Advancing Financial Inclusion through Digitisation of Government receipts in Zimbabwe.

    Today, merchant payment flows, with an estimated value of $80 billion are now a significant feature in the national payment landscape. It is estimated that over 70% of transaction in Zimbabwe are now electronic payments, of which 82% of these are mobile money payments. How significant?

    Despite the increased numbers and statistics that mobile money is now the popular account for transacting, it seems not much is being done, or rather we are lagging in terms of government receipts, from individuals and business. Global person-to-government (P2G) payment flows are now estimated at US$7.7 trillion. The Consultative Group to Assist the Poor (CGAP) observed that “Despite the value in digitizing these payment flows, only a small proportion have been fully digitized in emerging markets”. Zimbabwe included.

    Government revenue is a function of economic performance and efficient collection systems. However even with the best performing economy, without an efficient collection system revenues may not improve at the rate that is sustainable.

    Why mobile money P2G payments are critical.

    It’s called financing for development.

    In the absence of Official Development Finance, domestic resource mobilisation becomes key for revenue collection. Mobile money has had the impact on widening the revenue base and government needs to tap into that. Mobile money has had the effect of reducing the cost of transacting in cash.

    How much money would a farmer save when they pay for their annual lease fees if they pay via mobile money? How much time will be channeled into productive business instead of traveling and queuing at a payment point?

    The fact that payments can now be done via mobile will motivate majority of the citizens to pay on time and not accrue debts to the government. P2G transactions have the potential to change the way citizen interact with their government, mobile payments provide a cheaper, faster, convenient and transparent way of remitting what is due to government. In fact such payments can actually become impulsive, thus enhancing Domestic resource Mobilization.

    There is an increased potential for financial inclusion as individuals will open account so that they can have that digital access to their government.

    P2G payments provide data.

    Most P2G payments are repetitive and once these are digitised there is data, a very strong asset for both financial inclusion and financial integrity. The same data will broaden a government’s revenue base. With the same data government can send reminder messages to citizens that payments are now due without the need for an official to drive around advising and encouraging people to pay. As a positive externality, data is key to the fight against money laundering or terrorism financing.

    The SME and Informal sector.

    These two have become the biggest employers in the economy, one wonders how many would want to pay their dues to the government but are hampered by the cost of executing such transactions. This is another leg of payments called business to government payments (B2G).

    Zimbabwe has a high mobile penetration rate and mobile money usage is impressive. B2G payments will allow government to reach a large number small businesses and informal businesses who may want to pay their licenses and other tax obligations thereby reducing tax avoidance. For mobile money providers, equipping SMEs with the ability to make B2G transactions via platforms will further expand the digital financial ecosystem, and potentially offer revenue growth thus increased tax to government.

    Success Stories


    Property Taxes: The government of Tanzania allowed for property taxes and personal income taxes to be paid via mobile money. In a year about 15% of the tax base was using mobile money. Follow up researches and studies reviewed that, the use of mobile money led to a decrease in tax avoidance. It also found that there is a new a group of individuals who were paying through mobile money who did not have a record of paying taxes.

    Motor Vehicle Licenses: Licenses were paid for using cash, this system proved to be highly inconvenient for individuals and this led to a middle man system (not new to Zimbabwe) that created revenue leakages for the government. The government partnered with Vodacom’ MPESA to offer a digital alternative to pay for licence fees. The results were encouraging, “Within the first three weeks of the service’s launch, 42.5% of US $2.1M in license fees was collected through mobile money.”

    They did the same with business customs at Dar-es-Salaam main port and like the cases above there was an improvement in revenue collected for government as well as broadening the tax base and reducing tax avoidance.


    Back to school: The back to school initiative was successfully implemented in Ivory Coast as well, but the Ghana case is more relevant because it was initiated by the government.

    The government of Ghana launched Back to School initiative with MTN in 2014. This was a mobile payment solution for parents and guardians to pay school and college fees using mobile money. Schools are reportedly benefiting predictable revenues making planning easier as well as increased transparency. The government is happy with the revenue coming through and intends to add more schools to the project.


    We cannot talk about financial inclusion without Kenya in the Mix

    The Kenyan government partnered with Airtel in an arrangement that allows for Mobile Money customers to pay their taxes via the mobile money platform. Customers no longer have to queue in banking halls to pay their taxes. Customers can make enquiries on the Airtel platform get a reference number make payment and these are processed in real time. John Njiraini the Commissioner General is quoted saying “easing tax compliance leads to enhanced collection as tax payers find it easier to comply.”

    Over and above reducing tax avoidance and broadening the tax base, government receipts have the potential to increase the number of transacting accounts. Individuals will open accounts in order access government digital payment platforms. Such accounts will improve our financial inclusion agenda as outlined in the National Financial inclusion strategy.

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