How Three Firms struck Gold in E-Citizen Deal

In a controversial move that has raised eyebrows across Kenya, three private tech firms—Webmasters, Pesaflow, and Olive Tree Media— reportedly secured a lucrative contract to manage the country’s eCitizen platform, a digital portal central to accessing government services. The deal, signed on May 25, 2023, with the ICT Authority, grants the consortium significant control over a platform that generated at least Sh127.2 billion by October 2024, according to the Auditor-General. While the contract promises substantial financial rewards for the firms, it has sparked legal and ethical questions about transparency, public accountability, and the privatization of critical government functions.

The eCitizen platform, launched in 2014 to streamline access to over 15,000 government services, has become a cornerstone of Kenya’s digital transformation. From passport applications to business registrations, the portal processes millions of transactions daily, generating substantial revenue. However, the involvement of private firms in managing this critical infrastructure has sparked debate, particularly following a Kenya Insights report detailing the financial windfall for the three companies.

The agreement stipulates that the consortium receives an upfront payment of Sh50 million and an annual fee of approximately Sh1 billion once the government fully integrates over 8,000 services into the eCitizen platform. Additionally, the contract includes provisions for technical personnel to be paid between Sh27,000 and Sh53,000 per day to maintain the system. These payments, funded by taxpayers, highlight the significant financial stakes involved.

The consortium holds sweeping powers under the deal. Notably, the contract prevents the ICT Authority from using the platform’s infrastructure without a separate agreement and grants the consortium final authority to reconcile the funds processed through the system. Such clauses raise concerns about the government’s ability to oversee and regulate a platform that handles sensitive public data and billions in revenue.

From a legal perspective, the eCitizen deal presents several red flags. The contract’s restrictive clauses, which limit the government’s control over its own digital infrastructure, could violate principles of public accountability and sovereignty. The Auditor-General’s report has warned that the platform’s private operation makes it vulnerable to mismanagement, with billions of shillings at risk due to inadequate oversight. By October 2024, the platform had already processed Sh127.2 billion, yet the Auditor-General noted difficulties in tracking these funds, raising questions about potential breaches of fiduciary duty.

Furthermore, the contract stipulates that disputes will be resolved at the London Court of International Arbitration, bypassing Kenya’s judicial system. This provision could undermine the country’s legal jurisdiction and limit the ability of Kenyan courts to address grievances related to the platform’s operation. Such an arrangement may also deter public interest litigation, as the costs and logistics of international arbitration are prohibitive for most citizens.

The secrecy surrounding the deal has also drawn criticism. Signed shortly after President William Ruto assumed office, the contract’s details were not publicly disclosed until media investigations brought them to light. This lack of transparency may contravene Kenya’s constitutional requirements for open governance, particularly Article 10, which emphasizes accountability and public participation in government processes.

Webmasters Kenya Ltd, founded by Kenyan entrepreneur James Ayugi, developed the eCitizen platform. Pesaflow Limited and Olive Tree Media, whose ownership details remain closely guarded, are also integral to the platform’s operations. The opacity surrounding these firms’ structures and their connections to political figures has fueled speculation about conflicts of interest. Reports indicate that a network of politically connected entities is managing several of President Ruto’s flagship projects, including eCitizen, raising concerns about cronyism and the potential misuse of public funds.

Legally, the government’s reliance on private entities for critical digital infrastructure could set a precedent for future contracts, potentially eroding public control over essential services. The restrictive clauses in the eCitizen deal may also discourage competition, as the government is contractually barred from developing a competing system. This could stifle innovation and entrench the consortium’s dominance, raising antitrust concerns.

The controversy has prompted calls for greater scrutiny of public-private partnerships in Kenya. Legal experts argue that contracts of this magnitude should undergo rigorous public consultation and parliamentary oversight to ensure compliance with constitutional standards. The Auditor-General’s recommendation for prosecutions in cases of mismanagement underscores the need for robust enforcement mechanisms to protect public funds.

Public sentiment, as reflected in recent media coverage, is increasingly critical of the deal. Citizens are concerned about the rising cost of government services and the potential for elite capture of public resources. The government’s commitment to fighting corruption, as stated by President Ruto on December 5, 2024, will be tested by its response to these concerns.