This archive report was first published on 14 November 2019.
Kenya's e-commerce sector has made significant strides in recent years, thanks to the falling cost of internet connectivity and the convenience of mobile money payments. However, despite the enactment of the Data Protection law, the sector still faces several challenges that may hinder its growth.
One of the major challenges is the lack of a reliable street address system, which makes it difficult for online outlets to deliver products to homes or offices. This is a major obstacle, as a foreigner once remarked, 'everybody here lives in a Post Office Box'.
Another challenge is the human-centric attitude of Kenyans, who prefer to see, touch, and bargain before making a purchase. This is not to say that a social connection with a shopkeeper is a bad thing, as it builds trust and allows buyers to clarify their purchases.
Additionally, the Data Protection law comes with complex and costly administrative procedures, which may be a barrier to entry for small e-commerce firms. For instance, companies will need to employ a Data Protection Officer who will be responsible for ensuring compliance with the law by conducting frequent security audits, training staff, and offering professional advice.
Despite these challenges, there are opportunities for growth in the e-commerce sector. For instance, the Postal Corporation has facilities countrywide that are underused, and could be leveraged to provide last-mile services for e-commerce companies. The government also needs to address the contentious issue of taxation of e-commerce, implement the National Addressing System, and provide public education and awareness on e-commerce.
Ultimately, the challenge of funding and access to credit is the most critical and challenging to realize, especially for upcoming entrepreneurs. Most financiers would rather lend money to traditional stores they can physically visit, rather than risk their resources in brilliant ideas in the minds of young innovators.
