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Kenyan Government Seeks Legal Backing to Monitor Mobile Money Transactions for Tax Evasion

The Kenyan government is proposing to amend the Data Protection Act to allow the Kenya Revenue Authority (KRA) to access and analyze bank and mobile money transaction data, including M-Pesa accounts, in order to identify potential tax discrepancies and catch tax evaders.

Image Courtesy: Standard.

This controversial plan is part of President William Ruto’s strategy to broaden the country’s tax base and raise revenue, as the KRA has been missing its targets in recent years. The KRA intends to integrate its tax system with telecommunication companies to gain unfettered access to customer transaction data.

However, the proposal has drawn heavy criticism from consumer rights groups like the Consumer Federation of Kenya (COFEK), who argue it violates consumer privacy rights guaranteed by the constitution and consumer protection laws. There are concerns it could force people to revert to using cash instead of mobile money.

The KRA believes monitoring the hugely popular M-Pesa platform, which accounts for nearly all mobile money transactions in Kenya, will provide a treasure trove of financial data to help identify individuals and businesses whose tax payments do not match their spending on assets like real estate and luxury vehicles.
The government is seeking to increase tax revenue to KES 3 trillion ($24.2 billion) in the next fiscal year to fund its ambitious budget plans. But the plan to allow the KRA to access sensitive personal data without a court order has been described as “worrying” by legal experts.

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Part 1: The Shocking Uhuru/Munya Maize Subsidy That Lasted For A Day.

According to an explosive tweet by Sam Terriz, a Kenya Kwanza insider, the maize meal subsidy program, touted as a benevolent initiative under the Uhuru-Raila handshake government, has emerged as a meticulously orchestrated conspiracy led by the then Agriculture CS Peter Munya. Promising affordable maize flour for Kenyans, it instead unfolded as an institutionalized cartel scheme, raising concerns about the misuse of taxpayer funds.

In July 2022, the treasury reportedly earmarked Kshs 8 billion for the maize meal subsidy program, intending to span four weeks. Peter Munya, the Agriculture CS, set the stage by introducing a narrative of contaminated maize stock, citing aflatoxin without providing specific details. He quickly advocated for maize imports, attributing elevated aflatoxin levels to adverse weather conditions affecting maize drying. This narrative prompted skepticism about the credibility of the contamination claims.

Munya’s subsequent announcement of importing four million bags of maize through millers added another layer to the controversy. He portrayed this as a solution to the alleged aflatoxin contamination, proposing the destruction of millions of bags, ostensibly unfit for consumption. However, the National Cereals and Produce Board contradicted Munya’s claim, revealing that only 69,000 bags were declared unfit, exposing the orchestrated nature of Munya’s plan to exploit funds.

Assurances of subsidized maize flour were coupled with specific government-set prices. Munya claimed the establishment of a multi-agency task force and oversight committee, although evidence of such coordination was lacking. Chaos ensued among millers as they were ordered to register with the Agriculture and Food Authority (AFA), and contracts reportedly signed with 70 millers turned out to be a calculated deception, resulting in financial losses for the millers.

The oversight committee, chaired by Dr. F.O. Owino, was never formalized, leaving a supervision void. The non-functional hotline for the program raised suspicions of deliberate misinformation. Targeted prices of Ksh 100 per 2kg Unga were maintained for just one day, after which flour prices skyrocketed to Ksh 230 for a 2kg packet, suggesting potential profiteering.

Discrepancies in reported program expenditures, ranging from Ksh 7.26 billion to Ksh 6.4 billion, fueled concerns about financial transparency. The Parliamentary committee discovered that the initial Ksh 4 billion paid to millers could not be accounted for. Munya’s cartels later claimed over Ksh 2.9 billion as pending bills in a move that further exposed financial irregularities.

As the intricate web of deceit unravels, calls for a thorough investigation into Peter Munya’s actions and Uhuru’s role in this alleged conspiracy have intensified. Kenyans are demanding accountability and transparency, particularly in matters affecting their well-being. The maize subsidy scandal raises significant questions about the integrity of government initiatives and the need for stringent measures to prevent such abuses of public trust in the future.