How Kampala is building a culture of taxpaying


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Sep 29, 2016 | Economy, Society | 0 comments

By Amy Fallon

KAMPALA, Uganda — Standing in front of a van packed with passengers and luggage on the roof rack, taxi driver Abu Mugisha is glued to his smartphone — paying his taxes.

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Scrolling down a list of options on his phone, he selects “pay bill” and “Kampala Capital City Authority.” In just a few minutes, his monthly fee for using the capital’s congested roads — 120,000 Ugandan shillings, or about US$35 — is all paid.

Until a couple of years ago, taxi fees had to be paid in person. It was enough of a hassle that many drivers skipped doing it, at the risk of having their vehicles impounded. Although really, impoundment was a risk whether they paid up or not. That’s because local tax administrators kept such bad records that mistakes happened all the time.

Both problems have improved with a new tax system called eCitie. The software keeps better track of registered taxpayers, reducing the chances that a driver who has paid the fee might see his vehicle taken away by mistake. And the mobile payment feature Mugisha uses is simple enough that the number of taxis registered to use it has doubled to more than 16,000. You can tell they’re registered by a special green, yellow or red sticker on the front of the vehicle.

“I used to forget to pay bills, and it used to take one hour,” Mugisha recalls. “But now I’m reminded all the time when I have a bill. And when I pay on the phone through mobile money, it’s five minutes. It’s very easy.”

The system is part of a larger push by the Kampala Capital City Authority, or KCCA, to streamline its revenue collections. Business licenses, property rates, hotel taxes and several other revenue sources are now managed through eCitie. Jennifer Musisi, KCCA’s executive director, calls eCitie “a powerful tool that has brought about convenience and efficiency.”

kampala-2Musisi is trying to cultivate a local culture that sees paying taxes as a responsibility. Part of that bargain is delivering good customer service and competent local administration in return. It’s hard to create habits around paying taxes when it not only costs people money but also is a frustrating waste of time.

But Kampala’s revenue effort is about something even larger: building the capacity to sustain local governance.

Like many cities in Africa, Kampala has traditionally relied on central-government transfers for most of its budget to pay for schools, public health, waste management and other services. That is shifting as Uganda joins a decentralization trend aimed at moving more authority closer to the people at local levels of government. For Kampala, this means it’s more important than ever to strengthen those revenue streams the city itself controls — what fiscal experts call “own-source” revenues.

Those revenues are growing at an impressive rate. In 2011, KCCA collected about 30 billion Ugandan shillings, or US$8.9 million. By the fiscal year that ended last June, that figure had shot up to 110 billion shillings, or US$32.5 million This represents roughly one-third of the authority’s total budget.

Growing the budget is not the only point, however. It’s also important for KCCA to show that these funds are used well — that paying one’s municipal fees yields better public services. To that end, KCCA has pledged to pave every road in Kampala using the funds it collects from the people. Other tangible improvements underway include improving drainage to reduce floods and installing new solar-powered street lights.

‘Prone to misuse’

The Kampala Capital City Authority was born from a 2010 Act of Parliament to manage the capital city’s affairs on behalf of the Ugandan government. The authority handles the technical capacities of managing local government; political leadership is vested in an elected “lord mayor” and other officials voted in by the people.

When Musisi and her team arrived in 2011, they found local finances in disarray. As Batungwa Frank Tumusiime, the manager of business processes in Musisi’s office puts it, the systemsKCCA inherited were “highly prone to misuse.”

There were 151 separate bank accounts, including many that were opened without official authorization. This made it nearly impossible to estimate revenues, or to prevent graft. More public monies would disappear at government offices, where citizens needed to go to make payments in person and in cash.

Another weak link was the lack of a functioning revenue registry. This meant local authorities could not easily track whether a taxpayer was delinquent or not, or even whether they owed tax in the first place. It wasn’t just taxi drivers who had mistaken enforcement cases brought against them. So did shop owners and traders.

“Many times, because of issues to do with reconciliation payments, we actually went and closed down people’s shops,” says Martin Ssekajja, ‎KCCA’s deputy director of information and communication technology. “They had paid their fees, but because of our process you could wrongly close down some.”

Plugging leaks

The first step in turning this around was to identify the “leakage points,” Tumusiime says.

“It is not true that taxpayers were not paying,” he says. “They were paying. But then there was no clear accountability of what they were paying.”

Moving away from cash payments has reduced theft. (Amy Fallon)

Moving away from cash payments has reduced theft. (Amy Fallon)

The first set of leakage points wasn’t too difficult to plug. Unauthorized bank accounts were shut down and others consolidated. The original 151 bank accounts are now down to 16.

Fixing other leakage points, however, required a detailed re-wiring of KCCA’s business processes. To get started, taxpayers were asked to register with KCCA and given unique identification numbers. That registry finally created a way to accurately track tax payments. It’s also a key part of software that had to be built for eCitie, such as a web platform and mobile apps.

The first phase of eCitie covered revenues from the transport sector — mainly taxis. It took a team of about 15 people six months to develop. Once that first module was up and running, the team adapted it to work for other KCCA revenue streams such as hotel fees, business licenses and property rates. eCitie is now both the customer interface for making payments as well as a management tool for KCCA to understand how much revenue is coming in.

The final leakage point was the reliance on cash payments at KCCA offices. Payments that must be made in cash now happen at local banks; customers can also pay by check or electronic transfer. And thanks to the mobile-payment options, most fees can be paid from anywhere, at any time. To facilitate these payments, KCCA has forged partnerships with more than a dozen banks as well as telecom companies and point-of-sale providers, who collect the revenue on the authority’s behalf.

“There’s no more cash,” Tumusiime says. “None of our staff collects money.”

Face time

So far, taxi drivers are the most dedicated users of eCitie — for drivers such as Mugisha, saving time by making mobile payments means more time driving and earning income. But not every tax or fee can be paid remotely yet — eCitie is still rolling out. And some customers still prefer going into an office to handle business.

For them, KCCA has opened a Revenue Service Centre at the authority’s headquarters in central Kampala. The walls are adorned with KCCA’s logo and slogan: “For a better city.”  On a recent morning, it was a bit crowded but orderly, and the line kept moving. About 30 customers were there to pay bills.

Nicholas Mukasa, a clerk with a local law firm was one of them. When I spoke with him, he was sitting at a desk with a customer service officer obtaining a business license for a client for 500,000 shillings, or about US$147.

“In the old days we used to get an assessment, then we go to the bank,” Mukasa told me. “After paying at the bank, you used to come here with the receipt … and they told us to come back within two days. Now it takes about five minutes.”

According to client care officer Topista Namulindwa, the center can serve up to 100 clients a day. She says eCitie has reduced a backlog of paperwork for employees like her. It’s also made it more difficult for people to forge licences because enforcement officers have better data on who has registered valid documents.

According to Tumusiime, not only has revenue collection gone up since eCitie was introduced, but the cost of doing business in Kampala has gone down. Cities in neighboring Tanzania and Kenya have rolled out similar revenue systems based on Kampala’s. One in the Kenyan county of Nandi, called e-Nandi, is integrated with M-PESA, the Kenya-based service that essentially invented mobile payments for the developing world.

“Customers know they have an obligation to meet,” Tumusiime says. “They pay willingly, and they are happy knowing where their money is going.”

Christopher Swope contributed reporting to this article.


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