Kenya Insights

Tag: Webmasters Kenya

  • The eCitizen Scandal: Kenya’s Billion-Shilling Digital Heist

    The eCitizen Scandal: Kenya’s Billion-Shilling Digital Heist

    eCitizen was supposed to revolutionize Kenya’s access to public services. It promised to end long queues, kill corruption, and simplify lives through digitization.

    But behind the slick interface lies one of the most shocking scams in modern Kenya. Billions have vanished.

    The same players—under different names—have stayed in charge. And government silence has fueled suspicion.

    From Webmasters to Goldrock Capital and Pesaflow, a group of insiders may have hijacked Kenya’s digital future for personal gain.

    This is the eCitizen Scandal—a tale of tech, theft, and betrayal.

    Ayugi’s bold statement in 2014 foreshadowed the scandal. He posted on social media that he’d make a billion shillings in five years. Nearly a decade later, with the juicy contracts Webmasters secured, he may have been right. [Photo: Nation]

    Inside the eCitizen Scandal: How a National Digital System Became a Private Cash Cow

    eCitizen launched as a public digital platform to centralize access to government services. It was built with Sh70 million from the World Bank. But somewhere along the way, public ownership faded. Private hands took over.

    At the heart of the scandal sits James Ayugi, CEO of Webmasters Kenya and Webmasters Africa. His companies built the original eCitizen system.

    Then, in a shocking twist, they demanded Sh1.5 billion from the government to hand it over—claiming intellectual property rights.

    This claim makes little sense. The platform was created for public use with donor funds. So how did a public portal suddenly become a private asset?

    Ayugi’s bold statement in 2014 foreshadowed the scandal. He posted on social media that he’d make a billion shillings in five years. Nearly a decade later, with the juicy contracts Webmasters secured, he may have been right.

    The deal was never clean. The government failed to clarify ownership from the start—either by incompetence or design.

    This allowed Ayugi and his network to sink their claws into a vital national resource. The deeper you dig, the murkier it gets.

    Goldrock Capital and The Questionable Middleman

    To manage eCitizen payments, Webmasters outsourced the job to Goldrock Capital. Citizens sent money for passport applications, business registrations, and more.

    Goldrock was supposed to forward these funds to the government’s account at KCB. But the truth was far from clean.

    In 2017, the Treasury uncovered that Goldrock had no license to handle public money. Worse, millions—Sh127.8 million—were stuck in mobile wallets like Paybill 206206. Suspicion of fraud exploded.

    Shockingly, no one at Goldrock was held accountable. There were no prosecutions. No arrests. Instead, the government made a quiet move—it replaced Goldrock. But the replacement wasn’t really new.

    Pesaflow: New Name, Same Faces

    Enter Pesaflow. Registered in August 2017, during Goldrock’s legal troubles, Pesaflow looked like a clean slate. But it wasn’t.

    A closer look showed that Pesaflow’s directors were all ex-Webmasters Africa staff: Evid Araka Sibi, Frank Weya, Charles Sewe, and Larry Agoro. The same crew. Just a different name.

    Without any open tender or public bidding process, the government appointed Pesaflow as the new payment processor.

    In short, when Goldrock got too hot, the insiders regrouped under a new company, and the cash continued to flow.

    This is the blueprint of a classic shell game. When exposure hits one entity, the masterminds simply switch names, stay in business, and keep milking taxpayers.

    Even today, Pesaflow remains shrouded in secrecy. There’s no transparency about how much money flows through it or where the money goes before it reaches public coffers.

    Why the Government is Silent on eCitizen Scandal

    President Ruto’s administration has stayed largely mum about the scandal. That is, until former Deputy President Rigathi Gachagua recently accused Ruto directly on KTN of minting billions through the eCitizen platform.

    Gachagua made bold claims:

    • That eCitizen doesn’t belong to the government

    • That billions are being pocketed

    • That the platform is controlled by unknown entities

    While Gachagua did not name names or prove ownership links, his outcry added fuel to a scandal that the public and media have started to investigate.

    Despite the red flags, despite court records, and despite public money being at stake, no official audit has been published, and no criminal case has been concluded. Is this silence protection, or is it complicity?

    A National Shame Hiding in Plain Sight

    The eCitizen scandal is a slap in the face to every Kenyan taxpayer. What started as a promise of digital transformation has become a tool for elite theft.

    From Webmasters to Goldrock Capital to Pesaflow, the same actors have danced around accountability. And the government has let them.

    Billions have passed through this system. Who owns it? Who benefits? And why haven’t we followed the money?

    If Kenya wants to fight corruption, it must start with transparency in its digital backbone. Anything less means the thieves will keep dancing—and we’ll keep paying.

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

    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.

  • Pesaflow Among Shadowy Firms Siphoning Billions From eCitizen

    Pesaflow Among Shadowy Firms Siphoning Billions From eCitizen

    Shadowy firms have pocketed over Ksh 1.45 billion through Kenya’s eCitizen platform, sparking concerns about their grip on government revenue collection.

    Pesaflow, a private company authorized to collect payments for government services, bills the state between Ksh 100 million and Ksh 200 million monthly.

    This amounts to an estimated Ksh 2.4 billion annually. Yet, details about its ownership, contracts, and operations remain shrouded in secrecy.

    The Rise of Pesaflow and Its Associates

    In 2017, amid a legal tussle over control of mobile money wallets, Pesaflow emerged as a key player in processing payments for eCitizen.

    Before Pesaflow’s involvement, Webmasters Kenya had contracted Goldrock Capital Ltd. to manage funds from eCitizen users for the government. A fallout led to Goldrock’s removal, paving the way for Pesaflow’s appointment.

    Pesaflow operates alongside Webmasters Kenya and Olivetree Limited, forming a consortium linked to software developer James Ayugi.

    While Webmasters Kenya claims intellectual ownership of eCitizen, the government previously stated that the International Finance Corporation (IFC) handed over the portal.

    Ownership and Operations in the Shadows

    Official records reveal that Pesaflow’s largest shareholders, Evid Araka Sibi and Frank Lawrence Ochieng Weya, each hold 3,000 shares.

    Other stakeholders include Charles Wambani Sewe and Larry Ochleng Agoro, each owning 2,000 shares. All are linked to Webmasters, suggesting a possible silent takeover.

    Despite these connections, Mr. Ayugi has declined to explain his relationship with both Webmasters and Pesaflow.

    He maintains that Webmasters handles technology, Pesaflow manages payments, and Olivetree Limited oversees communication services, such as bulk SMS alerts.

    Auditor-General Raises Red Flags

    Auditor-General Nancy Gathungu has flagged Pesaflow’s role, questioning its control over eCitizen without a proper backup system.

    She also criticizes the Ksh 50 convenience fee imposed on Kenyans seeking digital services, calling it unjustified.

    Dependence on Private Vendors

    The Auditor-General warns that the government heavily relies on private vendors for critical eCitizen functions.

    Over 15,000 public services listed on the portal could be compromised in a cyberattack. Support services are also under private control, with government agencies resorting to WhatsApp for assistance.

    Lack of Transparency and Oversight

    The audit reveals that eCitizen’s helplines and email correspondence are managed by the vendor, with no clear service-level agreements in place.

    This lack of transparency and oversight raises concerns about the security and reliability of the platform.

    In conclusion, the involvement of shadowy firms in managing eCitizen raises significant concerns about transparency, security, and the government’s reliance on private entities for critical public services. Addressing these issues is crucial to ensuring the integrity of Kenya’s digital service delivery.