When Diana Wakhungu’s customers outside Kenya place an order with her online shop, the product journey does not end with a click on the ‘buy’ button.
Ms Wakhungu runs Brinax, a purely online business with a pickup point in Kenya, selling to customers both locally and in other countries.
But while her Kenyan customers can collect their orders locally, international customers have to rely on extra shipping costs.
Brinax imports its products directly into Kenya, where they are received, cleared, and made available to its Kenyan customers.
‘Most of our customers are Kenyan, but we also have customers in other countries. The challenge is that when we import our products, they come directly into Kenya, which makes it easier and cheaper for our Kenyan customers,’ she says.
Ms Wakhungu says a courier operating from Nairobi, for instance, currently goes for about Sh2,300 to send a parcel of up to 5 kilogrammes to Kampala, Sh2,520 to Dar es Salaam and Sh2,600 to Kigali, with the delivery taking between one and three days.
‘A Sh5,000 product sent to Kampala can have a shipping charge that is almost half its value before payment charges, taxes, duties or clearance costs are factored in. For a Sh2,000 item, the shipping charge alone can be more than the value of the product,’ she says.
The problem is not unique to small traders. Online health platform MyDawa, which has expanded its digital healthcare business into Uganda, has suffered the cross-border challenges.
‘You don’t take an online business across a border, you build a second business,’ says Priscilla Mahui, country director at MyDawa.
‘Uganda taught us that almost nothing transfers: you need a separate legal entity, separate pharmacy licensing and product registration, local inventory, a local pharmacist workforce, and a separate payments integration because M-Pesa Kenya doesn’t clear in Kampala. What transfers is the software, the operating playbook and the supplier relationships.’
The cost of crossing a border
Ms Mahui says compliance comes before payments and delivery when expanding into a new market.
‘Compliance is a fixed cost that doesn’t shrink with volume. Payments are next because every country needs its own rails, its own reconciliation, and its own failure modes. Delivery is manageable once you hold stock locally; it’s only crippling if you try to ship from Nairobi,’ she says.
She adds that another cost that businesses often underestimate is not captured on a courier invoice.
‘Customer acquisition is high but not structurally different from Kenya. Returns barely feature; pharma doesn’t take returns. The cost people underrate is management attention, which is the second country consumes senior time disproportionate to its revenue.’
The steep delivery costs are putting off some customers.
‘It isn’t just that the courier costs more than the order, it’s that the whole stack on duty, clearance, courier, payment friction, and the customer’s uncertainty about whether it will arrive makes a basket uneconomic below a threshold most consumers never reach.’ Ms Mahui says.
‘The result is that Kenyan online businesses serve the diaspora buying for family back home and serve neighbouring markets only once they’ve set up locally. Genuine consumer cross-border commerce for low-ticket goods barely exists in East Africa,’ she adds.
The payment problem
Timothy Were, Director of ICT at the State Department for Trade, says Kenyan SMEs have embraced e-commerce but still face difficulties when money has to move across borders.
‘Kenyan SMEs have really taken to e-commerce. However, there are challenges and barriers. One of the challenges that we have is the ease of sending and receiving payment across borders,’ Mr Were says.
‘The conversion of currency and the banking requirements take several days, and the commissions are also very high.’
A Kenyan customer can pay a local merchant through a mobile wallet within seconds. But the same transaction becomes more complicated when the seller or buyer is in another country.
Ms Mahui says that mobile money is both an advantage and a weakness when Kenyan businesses expand regionally. ‘It’s an advantage in capability since Kenyan teams know how to build for wallets, USSD, agent networks and payment-on-delivery, and that muscle transfers to any market where cash still dominates,’ she says.
Read: Demand for faster speeds reshapes Kenya’s internet market
‘It’s a weakness in rails: M-Pesa Kenya, MTN MoMo Uganda and Airtel Money don’t clear against each other for merchant collections at scale, so every market is a fresh integration and a fresh treasury problem, collecting in one currency, paying suppliers in another, and eating the FX spread,’ she adds.
