Business

UN report reveals barriers to e-trade growth in Kenya

Thursday, June 30th, 2022 09:39 | By
United Nations. Photo/Courtesy

A report by United Nations Conference on Trade and Development (Unctad), says Kenya still faces several barriers to growth in the sector despite being an e-commerce leader on the African continent.

“The high cost of transactions and concerns about fraud continue to hamper trust and hinder the use of electronic payments for e-commerce,” the report reads in part.

The report also notes challenges in accessing financing and lack of an e-trade policy are other challenges hindering the growth of e-commerce in the country.

Currently, it costs Sh22 to send Sh1,500 to a registered mobile money user via M-Pesa and Sh28 to withdraw the same amount. Sending the same amount to an unregistered user costs Sh49.

On Airtel Money, sending Sh1,500 to any network costs Sh15 while withdrawing the same amount costs Sh27. The report comes at a time when the country is witnessing increased cases of fraud allegations on both mobile money and online platforms.

Recently, an aspiring Member of County Assembly in Meru County was arraigned in court charged with M-Pesa fraud.

In a different incident, four young men widely believed to be online fraudsters were found murdered in a thicket in Kijabe.  

Several gaps

While several laws have been put in place to curb fraud and facilitate growth of e-commerce, there still remains several gaps relating to e-commerce, the report says.

The laws in place include Kenya Information and Communication Act (amended 2013), Consumer Protection Act of 2012 and the Computer Misuse and Cybercrimes Act of 2018, among others.

According to the Unctad report, the Consumer Protection Act of 2012 needs to be amended to address several gaps relating to e-commerce. Additionally, there is need for increased public sensitisation on these laws for increased compliance.

“There is also a need for improved enforcement of these regulations to stem the cases of fraud, cybercrime, and other issues hindering the growth of e-commerce,” the report says.

Common cases of fraud include misleading advertisements, payment fraud and non-delivery of goods.

The report identifies other factors as lack of an e-commerce strategy to propel growth in e-commerce while an e-Trade policy is yet to be developed.

Likewise, there lacks business and consumer data on e-commerce which is essential in policy formulation for the industry.

Other challenges facing the growth of e-commerce in Kenya include the absence of physical addressing systems, heavy road congestion, and poor road infrastructure in some parts of the country.

Entrepreneurs in the sector also still face a lot of challenges accessing financing for their businesses.

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