Ecommerce Penetration in Kenya: Contribution of Foreign Investment & Impact on the Kenyan Economy

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Internet in Kenya

The steady rise in the number of internet users in Kenya is quite promising; out of the country’s  45 million inhabitants, over 21 million have access to the internet, even though this is less than half of its population (source: http://www.internetworldstats.com/africa.htm#ke) there is bright hope for the future.  For a country whose broadband download speed stands at 7.67 Megabits per second, as of March 2015, and with a fast growing internet-literate citizenry, there is hope that in the foreseeable future, success will be hugely recorded in Kenya’s communication sector especially with the current growth rate of internet penetration in the region.

E-Business in Africa

Kenya has its fair share of the growing e-commerce market in Africa, maybe a not-so-good enough growth but research experts are hopeful that there is a promising future for e-trade on the continent which already boasts of a good number of countries of which Kenya is a part that have tapped into the market and have had both their great gains and losses. The countries include but are not limited to Senegal, Nigeria, South Africa and Ghana.

The huge potential of the e-business market is expected to grow as internet penetration continues to gain widespread attention continent-wide. However, amid the optimisms, there have been major setbacks for online trading from a number of known factors such as high illiteracy rates, lack of confidence in the e-commerce technology, logistics, high costs of Internet data services,  cultural differences, language and currency barriers, cross border charges to mention but a few.

However, as ICT technology advances in Africa, the ecommerce market will continue to grow but will require much time and commitment on the part of the governments of different countries on the continent to make policies that will allow the growth of the sector to be accentuated rather than stifled. The government must have the political will to  invest in technological infrastructure such as improve the bandwidth allocation, invest in broadband networks, build good road networks to ensure delivery of good bought are safely delivered without hitch and delay.

When many Africans witness these improvements, they will be encouraged jump in and embraced online shopping as a better alternative to shopping at malls and supermarkets offline this way, the market will continue to expand and accommodate the growing number of internet users across the region.

Acceptance of E-Commerce in Kenya: Success stories and Challenges

Against the odds, more e-businesses continue to spring up amid a really stiff competition brought on by older players who have saturated the market with different models of online trading such e-commerce ventures such as Bidorbuy, cakes.co.ke, Jumia, Rupu, Kaymu, Ticketsasa, Kopokopo, Kalahar and more.

In the midst of these players, the startups are not really finding business easy but are thriving as much as they can hopeful for a better future. As far as shopping online in Kenya is concerned, there is a general theft scare especially among debit/credit card holders who strongly believe the online marketplace is not secured and have the potential to cost them their hard earned money since the technology is still alien to more than half of the country’s population.

Thus, to gradually build trust among the growing population of e-shoppers, most e-businesses offer the cash on delivery payment option which simply means no Shilling will exchange hands without the delivery of an order in good condition.

The current status of e-commerce will scale up given the right environment, proper education of potential online shoppers and active participation of all including the government of the day. It will be recalled that as at 2010, when online trading gained wide popularity around the world, a sizable number of Kenyans didn’t have access to speedy internet connection even at urban areas of Nairobi, there were only few internet facilities available.

This limited the country’s uptake of e-commerce technology but fast-forward to 2012 down to 2015, the sector has witnessed massive development and its growth is not expected to grind to halt.

Value of the Ecommerce Industry

In a statistics report made available for public consumption by the Kenyan Communications Authority, the country’s e-business was altogether valued at 4.3 billion shillings as of the concluding quarter of 2014 and the players are optimistic of a further surge in the numbers especially with the increasing number of the internet-savvy middle class.

The massive influence and contribution of foreign investment in Kenya aided the economic success of the country since independence and as the economic performance maintains an upward trend, it is expected to witness a further jump in GDP as the years roll by.

The incursion of the well-meaning investors has continuously led to great achievements in all the sectors including e commerce which is a bit slow but steady in growth.  Kenya’s Vision 2030 is currently the blueprint for hopeful bright future of the economic growth of the country.

Influence of Foreign Investors on Economy

As more foreign investors continue to pump investment money into Kenya’s ecommerce sector, the startups will gradually pick up and the economy of the country will incessantly witness upsurges and may even bypass South Africa’s. Already, investors such as communications and media giants, Ringier, Rocket-Internet, Millicom, Safaricom and have investment in Billions of Shillings pumped in to ensure the successful operation of the business in Africa.

Before now, the sector was only crawling not until more investors discovered there is huge market waiting to be tapped in Africa albeit stifled by various factors such as government’s austere policies, inactive participation of the populace, the sector has continued on an upward trend and is very promising to deliver the best in the years to come.

Conclusion

Experts are optimistic that by 2030, the economy of the country will have received global attention and attract more foreign direct investments which in turn should catalyse the rate of development in the market-based economy of the country.

With investment money coming in, it is hoped that the government of the day makes good use of it to build ultramodern ICT technology infrastructures, subsidize internet service charges, educate more Kenyans on the use and benefits of the internet and online shopping as opposed to the conventional way of shopping and even create jobs for budding internet literate entrepreneurs that are also business savvy but lack the financial power to secure shops and furnish them. When prices of broadband access drops and the citizens trust the ecommerce platforms, many will actively participate and the e-business sector will grow the more.

Massive investments will come in for SMEs and the economy of Kenya will not remain the same again as it would then become the envy of all – indeed a case study for African states including Nigeria and South Africa which are touted to have the largest economy in Africa.