An Exploratory Study on E-commerce, Digital Payments and Digital Remittances in Nairobi

10th October 2013

Prepared by:

Leonida Mutuku



Afrikoin is a flagship conference on digital currency and payments in Africa with the aim of bringing to light and tackling the real challenges surrounding digital currency and payments in Africa, while providing a rewarding learning experience for anyone new to the space. The conference, which will be held on 20th November 2013, targets practitioners, innovators and entrepreneurs in the industry with an aim to push forward practical innovation in digital currency and payments. Thematic issues that will be addressed at Afrikoin include gaps and broad opportunities in the digital money space in the nascent African market such as: identifying payment aggregators, technical considerations for digital payments and regulation policies. Afrikoin will also double up as a demo day for Savannah Fund e-commerce focused investments.

Problem Statement

One key component to digital money is an understanding of the African online consumer, their preferences and habits when it comes to e-commerce, digital money transfers and remittances. This is in order for players in the space to effectively anticipate their needs and capitalize on the growing population of African online consumers. Little research has been done in Africa that distinctly brings to light this growing populace, their characteristics and needs, and how different stakeholders in the e-commerce/digital money space are engaging online consumers.

Further, there is a need to landscape the e-commerce market in general in Africa, with a focus on the existing trends in e-commerce and digital payments, various actors and stakeholders, the macro-factors affecting adoption of e-commerce and digital payments, and the potential for the market to grow. Currently, new and existing players in Africa are struggling to identify the current dynamics of e-commerce and digital payments, and ultimately how to acquire and retain customers.

Research Objectives

iHub Research together with Savannah Fund is conducting research to understand the e-commerce landscape in Kenya, particularly Nairobi. The main objectives of this research include:

  1. Understanding the viability of e-commerce, the key elements and current trends that comprise the e-commerce landscape in Nairobi using the framework for e-commerce research – Consumers; Products; Existing Channels; Businesses and Payment Options;
  2. Reviewing the legal frameworks and policies governing E-commerce and Digital payments/remittances;
  3. Identifying challenges and/or barriers to a robust e-commerce market in Kenya.

Key questions this research aims to answer include:

Future iterations will scale this research to other key African markets.

Suggested Research Methodology

This research will be conducted in Nairobi and will use a mixed methods approach as outlined below:

Short Literature Review:

Online desk research will be conducted to study any existing literature on e-commerce and digital payments in Africa, and particularly in Kenya. This will provide background knowledge on definitions of e-commerce and digital payments and the different scenarios in which they take place; consumer profiles and behaviors; existing legal frameworks governing e-commerce; and prevailing challenges and barriers to growth of e-commerce in the region.

Exploratory Quantitative Survey:

 A short survey will be conducted with both e-commerce and digital currency users and non-users. This survey aims to understand consumers’ and non-users’ perceptions to e-commerce and digital payments, current trends in purchases and payments of goods and services using digital channels and any challenges faced when conducting such transactions.

Initially, this survey will be deployed as an online questionnaire targetting 150 users and 75 non-users of digital currency, payments and e-commerce services. The research team will use BiNu market research tool to deploy this online survey, which will be live for a period of three weeks. Additionally, the research team will partner with popular e-commerce sites to post links to the survey on their sites in order to ensure that the target sample sizes are fulfilled. It is intended that this survey will reach an equal number of male and female respondents.

Finally, to ensure that the sampling targets are achieved, we will code the questionnaires on to tablets and hold face-to-face interviews with at least 20% of the required sample target.

In-Depth Interviews:

In-depth interviews will be conducted with at least one representative from a regulatory agency as a follow up to findings from the literature review on existing regulatory frameworks for e-commerce and digital payments/currency. Similar interviews will be held with at least 10 founders of e-commerce and digital payments companies and startups to understand further the business side of e-commerce transactions, and payments and the various challenges faced in delivering such services. An additional two interviews will be held with traditional commerce merchants already using digital payments such as the Uchumi and Chandarana supermarkets.

A team of researchers from both Savannah Fund and iHub Research will conduct this study. Data collected in this research will be aggregated and analyzed and key findings highlighted in a report. This report will also include findings identified in the research such as various existing models of e-commerce in Nairobi presented in graphical formats. Further, the research findings will be disseminated through an infographics and in a PowerPoint presentation format at the Afrikoin conference.

