Opinion: Kenya’s Privacy of Electronic Money at Risk


It is easy to take for granted the privacy cash and paper money accords us today. Whenever you and I pay for goods and services using cash, only the seller and buyer are privy to the details of this transaction. In essence, there is no identity required to make this transaction. The Kenyan Shilling paper note, and until recently bitcoin, are the only forms of money that do not require a name, account number or a third party like a bank, mobile money operator or card company be involved.

Kenya’s much touted transition to electronic money however, raises fundamental concerns about the possible infringement of our privacy. Unlike paper money, electronic money leaves a traceable digital footprint, a trail of all our transactions. How much you spent, to whom, what you bought, and where you paid for it. Inadvertently, in paying electronically, we share personal transaction details. This data is incredibly valuable for governments, the Kenya Revenue Authority, mega corporations and consumer companies. And why? They are mining it for mass surveillance and advertising.

Depending on how you view it, our privacy of money can be both good and bad.

On the one hand, it affords criminals and corrupt officials a way to launder money, evade tax, hoard and receive proceeds of crime. Governments would love to eradicate paper money because, it fosters a means to keep hidden transactions off the books.

In May this year, corrupt Kenyan police officers were exposed after their mobile money transactions were laid bare before a vetting board. Junior officers repeatedly collected bribes from traffic offenders and sent them to their seniors via Mpesa. For investigators, sieving through their mobile money statements to connect the dots was fairly trivial: where the money was from and where it was headed. For askaris (police men), accepting cash bribes is now the safest way to accept unlawful proceeds. They now strictly request traffic offenders to withdraw Mpesa at a predetermined cash agent. Then, without a trace, pick up the cash at day’s end.

But there is a flipside to electronic money, that can lead to unlawful abuse of our rights. In March, the Kenya Revenue Authority (KRA) announced a proposal to use mobile money and bank data to enhance its tax collection mandate. KRA intends to pass our data through a Data Warehouse and Business Intelligence (DWBI) system to approximate income levels and tax due. There is no legal basis for this, a fact that drew sharp reactions from the Kenyan public, civil rights advocates and Safaricom, which, rejected KRA’s bid to freely access taxpayer’s Mpesa’s accounts.

When we sign up to use mobile money or card payments, are we automatically granting unfettered access to our personal data?

Article 31 of the Kenyan Constitution guarantees us a right to privacy, which includes the right not to have the privacy of our communications violated. In Kenya, the lines between communications and money have been blurred. Telecommunications companies are now indistinguishable from financial institutions, and Banks have morphed into telecommunications companies.

The way I see it, money was never meant to be a tool for identity tracking. The transition to electronic money is a discussion we, the public, need to have.

KRA’s move targets the over 65% of Kenya’s economy that is largely a cash intensive informal sector. But the taxman’s preemptive move may backfire, just like in India, where, a radical move to crackdown on the informal sector’s untaxed revenues led to unintended consequences. India’s informal economy turned to informal financial services, resulting in decline in debit card payments, bank transfers and bank deposits year on year. Capital, fleeing surveillance, found its way into gold, real estate and cash.

On a global scale, the resistance to increasing supranational surveillance of financial transactions has taken the form of cryptographic money. Digital cash, as the name implies, is an attempt to construct an electronic payments system modelled after our paper cash system. It restores our privacy of cash in digital form. Today, Bitcoin is the only true form of digital cash, and why, it presents a headache for monetary authorities and Central Banks across the world. Earlier this month, 90 Central bankers gathered at the Federal Reserve Bank in Washington to discuss Bitcoin.

Where do we draw the line? What is the suitable level of privacy? What counts as a private transaction? Who decides?

Before we jump in the deep end of electronic money, boundaries need to be set. I would like to live in a society that provides the appropriate level of privacy for my financial transactions.