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Entrepreneur's Corner

Kenyan Economy Thrives On The Wheels Of E-commerce

BY Juma · January 26, 2021 10:01 am

KEY POINTS

Kenya’s SME sector, which is known to be the key driver of the economy by employing at least 86 percent of Kenyans and contributing at least 45 percent to Kenya’s GDP

The world has changed in terms of the internet. Thanks to the internet, the world is no longer a global village. It is not even a bungalow. We can authoritatively say that thanks to the internet, the world is a bedsitter where everything including the washrooms are within reach. Amazing. Right?

People cannot run away from the evolution of technology, especially the internet. It is like a train that has already left the station. Those still having second thoughts of not being on board risk losing out for good. Once overtaken by the train of the internet, chances of catching up are always minimal.

Covid-19 got the world unaware. It is an event in history that no one was ready for. Institutions did not have strategies in place to respond to the pandemic that was and is stills sweeping across the world. When the pandemic came knocking, businesses in Kenya did not know how to adapt to keep their businesses afloat. Many have ended up reacting towards Covid-19.

The coming of Covid-19 led to thousands of businesses in Kenya shutting down and millions of Kenyans losing their jobs. Stats show that at least 2,000,000 Kenyans were rendered jobless as a result of the pandemic. Before Covid-19, stats from the Kenya National Bureau of Statistics indicated that at least 450,000 small businesses were shutting down annually in Kenya. This translated to at least 30,000 businesses closing shop monthly and 1,000 daily. With Covid-19, the number of businesses exiting the market might even be double.

With Covid-19, and with the stringent measures put in place by the government to contain the pandemic, it was obvious that businesses that relied on customers visiting them physically were on the verge of collapsing. They had to think fast to survive. It was either they adapt to the changes or they die.

One beautiful thing about Covid-19 is that it led to the realization and the adoption of digitization by various businesses and organizations. Several businesses have embraced the virtual ways of working and making investments in terms of virtual infrastructure for online collaboration and transactions.

Kenya’s SME sector, which is known to be the key driver of the economy by employing at least 86 percent of Kenyans and contributing at least 45 percent to Kenya’s GDP, realized that to succeed, it had to shift to E-commerce.

For the first time, there has been a surge in businesses in Kenya moving their operations to online platforms. It was not for businesses alone. Kenyans too realized why E-commerce was the only savior in supplying them with the products and services that they need daily.

Covid-19 has made Kenyans realize that it saves both money time to order a service or a product from an online platform such as Jumia. All one needs is a smartphone or a computer to place an order and the service or product is delivered at their homes or preferred pick-up points. This has made life easy and flexible. Platforms such as Jumia also give buyers a wide range of products and services to choose them with a wide range of prices allowing the buyer to compare prices.

“Home delivery from restaurants & supermarkets is growing fast, as more consumers are choosing to order from home or the office and want to avoid crowds. We have been working hard this year to continue to improve our quality of service. Our average delivery times on Jumia Food are down to 35 minutes today in Kenya, and I expect we will do better by the end of the year,” said Jumia CEO Sam Chappatte during the launch of Kenya Food Index in 2020.

Kenyan businesses have also realized that E-commerce is the only way to go. They have realized that as some of them were busy waiting for buyers physically, buyers were looking for products and services online. Through E-commerce, they can reach more buyers within the shortest time possible, get in touch with customers, get sentiments on time, and address them in real-time.

Touching on the E-commerce sector by slapping it with taxes is like touching the common Mwananchi and conspiring to snatch the little he has after struggling the whole day. The Digital Service Tax (DST) is a threat to the very driver of the economy at a time a pandemic is threatening to wipe them out. What is the use of DST when individual businesses that run the platforms are paying taxes? What is its use when customers are also paying taxes through VAT every time they make a purchase?

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. (020) 528 0222 or Email: info@sokodirectory.com

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