E-taxation: digital as a response to common challenges in three African cities?
Whether it is a challenge or a development lever, tax collection is at the heart of the digital transformation process in three cities in the ASToN network: Bamako (Mali), Kumasi (Ghana) and Matola (Mozambique). During the first phase of ASToN, these 3 cities chose to work on the topic of e-taxation.
It is a fact that African cities are diverse and varied, and so are the challenges they face. However, we can observe some major trends on a global scale. Tax collection is one of the issues that urban services around the world need to manage and improve in order to ensure a good source of revenue for the city.
Common issues in 3 network cities
Since tax collection is a key factor in the development of the local economy, it is important to identify the issues that need to be addressed to ensure financial self-sufficiency. Here are some of the obstacles in the 3 cities considered:
Manual collection and too many intermediaries
The collection system is still largely quite old and the cycle long and tedious due to intermediaries. For example, taxes are collected in markets or from users and landlords by service agents who then have to travel to collection centers or local services. More than 90 percent of revenue collection at the Kumasi Municipal Assembly is done manually. Too many intermediaries increases collection costs and the risk of leakage. It also leads to transparency problems.
Informalization and false documents
Due to the long and arduous procedure, and the fact that services are difficult to access (long queues at tax centers in some cases), there is a proliferation of false documents and the development of alternative and informal payment systems. In Bamako, for example, since the queues at the tax centers are long, some people come forward as intermediaries: in return for payment, they will stand in the queue in place of the payers and sometimes also make the payment at the tax center in their place. This system and these arrangements are informal.
Different collection centers not linked to each other
In the three cities, the same observation was made: the different collection centers operate in silos and there is no centralized directory. There is no centralized “repository” of tax base information in Kumasi, for example. Citizens also have to make multiple trips depending on the tax to be paid, as each center specializes in one type of tax.
Lack of data and updates
Related to the previous challenge, in Kumasi there is a lack of policies to ensure that data is complete. In addition, the last data assessment was conducted 15 years ago, but should be updated every three years to be more effective. In Bamako and Matola, there is also a lack of reliable data.
Internal capacity
The level of computer skills of municipal staff is sometimes average.
Weak communication with citizens
The inhabitants have little knowledge of what is being done and why.In the case of Matola, it was during a workshop that the local teams realized that the city does not communicate enough with the citizens, and not who would not want to pay taxes.
In the case of Matola, it was during a workshop that the local teams realized that the city does not communicate enough with the citizens, and not the citizens who would not want to pay the taxes.
Which economic sectors are concerned? We find these problems in real estate and property taxes as well as in car taxes and markets.
Digital as an opportunity
According to a Matola city official, a smart city is “a city that promotes development by leveraging information and communication technologies to provide optimal service to all citizens.”[1]
In Matola, for example, the digital tool will be applied in the area of market vendor taxes, to the design, planning, development, implementation and operation of applications for various municipal management processes.
In Bamako, there is a lot of room for maneuver for local governments in terms of digital technology, which should allow for the modernization of municipal administration, as well as the implementation of digital technology across the board, starting with taxes on two wheels.
For Kumasi, it is the services related to property taxes that will benefit from digitization.
How do we go about it?
Despite different socio-economic and cultural contexts, these 3 examples show us that the challenges are similar. The ASToN network therefore gives cities the opportunity to think together about digital strategies that will serve to improve their tax collection services, focusing first on a pilot project of experimentation.
One of the most important conditions for a successful experiment in digital transformation is, as in Bamako, legal texts on local finance that authorize the use of information and communication technologies in the mobilization of resources. These conditions also include digital audits of urban services, data updating and analysis, staff ready to be trained if digital skills are not yet up to standard, and of course the involvement of users, the private sector, finance and technology.
The ecosystem thus created will ensure the sustainability and relevance of the solutions implemented for a truly smart city.
Next steps
After analyzing the challenges and processes at work that create obstacles to efficient tax collection, the three cities, Matola, Kumasi and Bamako, as well as the eight other cities in the ASToN network — regarding their own theme, are working to identify digital solutions to test. These analyses have been carried out through field surveys, qualitative and quantitative research, and meetings.
The cities have now reached the stage of developing their local action plans. It sets out a clear vision and roadmap for each city to achieve its goals and overcome its challenges in improving tax collection.
Written by Joyce Mavoungou
