side is estimated to cost Sh1.5bilion.
The road construction between Lokichar and Nedapal is worth Sh52.5billion and will be funded by the World Bank.
The full cost of the road construction from Eldoret to Sudan border is an estimated $1.2 million dollars. The real construction work will start in May 2016 and will be completed in February 2019.
Once completed, the two countries are set to benefit from fast movement of goods and people and enhanced internet connectivity.
The connectivity will be used by towns and facilities along the corridor including schools, hospitals, government offices and telecommunications operators.
"This development will increase inter-border trade between Kenya and South Sudan as well as link Turkana County to the rest of Kenya. We see the prices of commodities coming down," said Turkana County Governor Josphat Nanok.
Kenya through the Ministry of ICT has already entered into an MoU with South Sudan through the Ministry of Telecommunications and Postal Services on January 23, 2015 in relation to the construction of the fibre optic cable that will interconnect both countries.