Unlike many nations that have switched predominantly to e-commerce, Kenya still continues to have a large informal sector. According to the International Monetary Fund, this sector contributed to almost 65% of the entire gamut of commercial activity in the nation, in 2017. However, here’s the catch. The nation has more than 300 million smartphones, and with a robust infrastructure and regulation process, it can leapfrog towards a future that’s brimming with online transactions.
On the business front though, the scenario has pleasantly been changing. More small and medium-sized enterprises have been taking the jump and putting their trust in “online”. This certainly has been steadily put into action by the Kenya Communications (Amendment) Act of 2008. This is based on the Model Law on Electronic Commerce of 1996 by the United Nations. This act made it possible for the nation to look at e-commerce and e-governance more seriously, with more focus on cybercrimes.
So, what we’re talking of here is really a situation rife with possibility. And the national context of everything internet-related points to just that. For example, Safaricom reported that in 2017, the average internet user in the country was about 270 MB, apparently a 58% hike from the year before. In the same year, the speed of the Internet was an average of 12.2 Mbps, which was higher than the global average of 7.2 Mbps.
One can see that what we’re trying to touch upon here is a hotbed of opportunities, as the nation sees more and more companies coming to the forefront to innovate and disrupt. Here’s a look at the largest fintech companies and how they are ushering in a whole new dimension for e-commerce in Kenya.
Pushing the e-commerce agenda every single day is Finserve Africa, a subsidiary of the Equity Bank, which finds a presence across 6 nations in East Africa. Launched in 2014, Finserve backed the bank upon innovations such as Eazzypay and Equitel, lifting the bar on transactions and making them infinitely easier. Finserve is known to have backed many firsts including Equitel, which is considered to be the nation’s first mobile virtual network operator. Using their SIM card, Equitel customers are able to send money to all existing mobile wallets. Finserve also launched Kenya’s first every keyboard app, mKey in 2018. The app comes with its own keyboard, which can then replace a phone’s original uni-functional keyboard. mKey really looks at integrating the banking experience along with navigable tools. The app comes with its own emojis that have been created specifically for the Kenyan cultural context! Finserve is also the creator of the Jenga payment gateway, which enables payments from across 180 countries and revolutionizes e-commerce in Kenya.
Launched in 2019, Ontrack brings a scientific approach to e-commerce in Kenya and attempts to solve logistical issues. In a context that’s both chaotic and has space for improvements, Ontrack focuses on both B2B as well as B2C customers. Ontrack looks at being asset-light in a way that delivery partners can work alongside, reducing the need for customers to have their own fleet. Ontrack predominantly works as a technology platform that looks at choosing its delivery partners carefully and then offering them equipment, training, and finance, so that they can do their best to serve the customer’s business.
Long gone are the days of physical banks, and mobile lending is entering the Kenyan market in a big way. In a country like Kenya, where a majority of people still don’t have physical bank accounts, the importance of mobile money then is manifold. And Branch International seems to have tapped into that growing space by creating a system that checks creditworthiness simply by analyzing phone data, which includes call logs, GPS data, texts, and contact lists. In the African market, it creates loans from anywhere between $2 and $700. In Kenya, Branch charges an interest rate of about 14%. With a recent partnership with Visa, Branch has also moved into offering preferential loans to African merchants that accept Visa on their mobile. These are significant steps given that the Doing Business 2019 Report by the World Bank, clearly mentions getting credit as the second-most challenging problem to run a business in the sub-Saharan markets.
While there’s still a long way to go for Kenya to match up to other world players, statistics are positively showing that there’s steady growth in this direction. In one of its quarterly reports in 2017, the Communications Authority of Kenya reported that while the GDP was growing at 5% every year, the use of mobile money transactions was, in fact, growing at 5% every quarter – a sign of times to come.