E-Tax Mobile to Improve Uganda Revenue Collections

When Uganda Revenue Authority launched its e-tax mobile payment system on May 30, it had only two partners signed in; the telecom company Warid and Orient bank. Not quite the anticipated reaction as the big banks and telecom companies took a wait-and-see stance.

But URA's Commissioner for Domestic Taxes, Moses Kajubi, remains unfazed. When the tax body launched that system, few banks expressed interest and when it succeeded with a few that had partnered, all the rest joined. They are working on the belief that others will join after seeing their fellows gaining.

"We discussed with all of them and urged them to join the platform," Kajubi said in a prelaunch interview. "We will go with only those who are ready. The word goes that the early bird catches the worm."

Kajubi said the system is intended to make tax payment easy for users and URA expects the platform to collect between Shs10--20billion every month from sources like non-tax revenues such as Police Express Penalties, Driving Permits fees, Motor Vehicle transfer fees and many others which may be Shs 3 million or below .

"We want to make it easy for busy tax payers to be able to pay tax through SMS (Short Message Service)," Kajubi said.

Service providers like National Water and Sewage Corporation, cable TV, and schools are already using an SMS-based system to transact. Under the arrangement, participating financial institutions earn a commission on transaction while telecom companies reap from the SMS charges.

Sarah Birungi Banage, URA's assistant commissioner (Public & Corporate Affairs) said it is not clear why other players are reluctant to join. "By the time they realise that this is important, may be, their fellows will have gained a lot," she said.

High hopes

Warid Telecom Chief Executive Officer Sriram Yarlagadda said at the launch of the partnership with URA on May 2 that he hoped the e-platform would attract more customers to the Abu Dhabi-based mobile telecommunication company's on its five-month old mobile money platorm, the Warid Pesa.

"This is good for the company in terms of revenue but also in terms of deepening our relationship with our customers," Yarlagadda said.

MTN Uganda, which according to analysts is the market leader in the telecommunication sector with about eight million subscribers out of over 16 million said it will join when it is ready, possibly in September.

MTN's General Manager for Legal and Corporate Affairs, Anthony Katamba, told The Independent that there is little to benefit from the platform apart from the small commissions earned on the transactions. "We shall only join to maintain loyalty to our customers who could be potential beneficiaries from the service," he said.

Part of MTN's reluctance could be attributed to recent set-backs it has suffered on its MTN Mobile Money platform. MTN lost money when members of its staff stole up to US$3.5 million (Approx. Shs 8.7 billion) in fraudulent transactions on the platform.

Available figures indicate MTN's Mobile Money which has over 2 million subscribers controls 80% of the mobile money markets and would be an ideal partner for URA's e-tax project. Airtel Money has about 150,000 subscribers and Uganda Telecoms M-Sente just over 30,000. The numbers for Warid Pesa, which launched in December 2011, have not been published.

V.G Somasekhar, Airtel's managing director told The Independent that they would join but their delay was "technical".

"There has to be physical connectivity or technical linkage between us, the bank and URA," he said. "It is not a one day thing."

He said Airtel cannot let down its customers who are yearning for better and quick methods of paying taxes and other utilities.

"There has always been one option; paying hard cash for a transaction in banks or anywhere," he said, "But now mobile payments are the way to go especially for those who have no bank accounts and also those who have little access to banks."

Uganda telecom (UTL) was also positive and its manager for Technology Innovation, Andrew Kasola, said it was in the final stages of joining the platform.

"We delayed because of financial issues by URA," he said.

Stanbic Bank, which is regarded as the market leader in the banking sector with close to 800,000 customers, said compatibility of the system was still a major factor standing on their way. "We need to take time before joining the platform," Jacqueline Namara, the bank's head of Marketing told The Independent on May 24. "We need to sort out the system with telecom companies and URA. It is a joint venture."

Lamin Manjang, managing director of the other big player, Standard Chartered Bank said they could join later. Crane Bank's managing director A.R Kalan said he suspects many of its clients and other mobile phone users would love to see the bank on the e-tax mobile platform and said the bank could sign on later.

But Maxwell Ibeanous, managing director Orient Bank said the new system is good news to those tax payers who have no access to banks but have mobile phones and are connected to mobile money platforms. "Even those in urban areas where banks are concentrated will have an alternative," he said.

He said apart from the good image to the public that the bank would get by extending the service; the bank had eyes on the commission it stood to earn.

The launch of this mobile money payment comes at a time when it is feared URA could miss its annual revenue target of Shs 6.2 trillion for the current financial year. On a cumulative basis, net revenue out turn for the period of July 2011 to April 2012 has been Shs 4,956 billion against a target of Shs 5,335 billion according to URA's financial performance released on May 23.

The Independent
4 JUNE 2012

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