Pact Aims to Create Seamless Regional Digital Market

NAIROBI – Kenya officially ratified the East African Community (EAC) Protocol on Digital Trade on Friday, October 24, 2025, a move the government says will unlock immense economic potential and solidify the region's position in the global digital economy. The decision, announced following a cabinet meeting chaired by the President, aims to create a single digital market across the seven EAC partner states.

In a statement released Friday morning, Cabinet Secretary for Investments, Trade, and Industry, Lee Kinyanjui, confirmed the ratification. "This protocol is a monumental step towards creating a seamless digital market of over 300 million people," Kinyanjui stated. "By harmonizing rules on e-commerce, digital payments, and data flows, we are paving the way for our businesses to scale, innovate, and compete on a continental and global stage."

The government projects that the digital economy will contribute over KSh 600 billion to Kenya's GDP by 2028. Proponents argue this pact is essential to achieving that target, fostering cross-border innovation, and aligning the EAC with the broader objectives of the African Continental Free Trade Area (AfCFTA) Digital Trade Protocol, which was adopted by state parties in February 2024.

Concerns from Kenya's 'Silicon Savannah'

Despite official optimism, the move has been met with apprehension from key players in Kenya's vibrant technology sector. The Kenya Tech Innovators Forum (KTIF), a leading industry association, issued a cautionary statement on Friday, warning that the protocol could disadvantage local startups.

"While we support regional integration, the devil is in the details," said KTIF Chairperson Dr. Aisha Okoro in the statement. "The provisions on cross-border data flows and the prohibition of data localization requirements could expose sensitive Kenyan data and undermine the competitiveness of local data centers." This sentiment echoes ongoing concerns about how Kenya's Data Protection Act of 2019 will be reconciled with international trade agreements that push for unrestricted data movement.

Small and medium-sized enterprises (SMEs), which constitute the backbone of Kenya's economy, are particularly vulnerable. There are fears that without adequate safeguards and capacity building, larger, more established firms from outside the region could dominate the newly liberalized market, stifling local innovation.

Balancing Growth with Sovereignty

The EAC protocol aims to address several key areas, including consumer protection, cybersecurity, paperless trade, and the interoperability of digital payment systems—a domain where Kenya is already a continental leader with platforms like M-Pesa. The framework is part of a wider push for digital integration, supported by initiatives like the Eastern Africa Regional Digital Integration Project (EARDIP), a multi-million dollar World Bank program.

However, analysts from the Nairobi-based Institute of Economic Affairs (IEA) stress the need for careful implementation. "The potential benefits of a harmonized digital market are significant, from reduced transaction costs to expanded market access for SMEs," noted Kwame Owino, a senior researcher at IEA, in a policy brief released this week. "However, the government must ensure that regulatory frameworks are not only harmonized but also robust enough to protect national interests, particularly in areas of digital taxation and data governance."

The protocol's ratification comes as Kenya also navigates other complex trade negotiations, including the Strategic Trade and Investment Partnership (STIP) with the United States, where digital trade provisions are a central and contentious point.

The Road Ahead for East Africa

With Kenya's ratification, the focus now shifts to the remaining EAC partner states to complete their own legislative processes. The protocol will enter into force once all member states have deposited their instruments of ratification with the EAC Secretariat. The successful creation of a single digital market will depend on aligning fragmented national regulations and bridging significant gaps in digital infrastructure and skills across the region.

For Kenya, the challenge lies in leveraging its position as a regional tech hub to capitalize on the opportunities presented by the pact, while simultaneously addressing the legitimate concerns of its own innovators and ensuring that the growth of the digital economy is inclusive and sustainable. FURTHER INVESTIGATION REQUIRED on the specific timelines for implementation and the establishment of dispute resolution mechanisms under the new protocol.