Convenience fee: The Ksh.50 gov’t service charge that's made its way to university kitchens

It began with the government consolidating payment of all its services on eCitizen, its online portal for all state services, into one Paybill number in August last year.

President William Ruto at the time ordered the closure of all existing government PayBill numbers and said starting August 8, 2023, 222222 would be the sole payment number for State services.

The figures started being tossed around to show how much the government was collecting since the consolidation; Ksh.281 million in daily revenue as of November, according to the Chief of Staff and Head of Public Service Felix Koskei.

“So far, 250 Ministries, Departments, and Agencies (MDAs) are fully onboard the e-Citizen, offering over 16,000 government services, up from 397 in June 2022, generating Ksh.281 million in daily revenue,” he said on November 14.

Then in December, Immigration and Citizen Services Principal Secretary Julius Bitok said the eCitizen portal hit a record Ksh.900 million collection in one day.

Bitok at the time said 11 million users were using the platform, with about 5,000 new users added daily.

He added that the government had collected an average of Ksh.300 million a day in November, with the government projecting to collect Ksh.4.2 billion per day by December 2024.

Come January, the government directed that parents of students in public schools pay fees through eCitizen.

A January 31st memo by Basic Education Principal Secretary Belio Kipsang to all national school heads said this is part of the government’s efforts to onboard all government services onto the eCitizen platform to enhance service delivery.

This week, the University of Nairobi sent a memo to its students and staff directing that customers in its kitchens pay for meals through eCitizen as part of a government directive requiring that all payments to the institution be made on the platform.

The memo gave a unique identifier for each cafeteria for payment through the 222222 Paybill number.

While most of Kenyans’ concern about the government merging its PayBill number was on how reliable the process would be, the last two moves – school fee and meal payments – have revived debate about the Ksh.50 convenience fee one is charged when paying for services on the platform.

Nearly 10 years after the introduction of eCitizen in 2014, the convenience fee is still shrouded in mystery.

When one makes a payment on the eCitizen platform, they pay a fee for the service they are seeking, called ‘Service Fee’, such as Ksh.7,500 for a 34-page ordinary passport, as well as an additional Ksh.50 ‘Convenience Fee’.

The amount is billed and two invoices are given; a government copy and a customer copy which indicates that the payment is through a company called Pesaflow. More on Pesaflow later.

In the wake of the latest government directive on school fee payment, there has been discussion of whose account the convenience fee goes to.

Narok Senator on Monday termed the whole process mysterious during a panel discussion on Citizen TV.

“There is a mystery behind the company that collects the Ksh.50. Back then in 2017, there was a company called Goldrock that sued Safaricom and Treasury for not being allowed to collect the Ksh.50,” the senator said, referencing a tug of war between M-Pesa owner Safaricom and Goldrock Capital, the firm that had been handling cash collection from eCitizen since its launch.

“KRA is the primary agency authorised by law to collect revenue on behalf of the Kenyan government. This Ksh.50 is billions of shillings daily. If we were to do a special-purpose audit of where these 50 shillings go, we would find that individuals are colluding with government officials to collect this money.”

The battle Olekina mentioned stemmed from a Treasury instruction to the telecom giant, wanting it to lock Goldrock from the then-official Paybill number 206206.

It followed an audit that found that eCitizen was partly operating outside the law because there were no contracts between the government and Goldrock relating to the collection or management of funds paid by eCitizen users.

Treasury had tasked eCitizen’s developer Webmasters Kenya, to register mobile money wallets with the 206206 account number, after which Webmasters Kenya collaborated with its sister company, Webmasters Africa, to sub-contract the registration and funds management to Goldrock.

The auditor at the time said the situation meant a private firm was illegally collecting money on behalf of the government.

Goldrock was eventually kicked out and a legal battle over who owns the platform and the money that had been collected until then goes on.

Busia Senator Okiya Omtatah has previously moved to court raising questions about the Ksh.50 convenience fee, arguing that there are potential breaches of procurement laws.

His case was in September 2019 consolidated with Goldrock’s and in December 2022, the proceedings were adjourned after the court file was tampered with and all of Mr Omtatah’s filings removed.

Until then, the case had never even proceeded to a hearing.

During the wrangles over the collection and management of eCitizen funds in August 2017, Pesaflow was incorporated to take over from Goldrock Capital.

On its website, Pesaflow describes itself as “a homegrown, all-in-one payment system that powers revenue collection, payment aggregation, and business intelligence.”

Headquartered in Lavington, Nairobi, the company says it has been in existence for 10 years and was built with governments in mind “as a simple and reliable way to collect payment services from the public and helping [sic] track every single coin from all transactions made.”

Its CEO, per the website, is Larry Agoro, and the only other team members listed are five other men, all directors.

It was presented as an all-new solution to the chaos, but a Daily Nation investigation in December 2022 pointed out that Pesaflow’s shareholders are previous workers for Webmasters Africa.

The report indicated a possibility that the team which illegally subcontracted Goldrock Capital to manage eCitizen funds without the Treasury’s permission are still the ones who run Kenyans’ payments on the platform.

Now, Senator Olekina promises to raise the matter in Parliament when the house resumes on February 12.

During Monday’s discussion on Citizen TV, the senator said he will call for scrutiny on whether the convenience fee is authorised by Parliament.

“We are going to demand an audit of the Ksh.50 collected; who does it settle to? Who collects it?” posed Olekina.

“Parents should not be asked to pay when they go to deposit money in a bank account. It is the owner of the account who should pay because they are the ones who have a contract with the bank.”

Senate Minority Leader Stewart Madzayo has moved to court to stop Pesaflow from collecting convenience fees from people paying for services on eCitizen.

In his petition, the Kilifi senator says Pesaflow’s role and ownership are unknown and terms the convenience fee an unfair and unconstitutional burden to taxpayers.

He estimates that the company collects Ksh.36 billion annually.

“The same has never been included in the national budget as government revenue collected from the platform as a convenience fee,” read court documents. “It is unknown how the said funds, if indeed collected... are appropriated.”

The government maintains that Pesaflow Limited does not retain any part of the convenience fee.

“The monies are remitted to the National Treasury after collection. In essence, what Pesaflow Limited offers is a platform channel for revenue collection,” Treasury Principal Secretary Chris Kiptoo, in a counter-affidavit to Senator Madzayo’s affidavit.

He says the convenience fee is administered and approved by the National Treasury and that the government “has been having deliberations and discussions on the implications of the flat rate convenience fee.”

It is worth noting that the convenience fee in question is separate from the additional nominal administrative fee per the cost of the eCitizen service the government introduced in December last year, called the ‘Access Fee’. 

For services below Ksh.199, one is charged Ksh.5 while for those between Ksh.200 and Ksh.299, one pays Ksh.10.

Accessing government services worth between Ksh.300 and Ksh.499, one is charged Ksh.15; for those between Ksh.500 and Ksh.699, one pays Ksh.20; between Ksh.700 and Ksh.999, the charges are Ksh.25, while services over Ksh.1000 one is required to pay Ksh.50.