A five-year partnership between Naivas Limited and fintech firm FlexPay that processed more than Sh3 billion in transactions has collapsed into a dispute over Sh31.2 million in customer payments, competing financial claims and a criminal investigation.
Launched in February 2021, the partnership allowed shoppers to buy goods at Naivas outlets in instalments.
The pact worked well as FlexPay retained a five per cent commission for providing the tech platform for the buy-and-pay-later deal, with the promise to remit 95 per cent of the sales to the retail chain.
But the deal collapsed in March 2026 after Naivas accused FlexPay of failing to remit Sh31.2 million from customer sales.
Naivas terminates a seven-year partnership with FlexPay over Sh31.2 million in unremitted customer instalment payments.
Photo credit: Pool
FlexPay counters that Naivas owes it more than Sh24 million in loyalty points and disputes the retailer’s account.
The row has triggered a dispute before the High Court in Nairobi, where Flexitech Group Limited, which operates FlexPay, and its directors are challenging the criminal trial of theft by a servant.
Justice Roseline Aburili on Thursday declined to temporarily stop arrests or prosecution, saying Flexitech and its directors had not established sufficient grounds for immediate protection.
“If courts were to stop criminal prosecutions in order to protect businesses and reputations, except where, on the face of it, the prosecution is a purely civil-commercial dispute being recognised, then no prosecution of prominent people would take place,” the judge said.
“Reputational injury and loss of business are ordinary and inevitable consequences of any criminal prosecution, especially against prominent individuals, and do not, per se, constitute abuse of process or a ground for halting prosecution at the interim stage,” she said.
The petition names the Director of Criminal Investigations, the Inspector-General of Police, the Director of Public Prosecutions and the Attorney-General as respondents, with Naivas as an interested party.
Flexitech and its directors Dennis Karanu Mwangi, Richard Machomba, Martin Kariuki Maina and Johnson Gituma Mwangi argue that criminal investigations are being used to recover a disputed commercial debt. They want the intended prosecution stopped.
Naivas denies abusing the criminal justice system. In a replying affidavit, its Head of Loss Control, Paul Njoroge Minai, says Flexitech was entitled to retain only five per cent of payments and had no authority to use the remaining collections for other purposes.
“There was no agreement, instruction or authority from Naivas Limited permitting the Flexitech to deal with those funds in any other manner,” Mr Minai stated.
He said Flexitech acknowledged the outstanding amount in writing on February 25, 2026, but continued collecting customer payments without remitting them. Naivas says the agreement required the remaining 95 per cent to be paid by the close of the following business day.
The agreement was signed on February 10, 2021, and was due to run for seven years, until February 2028. Customers paid instalments through FlexPay and received a release code after completing payment, which they presented at a Naivas branch to collect their goods.
Naivas says it first demanded Sh24.9 million on February 19, 2026. The amount rose to Sh29.5 million by March 3. On March 9, its lawyers demanded Sh30.2 million by March 13.
According to Naivas’s court materials, Flexitech’s lawyers asked for more time on March 11, saying the amount remained unpaid. Naivas rejected the delay and later put the amount due at Sh31.2 million.
Naivas terminated the arrangement on March 17 and reported the matter to police on March 23. Its court materials say Flexitech transferred about Sh3 million on May 5, after the complaint, but the balance remained outstanding.
FlexPay says a December 2023 variation provided for loyalty points for customers shopping at Naivas. It says it paid for the points upfront and was entitled to reimbursement exceeding Sh24 million.
FlexPay also alleges that the retailer sought to reduce its commission late in 2025, proposing a rate between 0.5 and one per cent. It says it countered with three per cent, but the parties did not agree.
FlexPay says its systems flagged suspicious transactions, including purchases worth Sh10,000 that appeared on the platform as Sh100,000 before being reversed as errors. It alleges the pattern involved more than Sh300 million in transactions and may have affected incentives paid to Naivas employees.
"The relationship was one of debtor and creditor under a running account with mutual rights set-off, and the suns standing to the debit of that account were a trade debt, not money held on trust for Naivas Ltd," adds the company's director Dennis Karanu Mwangi.
The Directorate of Criminal Investigations forwarded its inquiry file to the Office of the Director of Public Prosecutions on May 26. Prosecutors recommended charges of stealing by an agent on August 11, according to court papers.
Two FlexPay directors, Martin Kariuki Maina and Johnson Gituma Mwangi, were arrested on September 1 and released on police bond the following day. The prosecution file was retained for further consideration after their advocates sought a review.
