ACADEMIA Letters
The Challenges and Opportunities of E-Commerce in
Ethiopia: A Review
Wassie Getahun Nigatu, Marketing Management Department, College of Business
and Economics, University of Gondar
Berhanemeskel Weldegerima Atsbeha, Social and Administrative Pharmacy
Department, School of Pharmacy, College of Medicine and Health Sciences,
University of Gondar
Background: The information communication technology (ICT) sector is the highly grow-
ing and significantly influences the global economy. This day’s most activities in the financial
sector are performing through ICT. The advent of the Internet has apparently become an indis-
pensable aspect of modern commercial transactions. E-commerce is undertaking of business
activities through the Internet, fully or partly. This paper tries is to explores the opportunities
and challenges of e-commerce in Ethiopia. Review Findings: This review study found that
three major opportunities of e-commerce in Ethiopia i.e. human capacity development, policy
and legal framework initiatives of the government and telecommunication infrastructure ex-
pansion in the country. And five major challenges that highly hinder e-commerce adoption in
Ethiopia are; low customer awareness in ecommerce, lack of skilled workers, fear of risk se-
curity and privacy, lack of e-commerce infrastructure and lack of legal and regulatory frame-
work. Conclusions: In this review study found three major opportunities of e-commerce in
Ethiopia and five major challenges that highly hinder e-commerce adoption in Ethiopia. The
government of Ethiopia should formulate strategies that enhance the e-commerce infrastruc-
ture and enabling legal and regulatory framework with full participation of all stakeholders and
develop awareness raising campaigns. Keywords: E-commerce, E-Business, M-Commerce,
Ethiopia.
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
1
1. Introduction
The information communication technology (ICT) sector is the highly growing and signifi-
cantly influences the global economy. This day’s most activities in the financial sector are
performed through ICT. The advent of the Internet has apparently become an indispensable
aspect of modern commercial transactions. The major reason for this is that Internet brought
what we call it now e-commerce. E-commerce is undertaking of business activities through
the Internet, fully or partly.
Definition of E-Commerce
There are many definitions for the concept of E-Commerce depending on the perspec-
tive of the viewer or commentator. Some authors define E-Commerce as being different from
E-Business; others see and define both concepts as same. When we look at it from the perspec-
tive of differentiating both concepts, E-Commerce is keenly looked at from the commercial
aspect, in which there are values and corresponding payments. This can however be described
as financial transactions which are mediated electronically between organizations and stake-
holders alike. E-Commerce however can be looked at from a broader perspective which in-
cludes different forms of business dealings that may not most often times involve forms of
payments or from another perspective, beyond what may be generally refer to as commerce
in the real sense but rather all types of transactions which are mediated electronically either
commercial or otherwise between an organization and its transactions with individuals and
third parties alike that its various dealings with them. This is however seen by some authors
as defining E-Business which makes E-Commerce an aspect of E-Business, while others see
it as defining E-Commerce which invariably makes it the same as E-Business which makes
them use the two concepts interchangeably. For the purpose of this study however, below are
a few definitions of E-Commerce as described by different authors.
• “Electronic commerce is the sharing of business information, maintaining business re-
lationships and conducting business transactions by means of telecommunication net-
works”. (Vladimir Z, 1996).
• “Electronic Commerce deals with facilitation of transactions and selling of products
and services online either via the internet or any other telecommunications network”.
(Jelassi and Enders 2005).
According to Turban et al (2008), E- Commerce can be defined from different perspec-
tives which include but not limited to: From a communications perspective, E-Commerce
is perceived as the delivery of information, products and services and/or payments over varied
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
2
communication lines i.e. telephones, computer networks, or other electronic channels. From
a business perspective, E-Commerce is perceived as the application of technological appli-
cations towards the automation of business transactions and flow of work. From a service
perspective, E-Commerce is perceived as a tool that caters for consumers, management of
firms to reduce service costs in an effort to improve quality of goods and foster the speed of
delivering services. From an online perspective, E-Commerce makes possible an enabling
atmosphere for products transaction, services and information via the internet and other ser-
vices that are available online. Classification of E-Commerce
There are different forms of classifications that are used to group E-Commerce operations
depending on the parameters that is been used by the author or commentator. Listed below
are some of the classifications that are used:
• Classification by seller/buyer. (Government, consumer, business, etc.)
• Classification by product or activity. (Search engine, online commercial, etc.)
