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Shadowy firms earn Sh1.45bn on eCitizen
A screenshot of the eCitizen platform. The government was on Tuesday dealt a blow after the High Court in Nairobi quashed its directive requiring parents to pay school fees through the e-Citizen platform.
Shadowy private firms running the government’s eCitizen platform pocketed Sh1.45 billion in the year to June 2024, even as details surrounding their operations and beneficial owners remain scanty.
The companies handled more than 11 million transactions, earning Sh591.9 million from a Sh50 convenience fee and Sh857 million for the eCitizen system maintenance, says the Auditor-General.
The disclosure emerged as MPs last week exerted pressure on the Treasury to reveal details of the company operating the key government online platform and details of contracts signed with the government.
Pesaflow is the private firm gazetted to collect money on behalf of the government for services provided on the eCitizen platform such as Issuing driving licences, national identification cards as well as passport applications and renewal since the current administration came into office.
But the formation of the firm, its beneficial owners and contracts showing its dealings with the State remain a top secret, with the role of software developer James Ayugi coming under scrutiny.
The firm reckons that it is billing the State between Sh100 million and Sh200 million monthly, pushing its annual pay up to Sh2.4 billion. It has since emerged that Pesaflow is not acting alone. It is in a consortium of firms that include Webmasters Kenya and Olivetree Limited—all associated with Mr Ayugi.
“The statement of revenue collections and transfers reflects revenue from commission (convenience fees) of Sh591,988,503 and total transfers in Kenya shillings and United States dominated amounts of Sh857,210,458. The funds were meant to cater for system maintenance by the vendor,” Auditor-General Nancy Gathungu notes in a new audit on the payout to the firms.
Webmasters claim that eCitizen is its intellectual property, contrary to the government’s earlier position that the World Bank’s lending arm, International Finance Corporation (IFC), handed the portal over to Kenya.
Between 2014 and 2017, Webmasters tapped a firm known as Goldrock Capital Ltd to handle the flow of funds from eCitizen users to the government’s main account.
Goldrock was kicked out from eCitizen following a fallout, leading to the appointment of Pesaflow.
But MPs are asking who Pesaflow is. Pesaflow was registered on August 24, 2017, when Goldrock Capital was in court fighting the government, Safaricom and Webmasters over the control of mobile money wallets that were receiving millions from eCitizen users.
Goldrock Capital had been hired by the Webmasters group to provide a simple and transparent solution that would see eCitizen users pay for online government services, and ensure the money gets to the government’s consolidated fund account at KCB.
The Treasury put an end to the lucrative deal on account that it did not approve the move.
At first glance, Pesaflow looked like a completely new entity with new faces not linked to the eCitizen saga.
Evid Araka Sibi and Frank Lawrence Ochieng Weya were listed in 2022 as its largest stakeholders, owning 3,000 shares each.
Charles Wambani Sewe and Larry Ochieng Agoro each have 2,000 shares in Pesaflow. However, a deeper look into the Pesaflow shareholders list reveals that the individuals worked for Webmasters, which means Mr Ayugi’s group might have managed a silent coup amid the court drama sparked by Goldrock’s suit.
Mr Ayugi in an interview with the Business Daily on Wednesday declined to explain his links to both Webmasters and Pesaflow.
“E-citizen is run by a consortium of three companies. Webmasters Kenya offers technological support, maintenance and onboarding of services, Pesaflow Limited is the payment aggregator and handles incoming payments to the government, while Olivetree Limited handles communications such as bulk SMS services,” said Mr Ayugi.
“We invoice the government monthly for support and maintenance services we offer. While I don’t have accurate numbers in regards to how much we were paid, every month we invoice about Sh100 million to Sh200 million. The figure has been growing.”
Ms Gathungu has raised concerns over the significant influence the private firm continues to have over the eCitizen platform, even as the system is operated without a backup.
Kenyans have been paying a flat Sh50 convenience fee any time they seek public services digitally through the eCitizen and Ms Gathungu is faulting the rationale for the fee, terming it unsupported. She is warning that over 15,000 public services that are now available on the digital platform are at risk should there be a cyber-attack since the private firm operates the platform without a backup.
