Online Shopping Booms, Racing Ahead the Rules

Dec 20 , 2025
By Yonas Jarsa

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The surge in digital trade has been fuelled by expanding internet access and the government’s Digital Ethiopia agenda. Electronic transactions, once experimental, now sit at the centre of urban economic life, promising efficiency, convenience, and new entry points for small-scale entrepreneurs. The legal framework, however, has lagged behind the pace of change.

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A quiet revolution is sweeping through the economy, changing how millions buy and sell. Across the country, digital trade is becoming a daily habit, with Facebook and Telegram merchants offering clothes and gadgets, delivery apps dropping off meals, and ride-hailing platforms helming chaotic city streets.

What began as a niche experiment has grown into a mainstream channel of commerce, powered by expanding internet access and the government’s ambitious Digital Ethiopia agenda. The boom in online trading promises efficiency, greater inclusion, and new opportunities for entrepreneurship.

However, it also brings mounting risks as the law is struggling to keep up. Fraud is rampant, and the state is losing out on sorely needed tax revenue. These issues are most visible in two interconnected areas of consumer protection and taxation. Policymakers often treat them as separate problems, but in reality, they feed into each other.

The domestic legal framework has not caught up with the surge in digital trade.

The Commercial Code, revised in 2021, brought the business environment into the modern era and recognised the legal validity of electronic records and contracts. Still, it does not directly regulate online marketplaces or assign clear responsibility to platform operators and intermediaries. The law governing electronic transactions, passed in 2020, while important in giving legal weight to electronic communications, focuses mainly on technical form rather than the substance of digital commerce.

Critical questions affecting consumers and businesses are left unaddressed.

The Trade Competition & Consumer Protection law of 2013, enforced by a department under the Ministry of Trade & Regional Integration (MoTRI), was crafted for face-to-face, brick-and-mortar transactions. Its enforcement tools are ill-suited for today’s world of anonymous social-media sellers and platform-based business models that now dominate the digital marketplace. For consumers, the consequences are real and immediate.

Many buyers complain of non-delivery of goods, misleading online ads, fake products, hidden fees, and a lack of refund or return options. Sellers often fail to disclose their legal names, addresses, or any way for buyers to seek redress. Once payment is made, usually through mobile money or a simple bank transfer, some sellers vanish, leaving customers with no recourse and little hope of recovering their money.

The law does not require clear seller identification, standardised information disclosure, or a “cooling-off” period that allows buyers to withdraw from an online purchase. The result is an environment of mistrust that discourages wider participation in e-commerce and undermines confidence in the country’s digital future.

Taxation is a parallel headache. The existing laws governing income, VAT, and turnover taxes technically cover income earned online. But in practice, enforcement is weak. A large segment of online traders work without registering as businesses, lack tax identification numbers, and keep no accounting records. Digital payments and platform commissions often fly under the tax authority’s radar, further shrinking the tax base.

The government’s announcement that it is preparing a directive on e-commerce taxation is a step in the right direction. A well-designed directive could boost government revenue and also tighten oversight of online trade, helping to formalise a sector where informality is the norm.

In truth, consumer protection and tax enforcement are two sides of the same coin. Informal digital trade does not simply erode the tax base. It enables fraud, unfair competition, and the anonymity that lets bad actors thrive. Requiring online sellers and platforms to register for tax, keep transaction records, and use trackable digital payments could help solve both problems, making the marketplace safer for buyers and fairer for businesses.

A comprehensive e-commerce law should impose basic duties on online sellers and platforms, including clear disclosure of legal identity and contact information, honest advertising, transparent pricing, published refund and return policies, and accessible systems for handling complaints. Platform operators, too, should be made responsible for verifying sellers and helping regulators and consumers resolve disputes.

Delay has real costs. The informal digital trade undermines businesses that play by the rules, starves the state of funds needed for public services, and weakens faith in the dream of digital transformation. As the country aspires for middle-income status and tries to unleash the economic energy of its young, tech-savvy population, a trustworthy and well-regulated digital market is essential.

We need an integrated legal framework for online trading that treats taxation as a tool for accountability and sees consumer protection as the foundation of growth. Regulation is not a barrier to innovation but the footing on which a fair and thriving digital economy rests. The time for action is now.

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PUBLISHED ON Dec 20,2025 [ VOL 26 , NO 1338]

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