• Classification by sources of revenue. (Advertising revenues, fees from referrals, etc.)
• Classification according to tasks. (Shopping, Investment, Banking etc.)
• Classification with technology. (Internet infrastructure, internet Application frame-
work, etc.)
While the above are varied classifications and methods, the most widely used type is the
buyer/seller classification form. This is because of the description of the different parties
involved in the transaction which makes reference to person or party that has made the order
for the good or services to be sold, who is the seller of the goods and services and the type
of transaction that is been done. Based on this, the various classifications of E-Commerce
are described below as defined in classification of E-Commerce as outlined by Turban et al
(2008).
• Consumer to Consumer (C2C): This is a type of E-Commerce transaction that is di-
rectly between individuals that is void of any human intermediary; it uses a platform
that serves as an invincible intermediary. The platforms are often used for sales and
auctions of online expertise and also online advertisement of personal services. Ex-
amples of these sites includes eBay, MSN.com, and other social networking site like
Facebook, Twitter, My Space etc. fall into this category.
• Business to Consumer (B2C): This is a type of E-Commerce transaction that involves
businesses and consumers in which the businesses sells directly to the consumer. The
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
3
platform for this type of E-Commerce transactions could be for transaction purposes or
relationship and brand building, with the main purpose changing consumer attitude by
getting more patronage for the products and services. Here the consumer is able to com-
pare prices before making a buying decision and also the business can relate directly
with the consumer without the use of intermediaries. Sale of non-standardized products
is also possible on this type platform. Examples are compUSA.com, amazon.com, indi-
aballs.com among others. Multinational companies like British Petroleum, Accenture
are also involved in B2C E-Commerce.
• Consumer to Business (C2B): This kind of E-Commerce transactions can also be re-
ferred to as demand collections, Turban et al (2008), describes it to be an avenue where
individual sells products and services through the internet to other individuals and or-
ganizations. It allows for bidding in which names their price for the good and services
available. Involves a situation where the customer based on his/her requirements makes
an online post with a price or at least a set budget, and businesses makes bids based on
this, the customer in turn reviews the bids and makes selections as appropriate.
• Business to Business (B2B): This according to Turban et al (2008) is the largest form
of E-Commerce transaction based on value as both the buyers and also the sellers are
business organizations with the exemption of individual consumers from such transac-
tions.
• Business-to-Business-to-Customer (B2B2C): It is the type of E-Commerce transac-
tion as where a business owner provides a product or service it receives from another
business to its customer without adding any extra value on the product or service pro-
vided. In this type of transaction, the client acts as an intermediary.
• Business to Employee (B2E): This is mostly used by for organizations that that has
quite a few mobile staff and/or also run a virtual office as information, goods and ser-
vices are passed on to the employees through this medium.
E-Commerce Platforms
E-Commerce operates on digital technology for its activities and transactions, which is
totally based on electronic communication (Turban et al, 2008). According to them, the tech-
nology used includes internet communications via websites, emails (intranet and extranet),
digital media such as mobile or wireless media for the availability of cable television and
satellites, mobile phones/devices for mobile banking services and also telemarketing, fixed
telephone lines which are used for telephone banking. While all these platforms are used for
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
4
E-Commerce operations, it is important to state the importance of the web as it is the base of
all the E-Commerce platforms. This is because web has been a very useful tool in breaking
through different nations and transactions can be done at almost any time irrespective of the
various time zones that exist around the world. The importance of the web to E-Commerce
cannot be over emphasized, and this is because it has become an unwritten rule for business
organizations that want to relevant by having a well and fully functional website where also
E-Commerce activities can take place. However most E-Commerce sites and platforms are
not entirely the same as they differ in capabilities, these capabilities are based on the purpose,
which will inform its features and design. Concerning e-commerce, there are limited studies
being conducted except very few handful of researches in related cases like challenges and
issues of e-commerce, ecommerce readiness, e-payment, in Ethiopia. Due to the emergence
of globalization, the number of Internet users is increasing all over the world. The nature of
e-commerce by itself has its own motivating factor because of its 24/7 availability, no need of
physical shops and no need or low cost of travel. Ethiopia is well known for exporting coffee,
leather products, pulses and oil seeds, live animals and animal products, spices, food, civet,
natural gum, agricultural products, cotton and cotton products, fish, textile, handmade cards
and ornaments, honey and bees wax, shoes and aluminum scrap. This avails opportunities to
be part of the international market through e-commerce.
