Kenya’s adoption of e-Commerce continues to grow. According to Statista, user penetration is above the regional average, with revenues expected to have a positive annual average growth of 16.4% by 2025.
More broadly, there are several factors that fuel e-commerce growth in Kenya. Kenya recently adopted a digital economy blueprint meant to further develop the ICT sector and e-commerce activity. UNCTAD estimates the proportion of Kenyans aged 15 and above with a financial (mobile or bank) account which enables them to transact online was second only to Mauritius, particularly because of the high usage of the mobile money system M-Pesa.
Kenya is the 3rd largest e-commerce market in Africa after South Africa and Nigeria, respectively (UNCTAD, 2022 eTrade Readiness Report).
Assessment of Current Buyer Behavior in Market
Revenue in the e-commerce market in Kenya is projected to reach $900m in 2024, with the number of users expected to reach 12.26 million. The highest level of consumer interest on e-commerce platforms were in clothing, shoes, food, and beverages. The most frequent channels used by consumers for product information included search engines (63%), customer reviews (58%) and social media (51%). The level of consumer interest on e-commerce platforms was highest in clothing, shoes and food and beverage respectively.
Local e-commerce Sales Rules & Regulations:
Through enactment of the Kenya Communications (Amendment) Act of 2008, Kenya effectively adopted the United Nations Model Law on Electronic Commerce of 1996. The highlights of the law include the promotion of e-government and e-commerce by increasing public confidence in electronic transactions; legal recognition of electronic records and electronic (digital) signatures; imposition of new offenses with respect to cybercrimes involving electronic records and transactions, and the use of computing and telecommunications equipment; and clarification of legal uncertainties about the admissibility of electronic records as evidence in court proceedings.
Online trade platforms in Kenya have traditionally not been 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.
Kenya’s regulatory environment changed in June 2020 when then-President Kenyatta assented to the Finance Act 2020, which included the introduction of a Digital Service Tax (see section on Leading Sectors, Information Communication and Technology).
Additional challenges for companies interested in e-commerce include logistics and infrastructure, physical addressing, cost of technology, as well as cybersecurity. Currently, many African countries, including Kenya, have very poor fraud detection and prevention mechanisms. In many cases, this makes it difficult to build trust within African online marketplaces, resulting in a delay in e-commerce adoption.
Local e-Commerce Business Service Provider Ecosystem:
The growth of e-commerce is highlighted by the number and size of new players in the market. Kenya’s largest telco, Safaricom, launched “Masoko,” an e-commerce platform, joining other dominant players in the market such as NYSE listed Jumia, Jiji, Glovo, and U.S-affiliated Copia, which provide e-commerce solutions for low-income consumers. Growth in hospitality also led to the entry of platforms such as Uber Eats. The growth in e-commerce has been further fueled by strong growth in social media adoption as well as increased diversification of marketing channels. Pursuant to CAP 411A of the Laws of Kenya, the Communications Authority is the primary government agency mandated with e-commerce industry development in Kenya.