East Africa ripe with e-commerce opportunities

There is huge demand for e-commerce facilities in East Africa – but the market is still in its infancy, according to PayGate marketing director Robin Philip.

March 19, 2013

There is huge demand for e-commerce facilities in East Africa – but the market is still in its infancy, according to PayGate marketing director Robin Philip.

“We are very excited about the opportunity to develop strong, mutually rewarding partnerships in the region,” says Philip. “The economy is vibrant, particularly in the IT sector as well as in travel and tourism.”

Much of the demand for e-commerce facilities currently comes from abroad, says Philip – but PayGate believes there is significant latent local demand.

“According to the card associations, there are only 200,000 credit cards in Kenya at the moment, but six million proprietary debit cards that can’t be used for e-commerce,” he says. “The card associations are working hard to bring these on board.”

There are also 16 million MPESA accounts, adds Philip, an indication of the real demand in the system. “MPESA is mainly used for low-value transactions but there’s no reason it needs to stop there. We are piloting MPESA as a payment mechanism for online businesses, particularly for airline tickets, and there is lots of room for growth.”

The key, says Philip, is to establish trust relationships and help local banks and merchants manage e-commerce risks effectively.

“The local banks are very interested, but they are also nervous of the risks after some bad experiences,” says Philip. “They haven’t had the opportunity to develop risk management expertise. This is where joint ventures are particularly valuable. PayGate is in the process of setting up relationships with several East African banks that will enable them to offer e-commerce facilities to their clients, while we manage the risks. We are excited to see where this could lead.”