As every sector, e-commerce has got its own opportunities and challenges. The main
purpose of this study is to conduct systematic review on the challenges and opportunities of
ecommerce in the case of Ethiopia. This research addresses the following two research ques-
tions: (1) what are the opportunities of e-commerce to Ethiopia? (2) What are the challenges
of e-commerce facing in Ethiopia?
2. Research Methodology
The paper has been written based on secondary data. The secondary data were collected from
published books, journals, research papers, magazines, daily newspaper, internet and official
statistical documents.
3. Review Findings
3.1. E-commerce Situation in Ethiopia
The main platforms to shop online are Jumia (by far the leading online market place in the
country), Qefira.com, Sheger.net, Sheba Shopping and Delala, all of which are market places.
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
5
Electronic commerce is in its infancy in Ethiopia and is rarely used. The Government of
Ethiopia (GOE) is preparing a draft national law to govern e-Commerce. Ethiopian banks use
debit cards and automated teller machines (ATM) but have not begun to issue credit cards.
ATMs are interconnected with international banking networks. International ATM cardhold-
ers are able to withdraw funds from any ATM machine of the 18 commercial banks operating
in Ethiopia. ET Switch S.C., a share company owned by the commercial banks, was created
to improve bank-to-bank integration. According to sources at ET Switch S.C., the service is
used by over 8 million ATM card holders across the country (trade.gov, 2021).
Ethiopian banks have started using primary internet transactions through mobile, internet
and card banking services. These technologies followed the launch of centralized, online real-
time, electronic banking solutions that have increased customers. There is still a long way
to go to improve the digital financial services delivery system. Currently, foreign firms are
engaged as technology service providers for various financial inclusion projects of the GOE.
At present, Ethiopia has drafted and tabled a proclamation to permit, regulate and monitor
e-commerce operations in Ethiopia to the Parliament (trade.gov, 2021).
3.2. Opportunities of E-commerce in Ethiopia
Human Capacity Development
Ethiopia has made tangible progress in the education sector. The system expanded from
having 10 million learners a decade ago to more than 25 million learners today. The country
has been able to maintain and improve the learning achievement in key subjects. For instance,
in 4th grade, the total number of students achieving basic proficiency or higher in all subjects
increased from 505,000 in 2011 to 792,000 in 2015 (57% increase). The number of ICT
students has increased significantly both in public and private institutions in recent years.
According to Ministry of Education (MOE), the number of undergraduate students in ICT
related fields (Computer science, Information systems and Electrical Engineering) was about
8,246 in 2006 that is 13per cent of the total enrolment in the same year (Sundaram B, et al.,
2018).
Policy and Legal Framework Initiatives
Ethiopia was one of the last countries in Africa to allow its national telco a monopoly on
all telecom services including fixed, mobile, internet and data communications. For many
years Ethio Telecom’s monopolistic control stifled innovation, restricted network expansion
and limited the scope of services on offer. However, in June 2019 the government approved
legislation which will open the market to competition and provide much needed foreign in-
vestment. Two licenses are to be offered to two international operators, with a deadline set for
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
6
February 2021. At the same time the government aims to part-privatize Ethio Telecom, with
a 45% stake in the company to be made available (budde.com, 2020).
Recently, the government of Ethiopia has been drafting a national law to regulate E-
commerce: when approved and implemented, such a tool is expected to boost the online
market. Legislation and regulation have significant positive relationship with the practices
of digital marketing practices (Ashenafi T, 2017; Alemayehu D, 2020 and Shaikh, J. et al.,
2021). The Federal Republic of Ethiopia Ministry of communication and information Tech-
nology has prepared a draft e-commerce law with a view to solve the hurdles the existing laws
create for the development of e-commerce within the country (Wondafrash SM, 2015).
Telecommunication infrastructure Expansion
Despite the stimulus from market competition, there has been considerable investment in
telecoms services, infrastructure and service expansion projects in recent years. Ethio Tele-
com has secured a network monitoring platform to help it improve services and has also re-
vised plans to launch a telecom satellite, while the government initiated the construction of a
$3 billion technology city. Most of the technologies deployed thus far have been provided by
ZTE and Huawei, which have often been preferred for offering vendor financing. In prepa-
ration for competition in the mobile market, Ethio Telecom has placed the expansion of LTE
services as a cornerstone of its investment program to 2022 (budde.com, 2020).