Research Activities



Finalizing Research Instruments -questionnaires; Coding to the tablets; Finalizing Engagement with BiNu

October 14th – 18th 

Literature Review

October 15-31st 

Online Survey

October 20th – November 5th 

Physical Survey

October 28th – November 1st 

In-depth interviews

October 22nd – November 1st 

Analysis and Report Writing; Building infographics; Peer Review w/ Tonny Omwansa

November 1st – November 14th

Presentation of Findings

November 15th and 20th

Appendix A: Recruitment Screener

Screener Questions:

  1. Gender
  2. Occupation
  3. Age
            36 and above

Appendix B: Interview Scripts

Users of E-commerce

  1. Have you ever bought anything online?
            No. If not why?
  2. When was the last time you purchased anything online?
            This week
            This Month
            This Year
            Last couple of years
  3. What goods/services have you ever purchased online?
  4. Where did you find this item/service? (offline or online location)
  5. How did you pay for the services or goods?
            Digitally (Mobile Money, Credit/Debit Card, Bank Transfer)
  6. How did you receive the services or goods?
            Physically (Store Pick Up/In person collection)
            Mailed to me/Delivered
    (Can put question 3-6  in a table format e.g.)

Good/Services Purchased

Where did you find this item/service?

How did you make payment?

How received the service

A dress





Digital - credit card



Facebook Page- Jewels by Angeline

Digitally - M-pesa


  1. Which is your favorite/most preferred/commonly visited online store/ ecommerce site? Why?
  2. Which goods/services do you prefer to purchase online/ via a digital platform? Why?
            Electronics and electronic accessories (phone or computer cases)
            Event tickets/Vouchers/Gift cards
            Cars/Trucks etc
  3. Which mode of payment do you prefer for e-commerce purchases/transactions?
            Mobile Money
            Credit/Debit Card
            Bank Transfer


  1. From what device do you commonly access these sites?
            Mobile phone
            Desktop Computer
  2. How often do you do an e-commerce transaction?
            Once a month
            Once a year
            Once in a lifetime
  3. What is your general experience when conducting an e-commerce transaction (1 very disappointed, 5 very satisfied?) (Insert likert scale)
  4. Have you ever experienced any challenges conducting an online/ digital transaction? Kindly describe which?
  5. Which service/good do you wish you could obtain using a digital/e-commerce platform but currently can’t access?
            Electronics and electronic accessories (phone or computer cases)
            Event tickets/Vouchers/Gift cards
            Cars/Trucks etc

  1. What is your general experience in dealing with e-commerce transactions (1 very disappointed, 5 very satisfied?).


For Non-Users

Business Owners

  1. Business Name
  2. What goods/services do you provide?
            Electronics and electronic accessories (phone or computer cases)
            Event tickets/Vouchers/Gift cards
            Cars/Trucks etc
  3. Where is your business located? (City or Town)
  4. Are you based in-store or online?
  5. What payment options do you offer your customers? For each option, explain why? (you can select more than one)
            Cash. Why?
            Mobile Money. Why?
            Credit/Debit Card, Why?
            Bank Transfer, Why
            Other, Why
  6. Which payment option is the most popular? (Rank according to popularity 1- most popular, 5 least popular)
            Mobile Money
            Credit/Debit Card
            Bank Transfer
  7. If relevant- Why did you take up the e-commerce/online  payment option?
  8. What is your general experience when conducting an e-commerce transaction (1 very disappointed, 5 very satisfied?). Why?
  9. What would you say are the main benefits of using e-commerce for your business?
            More Secure
            Easy to Track
            Time efficient
            Customer Friendly
  10. What would you say are the main barriers/challenges of using e-commerce for your business?
            Security Issues
            Too expensive
            Time consuming during transactions
            Service was unreliable/poor quality
            Fees were too high
            Preferred a different channel (E.g, mobile money vs credit card). Which one?


Appendix C: List Of Companies to Interview

Regulators to Interview

Central Bank of Kenya

Kenya Bankers Association

Communications Commission of Kenya

Companies to Interview




2 Social Commerce companies e.g. Facebook sellers

Mama Mikes

Weza Tele