Kenya has one of the fastest-growing e-commerce ecosystems in Africa that has shown consistent growth over the years. According to Statista, the revenue generated from e-commerce is expected to reach 2 billion by 2024, and 526 Million internet users opt to buy goods via a click of a button. This article will first seek to understand E-commerce and later show the importance of digital currencies in simplifying and popularizing e-commerce in Kenya.
According to Wikipedia, E-commerce (electronic commerce) is buying and selling goods and services or transmitting funds or data over an electronic network, primarily the internet. E-commerce platforms in Kenya are divided into two major parts; Business to Business (B2B) and Business to Customers (B2C). The two are further divided into domestic and cross-border players.
Examples of Business to domestic business vendors include Twiga foods and Sokowatch. The two mostly connect suppliers and vendors, while international players include Alibaba and Ali Express, stock solution providers for informal and cross-border retailers. The business to customer’s domestic market seems to be thriving, with most of its customers in urban areas. Examples of business to customers include; Jumia, Kilimall, and Sky garden. E-commerce is thriving in Kenya as a result of the following factors:
- The government of Kenya has created an environment to foster Ecommerce by licensing more than 39 firms to carry out e-commerce. The companies vary in their service delivery.
- Secondly, in 2020, there were more than 61.41 mobile subscribers in Kenya alone, with a mobile penetration rate growth of 24% in the last four years. The growth of E-commerce in Kenya is expected to triple by 2025.
- There is increased network coverage across the country. Hence more and more, more and more users are expected to use E platforms in rural areas, with platforms such as Copia leading in this area.
- Private logistics companies have partnered with companies offering eCommerce platforms to ensure that goods reach the customers and businesses within the shortest timelines, thus replacing the traditional Posta office services, which are quite inefficient in Kenya.
- Unforeseen forces such as COVID-19 mitigate factors introduced by the government to curb the spread of the disease. It promoted e-commerce with retailers and small businesses introducing delivery services and efficient platforms to ensure that goods reach their customers quickly.
Digital money (or digital currency) refers to any means of payment that exists purely electronically. It should, however, be noted that E-money and digital money are two very different things money in that e-money doesn’t change the value of a fiat while digital currencies do. Examples of digital coins include Bitcoin, XPR and Ethereum, with the most common digital coin in Kenya being Bitcoin. With the Central Bank of Kenya (CBK) in the very advanced stages of researching the importance of CBDC to Kenyans, there is hope in regularising and allowing the use of other digital currencies. With the already existing P2P platforms and POS systems, transactions will be done seamlessly, and transborder transactions will have fewer charges and taxes. In conclusion, digital currencies are expected to further encourage the growth and expansion of e-commerce in Kenya by making payment options seamless and having lower transactional rates.