3.3. Challenges in E-commerce in Ethiopia
Low Customer Awareness
Customer awareness level is low, the high rates of illiteracy of customers that poses En-
glish language is a challenge to use for online shopping in Ethiopia was identified as the
challenge for e-commerce in Ethiopia as well (Lemma Y, 2017;Mishra M and Tiruneh T,
2020).Furthermore, challenge of consumer’s behavior in adopting these kinds of businesses
and less awareness towards the use of Information and Communication Technology (Singh et.
al, 2016 and Shaikh, J. et al., 2021).
Lack of Skilled Human Resource
To make e-commerce successful, business organizations should be encouraged to use lat-
est technology oriented environment. Multiple studies also stated that lack of skilled hu-
man resource in e-commerce highly hinder e-commerce adoption and maintain in Ethiopia
(Lemma Y, 2017). Lacks of experienced labors was found as the challenges faced by organi-
zations when they start e-commerce in Ethiopia (Mishra M and Tiruneh T, 2020).
Fear of Risk and Security
There is a lack of system security, reliability, standards, and some communication
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
7
protocol. Customer loses their money if the website of ecommerce site is hacked. Most
common problem of e-commerce website is not having enough cyber security (Lemma Y,
2017). According to Singh et. al (2016) study on online apparel product shopping found that
fear of risk security and privacy was one of the challenges reported.
Lack of E-Commerce Infrastructure
In the changing world, there is a necessity to improve the business requirements according
to the changing needs of technologies, trends in the market, and customers. Infrastructure is
the foundation that makes your business stand out. Ecommerce infrastructure is a collection
of hardware, software, network, facilities, etc. that you need to run an ecommerce business.
When you have the right infrastructure, you will have an optimized business performance
(purchasecommerce.com, 2021).
E-commerce is still at the embryonic level and is rarely used due to the lack of IT in-
frastructures in general (Shaikh, J. et al., 2021) and lack of e-commerce infrastructure in
particular (Asrie B, 2012). Study conducted by Singh et. al (2016) also evidenced that lack
of e-commerce infrastructure as one of main barrier that prevent the consumers from online
apparel product shopping.
Lack of Legal and Regulatory Framework
Security and trust are fundamental to e-commerce because they reassure both consumers
and businesses. This makes it essential for countries to establish laws and regulations related
to consumer protection, data protection and cybercrime. Legislation and regulation have sig-
nificant positive relationship with the practices of digital marketing practices.
In Ethiopia, the existing laws which regulate commercial transaction were enacted before
cyber- world and hence, they are not capable of facilitating- transactions. Hence, The Federal
Republic of Ethiopia Ministry of communication and information Technology has prepared
a draft e-commerce law with a view to solve the hurdles the existing laws create for the de-
velopment of e-commerce within the country (Wondafrash SM, 2015). Ethiopia has not yet
set a comprehensive legal framework for e-commerce in general and electronic signature in
particular. Ethiopia’s e-signature and e-commerce laws are still at draft stage. Absence of
a suitable legal and regulatory framework for e-commerce (e.g. E-payment) is another chal-
lenge. However, recently, the government of Ethiopia has been drafting a national law to
regulate E-commerce: when approved and implemented, such a tool is expected to boost the
online market (Ashenafi T, 2017; Shaikh, J. et al., 2021 and Alemayehu D, 2020).
Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
8
4. Conclusions
In conclusion this systematic review study found that three major opportunities of e-commerce
in Ethiopia (i.e. human capacity development, policy and legal framework initiatives of the
government and telecommunication infrastructure expansion in the country) and five major
challenges that highly hinder e-commerce adoption in Ethiopia are; low customer awareness
in ecommerce, lack of skilled workers, fear of risk security and privacy, lack of e-commerce
infrastructure and lack of legal and regulatory framework. The government of Ethiopia should
formulate strategies that enhance the e-commerce infrastructure and enabling legal and reg-
ulatory framework by involving full participation of all stakeholders and develop awareness
raising campaigns.
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Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
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Academia Letters, September 2021 ©2021 by the authors — Open Access — Distributed under CC BY 4.0
Corresponding Author: Berhanemeskel Weldegerima Atsbeha, aberhaneth@gmail.com
Citation: Nigatu, W.G., Atsbeha, B.W. (2021). The Challenges and Opportunities of E-Commerce in Ethiopia:
A Review. Academia Letters, Article 3444. https://doi.org/10.20935/AL3444.
10
