A pilot study on digital payments conducted in Nairobi in 2012 showed that revenue collection in the then Nairobi City Council could be enhanced by as much as five times the current collection rates.
If for example they collect Sh100 million per month, digital payment solutions would enhance that to Sh500 million.
Automating revenue collections shuts down revenue loopholes and make the city more efficient and accountable to its residents by providing the much needed services.
A World Bank Executive, Augusto Lopez Claros, says “Revenue authorities around the world are taking steps to streamline and modernize payment systems. Taxpayers in 76 economies can now file tax returns electronically from virtually anywhere on the planet.
The use of the latest technologies to enhance the quality of public services boosts transparency and, for many tax authorities, it is also allowing a broadening of the tax base, a development with beneficial macroeconomic implications”.
According to the Paying Taxes 2014 report, most countries are trying to make it easier for their citizens to pay taxes with most common tax reform being the introduction or improvement of online filing and payment systems for tax compliance.
The compliance burden (the time to comply with tax obligations and the number of payments) has continued to fall in 2012, but the rate of decline has slowed.
Making any payments to Nairobi County is a nerve-racking process often shrouded in secrecy. From paying for a parking space to paying for land rates, there is no single source of truth.
Analogue systems ensure that there are no correct figures for anyone to settle the payments. Parking attendants disappear and only conveniently show up to clamp your vehicle and in desperation you part with something to get your car back.
This is all happening in the 21st century when most of the world has moved on to digitally managing their cities.
There are many digital solutions. Most would not require payment to digitize the county records and set them on a digital payment platform.
What is required is extra ordinary leadership to break the cartels in most of our counties and cities, remove the silos of resistance and set the county on the bath to recovery.
If this efficiency is realised, then Nairobi could raise money through municipal bonds to build its infrastructure like an efficient public transport system or redevelopment programme around Shauri Moyo, Makongeni, Mbotela and possibly Jericho.
To enhance revenue even further, the city stadium should by now be redeveloped into a mega conferencing facility. Portions of Shauri Moyo becomes a Jua Kali industrial park complete with necessary machinery to support growth of the sector and avoid perennial fights with city askaris.
Small enterprises fail to be productive and pay taxes because they do not have resources to invest in appropriate machinery, poor quality products, and lack of markets.
With digital dividends, these enterprises can be supported and turned around and literary develop new millionaires. With these myriad of opportunities, it is therefore startling that the county can be in perpetual deficit when it ought to be taking leadership in advancing the country’s image and improved environment for doing business.
In Kenya today, one does not need to go too far to find world class developers and information communications technology (ICT) expertise. It is because of these competencies that our country is increasingly becoming a true ICT hub.
If we fail to engage the current capacity, most will find their way to other destinations yet opportunities lie unexploited.
Inefficiency will certainly galore and poverty will continue manifest itself as though we lack the human capacity. We have a chance to exploit the resources we have or continue to sink. Most county or city authorities globally have automated their services and noted greater compliance on tax payments.
There was no justifiable need therefore for Nairobi County to increase parking fees or any taxes. It is by now common knowledge that increased taxes undermines compliance and often does not in any way lead to increased revenue collection.
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
The writer is a senior lecturer, University of Nairobi and a former permanent secretary, Ministry of Information and Communication.