Ministry of Trade director ICT Timothy Were, Gorbachev Co-founder Peter Ndiangui, GiZ digital trade manager Jennifer Chiku and Kenya E-Commerce Alliance CEO Martin Muli, during the launch of the Kenya E-Commerce Alliance /DOUGLAS OKIDDY
Kenya’s vibrant e-commerce sector is banking
on an industry alliance to push policy reforms, remove regulatory
bottlenecks, and unlock opportunities locally and in Africa.
This comes as the sector continues to attract
government attention, with the Kenya Revenue Authority targeting e-commerce
platforms, online stores, and digital content creators with specific taxes like
VAT and the Significant Economic Presence Tax to increase government revenue.
Kenya charges VAT at 16 per cent on taxable goods and digital services.
Local businesses must register for VAT if their annual taxable turnover is Sh5 million or more. For non-resident digital service providers, VAT registration and collection obligations apply upon the first sale to a Kenyan customer.
Significant Economic Presence tax is set at three per cent on gross turnover, applying to foreign digital service providers and non-resident platforms earning income from users in Kenya, having replaced the earlier 1.5 per cent Digital Service Tax.
Resident online sellers, freelancers, and e-commerce enterprises must declare online earnings and pay standard income taxes or corporate tax up to 30 per cent on profits, filing annual returnsted compliance tool designed to streamline electronic invoicing, reduce tax fraud, and improve transparency
The Kenya E-Commerce
Alliance (KECA) launched during the Digital Trade Congress 2026 in Nairobi, bringing together businesses, online marketplaces, logistics providers, payment
companies, technology firms, professional service providers and policymakers, is keen to address sector challenges.
The
formation of the alliance comes at a time when Kenya’s e-commerce market is
estimated at about $2.6 billion, or Sh336.7 billion, making it the
third-largest e-commerce market in Africa.
The sector
is projected to grow to about $3.83 billion (Sh496 billion) by 2029, supported
by rising internet penetration, digital payments and growing adoption of online
shopping.
However,
industry players say the rapid expansion of digital commerce has exposed
challenges around taxation, consumer protection, logistics, payments,
regulation and cross-border trade, threatening to slow the ability of Kenyan enterprises
to fully exploit the growing market.
KECA chief
executive Martin Muli said stronger coordination between the private sector and
government would be critical if Kenya is to turn the expansion of digital trade
into sustainable business and export opportunities.
“Kenya has
built a strong digital foundation, but the next phase is about making it easier
for businesses to trade digitally, across borders and at scale,” said Muli.
“The
Alliance provides a platform for the industry to articulate its challenges and
work with government and other stakeholders on practical solutions.”
The alliance
will focus on industry representation and advocacy, knowledge sharing, capacity
building, market access and strengthening collaboration across the e-commerce
value chain.
The
government has increasingly identified digital trade as an important avenue for
expanding exports, supporting small businesses and improving Kenya’s
competitiveness in regional markets.
Timothy
Were, Director of ICT and Trade at the State Department for Trade, said the
alliance could provide a stronger channel through which businesses participate
in discussions on laws and regulations affecting the digital economy.
“As an
umbrella body for the industry, KECA should take a keen interest in the legal
and regulatory framework being developed by the State by interrogating the
policies and helping identify barriers faced by businesses,” Were said.
He said
closer engagement between policymakers and industry players could help ensure
that regulations are informed by the realities faced by businesses operating in
the digital marketplace.
For small
and medium-sized enterprises, establishing an online shop is only part of the
challenge.
Businesses
must also navigate payment systems, delivery networks, differing regulations
and taxation requirements while building trust among consumers.
These
challenges become even more complex when companies attempt to expand beyond
Kenya into regional and continental markets.
GIZ-Kenya digital
trade manager, Jennifer Chiku, said successful e-commerce markets depended on
strong ecosystems rather than online marketplaces alone, pointing to the need
for efficient digital payments, stronger consumer trust and seamless
cross-border movement of goods.
The launch
also comes as the African Continental Free Trade Area presents new
opportunities for Kenyan businesses to access a wider market through digital
platforms.
But industry
players say unlocking this opportunity will require improvements in payment
interoperability, logistics, trade facilitation, consumer protection and
regulatory coordination.
