JamboPay; corruption scapegoat?

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Danson Muchemi, CEO JamboPay.

The Public Accounts Committee (PAC), in a report tabled on 3rd May 2018, asserted that JamboPay- the system contracted to collect revenue on behalf of City Hall – lacked the requisite capacity to collect revenue on behalf of the County Government.

According to PAC JamboPay delayed submitting the collected revenue to the Government. It found out that, Web Tribe, the company that runs Jambo Pay, colludes with the Cooperative Bank of Kenya to delay remitting of the collected monies to the County Revenue Fund account.

PAC consequently recommended that JamboPay contract be terminated and further, the county finds within five months adaptation of the report besides finding its own internal and foolproof automated revenue collection system.

The Auditor General was to conduct a forensic audit on all the JamboPay transactions for reporting. PAC stated that the JamboPay service providers had breached clauses 24 and 25.

“On terminating the Contract, there are legal implications and the county has no alternative system and would greatly harm the ability to collect revenue,” read the ICT report in part.

However, the ICT committee discoursing the same issue had totally dissimilar views. In its report, the ICT committee indicated that it was not possible for Web Tribe to collude with the Cooperative Bank since the bank has no authority over the company, and moreover, Web Tribe has no authority on county accounts.

The committee further dismissed allegations that collected funds were delayed, noting that remuneration was done daily to CRF account and the Central Bank and an automated SMS report sent every midnight. Last month, JamboPay denied reports of inconsistencies in revenue collected in financial year 2017-18.

This is the perfect play that harbors confusion to the Kenyan people, having been said that an amount of about Ksh 500 million could have been lost to this ‘faulty’ JamboPay revenue collection system.

Three possibilities are prominent here; 1. A misunderstanding in how SaaS works, 2. The use of old laws in the management of new technology, 3. The lack of trust on the procurement process of the automated systems and maybe, just corruption fighting back.

That the technology deployed by JamboPay or just the entire system using Software as a Service may have been misunderstood cannot be overemphasized.

Software as a Service is a legitimate mode of engagement when a company does not have internal capacity in terms of human resource, finance, infrastructure and ability to sustain a certain level of up-time but wants a fast output.

The JamboPay system was started within three months of signing the contract and got a revenue increment of about two billion within that first year. The vision bearers and implementers were set aside after the first quarter of the second year of use and revenue increased by about Ksh 100 million.

The Finance executive (Agt) Charles Kerich once told journalists that the county collected Ksh 8.2 billion out of a target of Ksh 17.2 billion which differed with what JamboPay’s KES 14 billion.

JamboPay however, clarified that the revenue by the county executive does not vary from the revenue collected through the EjijiPay system for financial year 2017-18 and that the Ksh14 billion was not in reference to 2017-18 financial year but for a period spanning two financial years.

Procurement of no trust

E-wallet as a concept escapes many people, what arouses suspicion that money is being swindled. Again the auditor general’s demand that feels it wrong for a user not to have administrative rights to the database and system arouses lack of trust.

The Auditor General’s report partly says, “The County was not consulted in the creation of an e-wallet and should have been consulted before PKF was appointed and they want the ability to audit the e-wallet.”

At evaluation of tender, one of the things the panel looks at are the whether the provider is licensed by the relevant authorities- the security they have put in place. CBK has to approve the creation of an e-wallet and auditors to ensure citizens’ money is safe. In the case of JamboPay, the auditor is PFK. Kenyans need to understand that the e-wallet is a bank account with citizens’ money and the only money which belongs to the county is the one the owner gives instruction to be paid to the county.

During the period of procuring this tender, there were only two companies at the time of procurement which had the ability to do a bill presentment and settle the hundreds of different payments the county receives: Web Tribe and Craft Silicon. Web Tribe won using the Public Procurement Oversight Authority (PPOA) formula and there is a dashboard which at any given time shows how much money has been collected and for which service and from who. Reconciliation should be what revenue management systems show it has received and the money deposited into the county account.

A source that sought anonymity said, “Procurement provides various ways of procurement. Most ICT applications chose to go the consultancy way where the bidder provides two envelops. The Technical bid and financial bid. Most of the bids give the technical responsiveness at 80 percent and financial bid at 20 percent. This means it’s not always the lowest bidder who wins. There is a formula provided by PPOA on how the winning bidder is calculated. Cheap in applications can be expensive because it might not meet requirements.

Although collusion is inferred because the contract was not given to the lowest bidder, it sheds light on the battled win of the tender award that has also been a premise for resisting the SaaS.

Commissions

Another mode of contention is how Web Tribe gets commission. The evaluation team of this system is from PWC, ICTA and NCC. Revenue handling systems that are known like MPESA, Banks or Debit cards get their commission upfront per transaction. JamboPay however, uses PFM act that states that all monies collected should be swept into the Revenue account before an invoice is raised. Now this may have failed and is still bound to, because the county does not pay its dues sometimes even up to six months.

“The system could not have taken off if they were to raise an invoice which has infrastructural costs like bandwidth and Carriers which have to be made promptly. Talks to have KRA collect on behalf of JamboPay have failed because even them demand deducting their commission upfront,” says another source.

Faulty system

This system was supposed to limit human interactions but people have cleverly focused the attention to the powers that be on perceived weaknesses in the system, resulting in the people who understand the system being perceived as implicit failures.

The people in the field are now back to their old ways of doing things and the revenues which had started climbing are steadily falling as the effort is not put in using the capabilities of the system but in finding fault with it.

The tables have been neatly turned such that the people who meant good and who wanted to clean out the manual systems have been branded corrupt and  using the system to steal while those who have always benefited from the manual system are sitting pretty as they go on with their old ways even more ruthlessness.

What is happening here is politics at its best or worst. People are throwing diversion in a calculated manner and getting away with it.

Web Tribe was contracted in April 2014 to automate and improve revenue collection. It was meant to seal loopholes that were associated with the manual system. Its contract will be ending in April 2019.

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