ICT surge spurs revenue growth

TANZANIA: TANZANIA is making significant strides in revolutionising its revenue collection through ICT advancements.

With the widespread adoption of Electronic Fiscal Devices (EFDs), a streamlined Tax Identification Number (TIN) system and growing digital payment options, the country is transforming its tax administration.

However, to fully leverage these developments, targeted investments in infrastructure, comprehensive training and enhanced public engagement are crucial.

President Samia Suluhu Hassan emphasised the transformative power of digital technologies in the Tanzania Digital Economy Strategic Framework 2024-2034.

“We are at the forefront of a new era, where the current industrial revolution is transforming economies and expanding possibilities.

“Digital technologies have permeated every aspect of our socio-economic landscape, including agriculture, manufacturing, health, education, finance, governance, and service delivery.”

The Third National Five-Year Development Plan 2021/22–2025/26 highlights how digital technologies can advance competitiveness, industrialisation, service provision and trade.

Additionally, the National Development Vision 2025 aims to improve Tanzania’s global ICT ranking from 133 to 70 by 2025/26.

The Ministry of Information, Communication and Information Technology’s National Economic Status Report for 2022, showed that the information and communication sector grew by 7.4 per cent in 2022, compared to 9.1 per cent in 2021.

“This growth is confirmed by the increase in access to and use of communication services, as well as the expansion of services provided by media organisations,” according to the report.

An analysis by the Ministry of Information in 2023 found that mobile phone communication services cover 69 per cent of the country’s land area.

This sector not only contributes directly to the economy but also enhances performance across other sectors through information technology.

The Tanzania Revenue Authority (TRA) reported a record-high tax collection in July, achieving 104.4 per cent of its target with 2.34tri/- collected, surpassing the 2.25 tri/- goal.

TRA’s Director of Taxpayer Services and Education, Mr Richard Kayombo, credited the success to the effective use of EFDs and ETS.

“The authority is committed to improving domestic and customs tax systems, including IDRAS (Integrated Domestic Revenue Administration System)] and TANCIS (Tanzania Customs Integrated System),” Mr Kayombo said.

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Africa is experiencing rapid digital transformation, with internet penetration rising from less than 5 per cent in 2008 to over 25 per cent in 2023. The World Development Indicator report highlights mobile connectivity as a key driver, noting over 90 mobile subscriptions per 100 people and a doubling of mobile penetration in a decade.

“While this digital revolution offers immense economic potential, it also presents complex tax challenges,” Dr Hildebrand Shayo, an economist and investment banker, observed.

To address these challenges, the Ministry of Information, Communication and Information Technology, in collaboration with the private sector, plans to implement major reforms. These include updating ICT policies, expanding mobile and postal services, fostering e-commerce, improving digital infrastructure, enhancing cybersecurity, increasing information access and supporting innovation and startups.

Dr Shayo emphasised that digitisation can streamline tax processes, enhance taxpayer services and improve compliance.

“E-filing and payment systems expedite tax returns and create a more equitable tax environment. Digital communication channels, such as email and SMS, facilitate efficient information exchange and reduce opportunities for corruption,” the economist said.

Digitisation also provides tax authorities with data-driven insights. Automated data collection and analysis enable more accurate revenue forecasts, effective progress tracking and better employee performance monitoring.

“Our goal is to manage and strengthen the foundations of a sound tax system, ensuring fairness and equity in tax collection,” Mr Kayombo said.

Finance Minister Dr Mwigulu Nchemba told the National Assembly recently that the National ICT Broadband Backbone (NICTBB) has added 3,000 kilometres in the past three years, totaling 11,319 kilometres.

“This will ensure fast, efficient and reliable communication across 99 districts, accelerating socio-economic development,” Dr Nchemba said.

Digital payment platforms are increasingly adopted across various sectors, supporting revenue collection and financial inclusion.

Watumishi Housing Investment (WHI) CEO Fred Msemwa said that the Faida Fund grew to 26.7bn/- from 12bn/- in 18 months thanks to e-government paying platform.

“The use of government electronic payment gateways has played a significant role in this success,” Mr Msemwa said.

The central bank’s launch of the Tanzania Instant Payments System (TIPS) last year, has facilitated faster, cheaper and easier transactions between banks and mobile networks.

Integration of mobile money services like M-Pesa, Airtel Money and Tigo Pesa into tax collection processes has made tax payments more accessible, especially in rural areas.

I&M Head of Retail and Digital, Mr Simon Gachahi, highlighted the introduction of ‘Rafiki Chat,’ an upgraded banking service aimed at reducing customer wait times.

“This service demonstrates our commitment to convenient, eco-friendly banking solutions aligned with the nation’s digital economy vision,” Mr Gachahi said.

Most banks, especially the largest ones, now offer over 90 per cent of their services through digital platforms, including mobile money and bank agents.

The Tanzania Communications Regulatory Authority (TCRA) reports that smartphone penetration increased to 31.55 per cent in June from 30.92 per cent in March.

The government has also introduced various e-Government initiatives, including online platforms for tax payment and filing.

The TRA e-services portal enables taxpayers to file returns, pay taxes and check compliance status online.

“Tanzania must, therefore,” Dr Shayo said “prioritise bolstering the legal framework to safeguard citizens’ right to privacy and the cybersecurity of all implemented technology systems, in addition to increasing the use of technology for taxation.