How eCitizen Owners Are Reaping Millions From Sh50 Convenience Fee After Defying State Orders

A private company behind the government’s eCitizen platform has continued collecting millions in convenience fees, defying directives from the highest levels of government to relinquish control.

Court documents involving the National Treasury reveal that Webmasters Kenya Limited, the firm that developed and operates the digital platform, has ignored state orders, maintaining control of the system and charging users a Sh50 convenience fee per transaction.

The eCitizen platform, which provides access to various government services, was slated for full transfer to the state by July 2023. Yet, Webmasters Kenya has persisted in collecting revenue from users, fueling tensions with government officials.

According to Bernard Ndung’u, Director General of Accounting Services and Quality Assurance at the National Treasury, efforts to assume control of the platform have met resistance. “The government was to reserve the right to inspect and ensure everything had been handed over,” he said. “However, the private firm remains in control.”

Millions Collected in Fees

Every Kenyan accessing services such as passport applications, business registrations, or driver’s licenses via eCitizen must pay the Sh50 convenience fee. With the platform’s high transaction volume, this translates to millions of shillings flowing into Webmasters Kenya’s accounts monthly.

Despite directives from the National Treasury and resolutions from State House, the firm remains entrenched in the system.

Launched in 2014, eCitizen has become a cornerstone of Kenya’s service delivery, enabling citizens to access government services online. However, ownership and control of the platform have been contentious for nearly a decade. During the Uhuru Kenyatta administration, the government fought a legal battle with Webmasters Kenya over ownership and the convenience fees it collected.

A meeting on November 30, 2022, at the Treasury Building resolved that Webmasters would transfer all rights to the eCitizen platform to the government. Following a State House meeting with President William Ruto, it was also agreed that convenience fees—Sh50 for Kenyans and $1 for foreign nationals per transaction—would be abolished effective December 1, 2022, with funds redirected to the Consolidated Fund.

Yet, nearly two years later, Webmasters Kenya and its sister companies, Pestalow Ltd and Olive Tree Ltd, continue operating the platform and collecting fees. According to Auditor-General Nancy Gathungu’s latest report, these firms amassed Sh15.9 billion in convenience fees and an additional Sh8.57 billion in maintenance fees for the financial year ending June 2024.

The report raised serious concerns about the government’s lack of control over eCitizen. Ms. Gathungu warned that without a backup system, a cyberattack could halt government services and cripple the economy. She also flagged the risks of private firms handling sensitive data with minimal government oversight.

Sources indicate Webmasters Kenya was initially contracted to develop eCitizen but later entrenched itself, complicating the government’s efforts to take full control.

Government’s Legal Battle

The state has been locked in a protracted legal and administrative struggle to wrest the platform from private hands. Treasury officials, alongside the Ministry of Information, Communication, and Digital Economy, have pressed for compliance, but Webmasters Kenya insists it deserves compensation for its investment.

In a recent court filing, the Treasury detailed how the firm continued processing payments despite repeated attempts to integrate the system under state management. Lawmakers have warned that Webmasters’ grip on eCitizen could lead to significant long-term financial losses for the government.

The lack of state oversight also raises questions about the transparency and accountability of the funds collected.

In a past Business Daily interview, James Ayugi, founder and CEO of Webmasters Kenya, disclosed that his group bills the government between Sh100 million and Sh120 million monthly. This highlights the lucrative nature of eCitizen and the financial incentives for maintaining control.

The ongoing Sh50 fee has sparked public frustration, with many Kenyans questioning why a private firm profits from a system meant to streamline government services. Experts caution that without resolution, taxpayers will continue to bear the cost.

As legal and political battles persist, eCitizen’s future remains uncertain. What is evident, however, is that Webmasters Kenya continues to reap millions from a platform intended to be fully under government control.