E-commerce powers growth of Kenya’s IT security market

In May of this year, Martin Muckle’s ducks lined up in a row.

He completed the design of his website — airtime.co.ke —that would allow users to buy airtime credit from any of Kenya’s mobile providers at discount rates through an online portal.

“Airtime.co.ke is a site that illustrates how e-commerce can be done better than “live” commerce. It is cheaper, faster, and more convenient than offline methods of buying airtime,” said the website developer.

“I’m banking on the fact that the convenience of not having to battle across town through increasing traffic, find parking, pay for it, then battle all the way back again just to make a simple purchase will increasingly tempt Kenyans into making online purchases,” he said.

After years of relying on foreign service providers, Mr Muckle finally had access to a local payment system when I&M got the rights from VISA to establish the first such platform in Kenya.

Using the platform, people can buy and sell thins online, pay for the goods through cashless methods, such as credit cards, whose numbers they input in the website in return for goods and services.

Electronic commerce (e-commerce) is currently estimated to be worth Sh9.6 billion, most consumers who participate in e-commerce buy telecom products, which make up 45 per cent of the transactions processed through electronic trades.

The tourism sector accounts for 38 per cent of e-commerce transactions, while services and retail goods contribute to 10 and 7 per cent respectively.

While the arrival of several international fibre links in the last 12 months resolved the connectivity bottleneck, e-commerce required a reliable financial settlements system.

This is where Arun Mathur, the CEO of I&M Bank, saw opportunity and decided to push his team to develop a portal that would allow the bank to become an active participant in the Sh9.6 billion dollar industry.

“This is the future for banks. Technology is providing the bridge to new business opportunities for financial institutions. The days of brick and mortar establishments are nearing their end and we must change,” said Mr Mathur.

In January this year, I&M launched a payment channel that would allow it to tap into a global commercial activity that was bypassing local banks and companies.

I&M’s e-payment portal aimed to localise the online payments system by providing Kenyan firms with a local gateway to receive money from any corner of the world.

Besides raising the cost of online transactions, the use of offshore gateways had meant local businesses could not immediately receive the cash, making them incur heavy losses in the event of exchange rate fluctuations.