Local startup bets on blockchain to unlock e-commerce growth

Kenyan startup Nuzo is banking on blockchain to disrupt the multi-million shilling e-commerce industry that has for years proved a tough nut to crack for many investors.

Nuzo, which operates a store to earn e-commerce platform, last month launched Nuzo Coins that will be earned by users of their platform when they buy or sell online.

“We believe that including the community in the ownership and governance of digital platforms is the best way to unlock the true potential of digital commerce in Africa,” says Nuzo founder Charles Nichols.

Nichols, who previously co-founded SunCulture, another startup that has raised nearly Sh6 billion, said integrating blockchain will give the platform’s users a different shopping experience and also help Nuzo expand its reach to more potential customers.

“We’ve seen firsthand at Nuzo that by including our community in ownership, we’ve been able to build a popular marketplace that’s growing very quickly,” said Nichols.

“The high engagement of the Nuzo community enables us to create new marketing opportunities for businesses that cannot be found anywhere else.”

The platform users will earn Nuzo coins when they buy and sell online, and these coins increase in value as the market grows.

Retail transactions

Nuzo coins are powered by the mobile-first, carbon-negative Celo blockchain and can be redeemed to buy goods, airtime and pay bills.

Since its launch in June, the platform now has 40,000 users and is growing rapidly.

However, compared to other regions, Africa still lags behind in e-commerce adoption with less than trailing percent of retail transactions occurring online compared to 19 percent globally.

Kenya’s e-commerce sector has for years been ripe for disruption, but attempts by both large private players and start-ups have yielded little in terms of market growth and new revenue streams.

Companies such as Jumia, which raised massive investor funds on the back of the country’s e-commerce potential, are still struggling to cut the high operating and logistics costs that eat into revenues.

CitiBank estimates that Kenya’s e-commerce market could be worth Sh700 million. However, unlocking this value has proven to be a moving target, and Nuzo is banking on the blockchain’s decentralized nature to attract more high-value users.

A recent report by the United Nations Conference on Trade and Development indicates that 4.2 million people in Kenya own cryptocurrency assets.