Kenya: Why Internet Use Is Yet to Spark Online Business
By James Kariuki
Kenyans’ love for ‘net-on-the-go’ has registered the highest internet connections in Africa.
However this is yet to translate into a vibrant online business, a report has shown.
In its latest survey now on sale, Germany’s Hamburg-based business intelligence organisation yStats.com says, “Kenya is Africa’s leader in all aspects of mobile: Mobile connections account for almost all of Internet subscriptions in the country.”
Middle-aged and young people are the most users of internet to update status and communicate with friends and ‘strangers’ all the time wherever they are.
Subjects that hog the most attention range from politics to social issues.
The report notes that this is yet to translate into a vibrant commercial enterprise due to the mobile phone-based payment services that registered double-digit growth in 2014.
Safaricom’s M-Pesa has set the pace monopolising cashless transactions.
This, the report says, has forced banks to sign deals with telcos to enable their (lenders’) customers to access their accounts and even loans through mobile phones.
These agreements are mainly attributed to the fact that banks have felt the heat from mobile platforms, resulting in a decline in their profits.
An increasing number of Kenyans now pay for various services and goods directly from their mobile phones unlike in the past when cashless transactions were conducted using credit and debit cards.
Consumers can now also pay for utilities such as water, electricity and TV subscription fees using mobile phones.
Cashless system is also being used at various points such as petrol stations and massage parlours.
Besides, consumers are increasingly using mobile services to pay for goods at the till.
Kenya is ranked at par with Nigeria in mobile shopping penetration but the former’s position on business to customer (B2C) online-based transactions remain low.
The report says that B2C e-commerce is expected to expand in Kenya and other African countries mainly due to widespread uptake of smartphones that have contributed immensely to internet penetration.
Improving infrastructure, especially the rise in mobile connectivity, is the main driver for online shopping.
Online-based shopping platform, Jumia opened in Kenya to a good start but it uses mobile payment platform.
E-commerce, the report says is at its infancy stage because of weak logistical structures and limited cashless payment infrastructure thanks to low internet penetration.
While the report laments that low incomes and high poverty rates have hindered the uptake of online shopping in Kenya, recent signs of economic improvements have led to forecasts of increased B2C E-Commerce sales in the near future.
It is expected that online transactions will grow rapidly in the next three years driven by symbiotic relationship between the mobile-based pay platform and the e-commerce.
South Africa and Nigeria lead the continent in online commerce with merchants such as Jumia and Konga running successful businesses.
US-based PayPal has also joined the fray in Nigeria and the international competition for customers is expected to get stiffer.
“South Africa is significantly ahead of all other countries on the continent by such important infrastructure indicators as Internet, smartphone and payment card penetration but it is has experienced a declining share of online spending on foreign websites due to fear of hidden charges and the convenience of buying from local merchants,” the report observed.
This has seen its two major online-based B2C players, Kalahari.com and Takealot.com join forces in an unprecedented merger to counter increasing competition from local and international entrants like Amazon.com.
The report says Morocco and Egypt are Africa’s most advanced markets in Internet penetration.
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