Madzayo suit threatens to open eCitizen's 'can of worms'

By Kamau Muthoni | Dec 10, 2023

ICT Authority CEO Stanley Kamanguya, Board Chairman Slyvanus Maritim, Konza Metropolis Business Development and Innovation Chief Manager Josephine Ndambuki and Konza Metropolis Acting CEO John Paul Okwiri during the launch of e-Citizen Services at KICC in Nairobi. [David Gichuru, Standard]

The government and a private company alleged to be running the eCitizen platform are at risk of being forced to refund Kenyans billions of shillings collected over the years as “convenience” fees.

Kilifi Senator Stewart Madzayo moved to court arguing that the Sh50 fee is illegal as it is not reflected in any law.

Madzayo, who is also a retired judge, sued the National Treasury Cabinet Secretary Njuguna Ndung’u, Pesaflow Limited, the firm said to be running e-citizen, Kenya Commercial Bank (KCB), and Equity Bank.

From a separate case, Pesaflow was incorporated on August 24, 2017.

He asserted that the Treasury informed Kenyans that it had developed the Digital Payments Platform through which citizens and all persons would be able to pay for government services digitally.

According to him, the government went ahead to gazette various charges for its services. However, he said that the Sh50 is not among those charges.

He also questioned the role of Pesaflow in the payment process. He stated that although Kenyans know that the portal is owned by the government, which is also gazetted,

Pesaflow is not gazetted to collect an administrative fee nor do Kenyans know what role it plays in e-citizen.
“Therefore, it begs the question, what exactly is the role of the first respondent in a transaction between the user of a government service and the government? Why does the platform, which is wholly government-owned, charge the said convenience fee which is then channelled to the first respondent?”

“Instead of charging a nominal administrative fee that would be a percentage of the payment made, the 1st Respondent, which is not mentioned in the gazette notice, has been charging a ‘convenience fee’ of Sh50 regardless of the payment made,” he argued.

The case stems from a visit to Fort Jesus Museum in the company of his children on October 2. 

In the meantime, President William Ruto gave a directive that all government agencies ought to use eCitizen and a single Paybill number.

The senator told the court was asked to pay Sh100 per child, through the digital platform for his children to enter the museum.

According to him, he ended up paying Sh300, of which the extra Sh100 was the convenience fee.

“The petitioner proceeded to pay since his children needed to access the Museum facilities. The petitioner was dismayed at being charged a convenience fee that is equal to half (50%) the substantive service fee and this caused him to want to find out the exact role that the 1st Respondent plays in the transaction between a user of a government service and the government,” narrated Madzayo.

He said that after some research, he discovered that the platform is a wholly owned domain and portal of the government and it is the official Government Digital Payment Platform.

He argued that the notices by the government indicate that it would charge a nominal administrative fee per transaction which would be a pro-rated percentage of the payment made.

However, he asserted that the gazette notices did not specify who the beneficiaries of the nominal administrative fee would be nor did it specify the exact percentage of the payment that would be charged as the nominal fee.

He also stated that the amount charged by Pesaflow is illegal and unfair.

Madzayo said that Kenyans have to foot the convenience fee on top of either M-Pesa or banking transaction charges.

“Neither of the two gazette notices mentions the first respondent (Pesaflow) as a co-owner of the platform or a stakeholder in any capacity and there is no legal basis for the convenience fee of Sh50 that it continues to charge… The formula used to arrive at the rate for the said convenience fee remains shrouded in mystery, ambiguity and obscurity,” he argued.

He continued: “In essence, the user pays thrice for the same service, that is, the substantive fees for the service, paid to the government of Kenya, the mysterious convenience fee paid to the 1st Respondent and whatever transaction costs that are levied by interested through the Mpesa service.”

He also stated that forcing Kenyans to pay through E-citizen for all services meant that the services offered by other arms of government such as the Judiciary would be subjected to the contested fee. According to him, the Judiciary does not charge the convenience fee.

He also argued that it also remains a mystery whether Pesaflow pays taxes from each Sh50 paid to it.

If the court rules in favour of Madzayo, it will open a pandora’s box as the government and Pesaflow will face an avalanche of cases by Kenyans demanding back the fees they paid. The case also opens up a channel for a class suit against both the government and the private company.

It is not the first time eCitizen and the fee collected is raising a storm.

Webmaster Group of companies sued the government seeking compensation and intellectual ownership of eCitizen.

Initially, the firm was demanding Sh1.5 billion before handing over the portal to the government.

At the same time, Goldrock Limited joined the case demanding its stake in managing the money collected from Kenyans. This is after it was kicked out of lucrative business.

The controversy also surrounded Pesaflow and its owners.

There was also a separate case filed by Busia Senator Okiya Omtatah over the same saga.

The dispute between Webmaster, Goldrock and the government was resolved out of court while the case by Okoya has not been resolved yet.

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