Kenyan economy to benefit from e-transaction law

Kenya's ICT industry will contribute to at least one percent of economic growth if Parliament enacts proposed e-transaction legislation, said Marcel Werner, chairman of the Kenya ICT Federation.

If enacted, the bill will boost businesses, guarantee an open market, promote innovation and contribute to overall economic growth in the next five years, he said.

The ministry of planning has projected an economic growth of six percent this year, one percent lower than last year due to disruptions caused by post election violence.

As an economic leader in Eastern Africa, Kenya lags behind in implementing a legal framework for e-commerce, which is harming the country's global competitiveness, Werner said.

The e-transaction bill is pending in Parliament and is not listed for discussion soon, given that political debates take precedence in Kenya.

While the private sector supports the bill, Werner said that legislation is needed to legalize e-commerce transactions by recognizing an electronic signature, manage and control e-commerce risks, and remove e-commerce barriers that Kenyans experience while transacting with businesses abroad.

For instance, most third-party online merchants such as PayPal do not issue online payment accounts to a Kenyan address directly, and those who do charge exorbitant fees, making it hard for Kenyans to open online merchant accounts and receive payments outside of banks.

The bill will be subjected to further scrutiny and additions by the private sector in case the drafting team has not covered all issues, said Bitange Ndemo, permanent secretary in the Ministry of Information and Communication.

The ministry has three additional bills pending in Parliament: the ICT bill, the media bill and the freedom of information bill. The ICT bill was tabled last year and is awaiting further discussions.

The ICT federation held public panels to discuss the e-transaction bill and other ICT-related bills pending in Parliament and has found that provisions on who can prosecute offenders are missing. Moreover, the liability of ISPs (Internet service providers) has not been clearly demarcated.

"We need clarification on which commercial documents are excluded from proposed legislation and eliminate any ambiguity on admissibility of electronic evidence," said Werner.

The ICT industry has expressed concern over lack of data protection and privacy provisions and the leniency on e-commerce fraud under the criminal procedure code.

"Sectors such as the tourism industry are expressing their desire for e-commerce to be covered by law," Werner said. "In tourism, online travel bookings have exceeded 80 percent in the USA and 50 percent in Europe. Destinations that cannot legally support abundant online booking, such as Kenya, will loose market share."

E-commerce is expected to have a great impact on Kenya's agricultural sector, most notably in the coffee industry, where farmers are allowed to sell coffee directly abroad. Formerly, sales could only be made through the Coffee Board of Kenya.