She says this means the existence of regional payment initiatives does not necessarily translate into a solution for individual businesses.
‘The Pan-African Payment and Settlement System (PAPSS) exists on paper; I haven’t seen it change a single one of our reconciliations yet.’
Mr Were says businesses also struggle with trust when dealing with customers or suppliers in other countries.
‘The other issue that challenges SMEs in e-commerce is the issue of trust where we have goods and even services getting lost, not being paid for by people on the other side since it’s difficult to verify.’
He says absence of digital identification systems that work across borders makes it harder to establish trust.
Businesses also have to contend with quality standards, customs procedures, and the physical infrastructure required to deliver an online order.
‘Apart from that, we also have issues of low-quality goods that may not be acceptable across borders. Our infrastructure is also not very well developed. The inter-country infrastructure and also the last-mile fulfilment. So, that is another challenge that the SMEs face as they try to deliver their goods across.’ Mr Were says.
The list extends to the differing customs regimes, informal roadblocks by law enforcers and costly logistics.
Kenya is also pursuing digital trade integration through the East African Community, the Common Market for Eastern and Southern Africa (Comesa) and African Continental Free Trade Area (AfCFTA). The State Department for Trade says Comesa launched a Digital Retail Payment Platform in 2025 that aimed at reducing the cost of cross-border digital payments for MSMEs.
At the EAC level, Mr Were says efforts include electronic cargo tracking and work to remove non-tariff barriers.
‘Through the one-stop border post, there are systems that have been implemented. In East Africa, we have the regional electronic cargo tracking system that helps in the flow of goods.’
At continental level, he says AfCFTA is also working towards digital systems that can simplify identification, payments, and customs.
‘Through the ADAPT programme, they are currently working on having trade corridors between the countries that will simplify identification, that will simplify payments and also simplify customs procedures using digital systems between different countries.’
The SME opportunity
Despite the obstacles, the opportunity for Kenyan businesses is huge.
Mr Were says agriculture is still an important area, particularly if Kenya shifts from exporting raw commodities towards processed products.
‘There is very big growth in the digital services area. These include business process outsourcing, development of software, financial services, insurance services, and remote health services. These also have big potential and are growing exponentially. We are looking at about 10 percent of the exports coming from those e-commerce.’
Kenya is also developing a Digital Services Export Strategy intended to position the country as a leading exporter of digital services in Africa and beyond. The strategy is being developed alongside the National E-Commerce Strategy 2023-2027.
However, Ms Mahui believes that Kenya’s biggest export opportunity may not necessarily be physical products.
‘On what Kenya can export: not products; services and operating models. Kenya’s edge is in tech-enabled service delivery: telehealth, chronic-care management, fintech-embedded commerce, logistics software.’
‘Our competitors in Kampala aren’t Kenyan pharmacies; they are local chains; what we bring is the platform that sits on top of them. That’s the exportable asset,’ she adds.
Building an SME e-commerce community
It is against this backdrop that the Kenya E-commerce Alliance is seeking to build a more organised private-sector voice.
Martin Mwili, convenor of the Kenya E-commerce Alliance (KECA) and CEO at TEKI, says the industry has lacked a structured association through which businesses could collectively engage policymakers.
‘One of the things that we realised is that there exists no community for e-commerce players and a vibrant community for that matter, a community that can engage all the different stakeholders, and that is why this event is important,’ Mr Mwili says.
The official says KECA is seeking partnerships with players in Uganda, South Africa and Germany to create market linkages for Kenyan businesses.
‘But these traders need linkages, so we’ve been able to connect with players from different parts of Africa, including Uganda, South Africa and Germany, and we’re also negotiating with more players to make sure that as we get into collaborations and partnerships, our local traders can access markets by collaborating with our partners.’ Mr Mwili says.