E-Commerce & the law in Ghana: The rise of online marketplaces and their impact on the economy and consumer behavior

By: Prince Kojo Tabiri ESQ

E-commerce has emerged as a significant driver of economic growth in Ghana. With the growing use of the internet and mobile technology, e-commerce has transformed the way business is conducted, allowing consumers to buy and sell goods and services online from anywhere in the world. Online marketplaces such as Jumia, Tonaton, and Jiji have become popular among consumers, providing easy access to a range of products and services.

However, the growth of e-commerce in Ghana also presents new challenges, including the risk of fraud and scams. In this blog post, we will explore the growth of e-commerce in Ghana, the impact of online marketplaces on the economy and consumer behavior, the legal frameworks safeguarding the e-commerce space, and the challenges and opportunities faced by e-commerce businesses.

• Growth of e–commerce in Ghana

E-commerce in Ghana has witnessed tremendous growth in recent years, with the number of online shoppers increasing year-on-year.

According to a 2020 report by the Ghana Statistical Service, e-commerce accounted for 3.1% of total retail sales in the country, and this figure is expected to grow in the coming years.

According to a report by Statista, the e-commerce market in Ghana was valued at US$300 million in 2020 and is expected to grow at a compound annual growth rate of 21.6% between 2021 and 2025[i].

• Impact of Online Marketplaces on the Economy

The growth of e-commerce has had a significant impact on the economy of Ghana. Firstly, online marketplaces have created jobs for young people in the country, as e-commerce businesses require a significant workforce to operate. Additionally, e-commerce has facilitated the growth of small and medium-sized enterprises (SMEs) in Ghana, as businesses can leverage the online platform to reach a wider audience, expand their customer base, and increase revenue.

• Impact of Online Marketplaces on Consumer Behavior

The rise of online marketplaces has also had a significant impact on consumer behavior in Ghana. Firstly, e-commerce has made it easier for consumers to access products and services from different parts of the country and the world. Secondly, it has facilitated the growth of the cashless economy, with more consumers opting for digital payments. Finally, e-commerce has created a more competitive market, with businesses striving to offer better prices and quality to attract customers.

• Challenges and Opportunities Faced by e–commerce Businesses in Ghana

Like in any other country, online businesses and online marketplaces in Ghana are also vulnerable to scams and fraud. While e-commerce has many advantages, it also presents new opportunities for fraudsters and scammers to exploit unsuspecting consumers.

One of the most common types of fraud in online marketplaces in Ghana is “fake product” scams, where sellers list products for sale that are counterfeit or do not fit the description made to the consumer. Another common type of fraud is “advance fee” scams, where fraudsters request payment upfront for goods or services that they never deliver.

To mitigate these risks, online marketplaces in Ghana have put in place measures such as seller verification, buyer protection policies, and dispute resolution mechanisms. For example, Jumia Ghana offers a “Jumia Guarantee” program, which provides buyers with a refund or replacement if they receive counterfeit or faulty products. Tonaton also has a “Buyer Protection” policy that allows buyers to request a refund or return for products that are not as described.

Fraud and scams remain a challenge in online businesses and online marketplaces in Ghana. Consumers are advised to exercise caution when shopping online, to research sellers and products thoroughly, and to use secure payment methods such as mobile money or credit cards.

Despite these challenges, e-commerce offers significant opportunities for businesses in Ghana, particularly those that can adapt to the unique needs and preferences of Ghanaian consumers. By leveraging the advantages of online marketplaces and addressing the challenges facing the industry, e-commerce businesses in Ghana can help drive economic growth and development in the country.

• Laws and Regulations

In Ghana, the Electronic Transactions Act, 2008 (Act 772) is the primary law that regulates e-commerce activities, including online marketplaces. The Act provides for the legal recognition of electronic transactions and electronic signatures and sets out the legal framework for electronic commerce in Ghana.

In addition, the Sale of Goods Act, 1963 (Act 137) is relevant to e-commerce in Ghana as it governs the sale of goods between parties in commercial transactions. The Act applies to contracts for the sale of goods. It sets out the rights and obligations of the seller and the buyer, including the transfer of ownership and risk, delivery of goods, warranties, and conditions, and the remedies available for breach of contract.

Moreover, the Data Protection Act, 2012 (Act 843) is also applicable to online marketplaces and e-commerce businesses in Ghana. The Act regulates the collection, use, disclosure, and protection of personal data in Ghana and seeks to ensure that data subjects have control over their personal information.

Online marketplaces and e-commerce businesses in Ghana are also subject to general laws that regulate businesses, such as the Companies Act of Ghana, the Value Added Tax Act, the Electronic Transfer Levy (Amendment) Act, 2022 (Act 1089), and the Income Tax Act, The Ghana Revenue Authority requires businesses to register and pay taxes.

Overall, while there are laws that regulate online marketplaces and e-commerce businesses in Ghana, the regulation of the sector is still evolving, and there are ongoing discussions on the need for more comprehensive laws to address emerging challenges and protect consumers in the digital economy.

Conclusion

To sum up, the rise of e-commerce in Ghana has revolutionized the way commerce is conducted, providing a plethora of choices and convenience to consumers. The increasing popularity of online marketplaces has played a vital role in expanding the reach of businesses and improving consumer experiences. However, the exponential growth of e-commerce in Ghana has also created new risks, such as online fraud and scams. To maintain consumer trust and promote fair competition in the sector, e-commerce businesses, and online marketplaces must take measures to safeguard their customers. Furthermore, the government must continue to enact and enforce laws that provide consumer protection and a level playing field for businesses. Despite these challenges, the growing e-commerce industry in Ghana offers tremendous opportunities for businesses and entrepreneurs to contribute to the country’s economic growth.

THE WRITER IS A BARRISTER AND SOLICITOR OF THE SUPREME COURT OF GHANA AND A MEMBER OF THIS PRESTIGIOUS LAW FIRM.

HIS LEGAL INTERESTS INCLUDE BUT ARE NOT LIMITED TO REAL/PROPERTY LAW, CORPORATE AND COMMERCIAL PRACTICE, CONSTRUCTION LAW, AND DISPUTE RESOLUTION.

[i] https://www.statista.com/topics/10270/e-commerce-in-ghana/#topicOverview