This archive report was first published on 4 December 2019.
On December 5, the world commemorates the World Competition Day to underscore the importance of effective competition to the economy. This year's theme, 'ensuring effective competition in an increasingly online world,' resonates well in Kenya, where the digital economy has experienced unprecedented growth.
Online markets, or e-tailers, have increasingly substituted traditional retailers who operate from physical locations. According to the World Bank Group, the ICT sector accounts for 17 percent of GDP growth in developing countries. In Kenya, the Economic Survey of 2019 shows that the value of the country's ICT sector expanded by about 13 percent from Sh345.6 billion in 2017 to Sh390.2 billion in 2018.
As more economic activities shift online, regulatory agencies face a crossroads: whether to regulate or not, and if so, how far is too far? The Competition Authority of Kenya has reviewed its Market Definition Guidelines to capture emerging trends and support the growth of Kenya's digital economy.
While regulations should be pro-innovation, pro-digital markets, and pro-growth, there is a need to secure the rights of all stakeholders in the digital space, both innovators and consumers. This requires a delicate balance between promoting competition and innovation, and protecting consumers from potential harm.
By enforcing effective competition in online markets, Kenya can attract national and foreign direct investment, boost economic growth, and reduce poverty. It is essential to ensure that big firms are not entrenched in a market, and that new entrants have a fair chance to compete.
