As Kenya’s online retail sector pushes toward KSh 500bn, trade leaders warn that regional policy fragmentation is leaving merchants vulnerable.
By Our Reporter
Kenya’s digital economy presents a stark, febrile paradox. Internet penetration across the republic has surged, yet online commercial transactions remain oddly tepid. Projections from the Ministry of Information, Communications and the Digital Economy indicate the national e-commerce market will reach KSh. 500bn Kenyan shillings by 2027. That growth, however, remains hostage to rampant online fraud that continues to gouge consumer confidence.
According to a 2025 Visa Stay Secure study, 71% of Kenyan consumers have encountered digital fraud—the highest exposure rate recorded in Sub-Saharan Africa. Further data from TransUnion reveals that third-party seller scams represent 39% of all digital fraud cases in the country, with victims suffering a median financial loss of KSh 108,132. The vulnerability of the marketplace is not merely a technical glitch; it threatens to stall the country’s macro-economic transition toward a fully digitized domestic market.
Industry leaders are now demanding systemic intervention to prevent bad actors from capping East Africa’s digital expansion.
Speaking on the challenges confronting digital merchants, Martin Mully, Chief Executive Officer of the Kenya E-Commerce Alliance, emphasised that consumer-facing fraud is only half the conundrum.
“Apart from what comes from the consumer, there are also a few frontline retailers that would like to scam the public or the consumers,” Mr Mully noted.
“So what retailers have been complaining about is the frontline retailers, and the question is how do we deal with them, and that’s what we are calling standardisation.”
To address this structural vulnerability, the Alliance is advocating for the formal incorporation of merchant certification mechanisms into Kenya’s National E-Commerce Strategy—a framework currently being aligned with the East African Community (EAC) e-commerce rules and the African Continental Free Trade Area (AfCFTA) digital protocols.
“We want to make sure that anyone who has a business that is not involved in fraud are also protected and are also get certified through a standardization tool that we’re going to introduce in the market,” Mr Mully explained.
Beyond domestic merchant vetting, industry stakeholders are pressing regional governments for the harmonization of digital policies across the EAC. Proponents argue that unified regulatory frameworks are essential for seamless cross-border commerce, enabling small enterprises to scale without friction.
Kenya has positioned mobile money platforms—principally Safaricom’s M-Pesa, which processes billions of transactions annually—as the core engine of this digital shift. Yet cross-border interoperability between sovereign payment systems across East Africa remains fragmented.
“If they integrated digitally, you don’t even have to move from where you are to go and make a payment,” Mr Mully said.
“M-Pesa phones is a very good example, or just clicking on the screen and making the payment to access the goods you want right from home”
He pointed to informal social commerce as evidence of latent regional demand. “A small team in Uganda is currently trading through Instagram and WhatsApp Business, and just by an avenue just like that, they have opportunity to trade across borders to as far as even South Africa,” he added.
Whether policy harmonisation can keep pace with informal digital enterprise remains the figure investors are betting on.
