Jambopay began operating in 2009 and rose to become one of the biggest (if not the biggest) fintech company in Kenya. Handling payment solutions for multiple big-time government agencies and perhaps even more private companies. However, the company has on several occasions been forced to defend its success.
From Grass to Grace through Thrift?
Muchemi’s story, as narrated by a number of news outlets, says his first income of Ksh. 80 ($0.8) out of selling his first herd of rabbits, marked his journey into the world of business. Muchemi was born in 1984 in Nyandarua, and attended the Gikeno Primary School and later joined Nguviu Boys Secondary School in Embu.
He then proceeded to get a diploma in Management Information Systems at Strathmore University and later pursued a bachelor of science degree in Telecommunications and Information Technology at Kenyatta University.
How Jambopay came into the picture
During his years at the university, Muchemi created digitized notes that he used to sell to students who had missed classes. He was running a sort of online shop, but he quickly realized the challenge of getting paid since there was no reliable pay-gate in Kenya back then.
With a capital of less than $1,000, he leased out two computers at a cybercafe at $45 per month and began working on a JamboPay. It was until 2014 when he caught his biggest break when a local bank agreed to use his JamboPay as a payments solutions. In the same year, he registered his business as Web Tribe.
Soon after, he landed a contract with the Nairobi City County to automate the city’s parking, rental, land rates, and permit collections. Four months after that, in yet another controversial move, he landed another contract to provide payment solutions for the country’s National Hospital Insurance Fund (NHIF).
Hefty commissions compared to the competition
In both the Nairobi County and NHIF contracts, JamboPay was getting hefty commissions of between 4 to 4.5 percent of the collections. The country’s Auditor-General raised a red flag over this matter and together with the Nairobi County Assembly called for the cancellation of the contracts citing procurement flaws and high fees.
However, the contract (at least for the Nairobi Country) was defended by the then Nairobi Governor Evans Kidero and sailed through. Despite the fact that the competition – Craft Silicon and Virtual Mobile – were willing to offer the same service at a more affordable commission of 2.5% of the fees being collected.
The contract between JamboPay and the Nairobi County is set to expire April 2019, and by that time, the fintech company will have earned at least Ksh. 767 million from that deal. In the financial year 2016-2017, the County collected Ksh. 10.9 billion in fees. Seven in every 10 shilling collected by the Country was paid through JamboPay.
For the financial year 2017-2018, it is not clear how much was collected since JamboPay puts the figure at Ksh.14.6 billion. While the County places it at Ksh. 8.2 billion.
The current acting County Finance and Economic Planning executive Charles Kerich say the JamboPay system is not transparent and the Nairobi County will be looking to replace it when the contract ends. At the same time, the County is mulling setting up its own stand-alone system for collecting revenues.
Boasting of many Clients
When JamboPay signed the contract with Nairobi County in 2014, its parent company Web Tribe was boasting of 1,500 institutional clients and processing Ksh. 5 billion in payments. The CEO and Founder Muchemi by other accounts other than his is said to be worth Ksh. 400 million. Currently, JamboPay is estimated to be serving at least 1.2 million users and some 10,000 merchants.
This article is by no means affirming or dispelling any allegations laid upon JamboPay. However, there is no denying, Danson Muchemi as the CEO needs to safeguard his reputation.