Summary
- In the negotiation objectives unveiled last week, the government eyes support from the superpower to help strengthen e-commerce and digital platforms for trade to enhance growth.
- Kenya plans to gradually relax its regulations of the digital market to ease entry of US firms and products.
- E-commerce penetration in Kenya remains low despite a growth in the number of developers in the country.
- In anticipation of a pick-up, the government introduced a 1.5 percent digital service tax on the value of transactions in the Finance Bill 2020 that takes effect on July 1.
Kenya has marked the e-commerce segment as a key growth area and
a priority in the negotiations for a proposed free trade agreement
(FTA) with the United States.
In the negotiation
objectives unveiled last week, the government eyes support from the
superpower to help strengthen e-commerce and digital platforms for trade
to enhance growth. Kenya plans to gradually relax its regulations of
the digital market to ease entry of US firms and products.
“We
seek to secure commitment to allow gradual regulations at facilitation
of digital trade in goods and services and cross-border data flow in
line with the country’s development agenda, in particular contribution
of this trade to economic development,” Ministry of Trade said it its
objectives.
“The US-Kenya FTA will aim at progressively
eliminating tariff and non-tariff barriers on substantially all trade
in goods in order to establish a free trade area among the parties.”
US
wants Kenya to “ensure that procedures facilitate e-commerce shipments
and a simplified process for the return of domestic origin of goods to
meet the challenges disproportionately impacting small business
e-commerce.”
The commitments are expected to enhance growth of e-commerce and
help enterprises keep up with competition and raise consumer demand
from both local and international markets.
E-commerce
penetration in Kenya remains low despite a growth in the number of
developers in the country, with Economic Survey 2020 showing that only
25.4 percent of industries in 2019 engaged in e-commerce for
transactions, sales promotion and lowering their operational costs.
In
anticipation of a pick-up, the government introduced a 1.5 percent
digital service tax on the value of transactions in the Finance Bill
2020 that takes effect on July 1.
However, the US is
calling for the scrapping of tariffs on digital products including
software, music, video, e-books and facilitation of cross-border data
flows.
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