Structural bottlenecksThe spillover effect of having a robust e-commerce strategy will create more jobs.
The year 2020 saw a massive boom for Nepal’s nascent e-commerce sector, primarily due to Covid-19 restrictions; but the disruptions amid the pandemic were a blessing in disguise. According to Nepal Rastra Bank, which has been collecting online sales data from mid-August last year, online sellers’ turnover has soared, and so has the use of electronic payment transactions.
The period mid-November to mid-December 2020 alone recorded e-commerce business worth Rs8.2 billion from 112,706 transactions, according to the central bank. The payments were made through debit or credit cards and exclude other popular alternatives like digital wallets and cheque or cash on delivery.
Consumer spending and behaviour are changing fast amid the pandemic, forcing businesses to reimagine their strategies to keep up with their customers, who are increasingly moving online. According to the latest management information system report of the Nepal Telecommunications Authority, internet penetration in Nepal had reached 77.91 percent of the total population as of mid-October last year.
These figures indicate that opportunities in the e-commerce sector will only grow in the future to create more jobs and attract investments; but in the absence of a law governing e-commerce in the country, the consumers will continue to be the biggest losers while small and medium businesses will suffer.
In June last year, the Ministry of Industry, Commerce and Supplies prepared a draft E-Commerce Bill 2020 to create a facilitative regulatory environment for online trade in Nepal. But consumer rights activists and entrepreneurs say the proposed e-commerce bill, which has come a decade late, lacks clarity, is riddled with issues, and has failed to understand the basic premise of what constitutes e-commerce business to start with.
Leading online sellers have even lamented that the stakeholders’ concerns put forward during the draft preparation haven’t been addressed clearly. At the same time, consumer rights activists say there are no clear provisions which would hold online marketplaces accountable.
The draft bill defines e-commerce as selling and buying of goods and services through the internet or computer network or any other electronic system as well as commercial transaction, data transfer, the supply of goods and services, lease, hire purchase, exchange and professional and other services provided through an electronic medium.
Marketplace, according to the draft bill, is an inter-mediatory business that facilitates deals between sellers and buyers through a network of the electronic medium and includes wholesalers, retailers, commercial agents, brokers and distributors that perform business through e-commerce.
As reflected in the vague definitions above and other contesting provisions, the draft bill in no manner serves the purpose to facilitate and regulate the e-commerce sector, more so for small and medium businesses. Instead, it demonstrates how the officials who prepared the draft have failed to understand emerging instruments of trade and the opportunities technology has created for start-ups and cottage industries.
The government, which needs to play a proactive role in creating jobs and facilitating a better business environment, cannot continue to kill potentials and sway investments. Given the pace at which online activity is rapidly expanding across the country, primarily due to mobile phone penetration, it is only natural that businesses will utilise emerging technologies to deal with customers.
There is an urgent need to revise the draft bill and produce clear guidelines to govern the growing e-commerce sector in Nepal, and foremost, protect consumers. The spillover effect of having a robust e-commerce strategy will create more jobs as already seen last year when online sellers went on a hiring spree to cater to record orders amid the lockdown. Officials need to be in tune with the evolving digital sphere that both consumers and businesses have embraced to tap into the potentials that can truly transform the national economy.