e-Governance and e-Payment Systems

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City  council attendant using the POS system to collect market revenue
City council attendant using the POS system to collect market revenue

In a nation that ranked poorly in the 2013 Transparency International’s Corruption Perception Index, e-governance and e-payments offer the prospect of transparency and heightened revenue collections, or do they? This piece assesses the hype behind e-governance and e-payment systems, and the reality behind its impact on local revenue collections.

County Devolution

 In 2013, the Government of Kenya decentralized its functions, and adopted a system of devolved governments. As a result, forty seven County Governments were elected with the mandate of delivering services, including the provision of health care and the maintenance of local roads at the grassroots.

While devolution promises to transform Kenya through accountable and transparent institutions, inclusive growth, and equitable delivery of public services; the sharing of resources between the national government and the county governments remains a major challenge.

County Governors are pushing to raise their share of the national revenue from 15% to 40%, and notwithstanding Section 132 of the Public Finance Management Act, 2012, which gives County Governments the power to raise revenues from local sources; most counties haven’t achieved their revenue collection targets.

Counties targeted to cumulatively collect Kshs. 67.8 billion in the financial year 2013/14; however, in the first half of the financial year 2013/14, the actual local revenue collections was only Kshs. 9.0 billion, representing 13.2 per cent of their annual target. Many counties had initiated automated or electronic revenue collections, which didn’t result in commensurate upsurge in local revenue collections.

 What gives? 

Thus far, County Government initiatives are focused on the deployment of handheld POS terminals, and the provision of electronic/mobile payment options for citizens. However, the perception that revenue losses are a function of cash handling and manual receipting are not entirely accurate.

Undeniably, handheld payment terminals have the potential to lessen revenue pilferage, owing to its ability to update revenue collections in real time, and digitize payment receipts. The terminals surely mitigate the possibility of unscrupulous attendants issuing fake receipts, and stifling collections.

However, to assume that the usage of such terminals exponentially steps up County revenues, one will have to assume graft of ponderous proportions. Additionally, payments aggregated on such handheld devices are confined to a cross section of the revenue sources, constituting, parking, park fees, market fees, etc., which entail small tender payments. Likewise, though mobile and online payment systems add to citizen convenience; the belief that providing citizens with sundry payment options compounds revenues is misguided.

In consequence then, how do County Governments boost revenues?

Stated simply, revenue growth is determined by effective governance.

The complexity in availing services, permits and approvals, for citizens and businesses alike, is painstakingly long, opaque, inefficient and ineffective – leading to revenue leakages and losses. Such revenue forfeiture by County Governments is immense, and might be realized upon timely service delivery.

County Governments are better served in their quest to increase revenues by effectively delivering services, inducing transparently, bolstering accountability and mitigating bureaucratic impediments.

The failings of County Governments in mopping revenues may to such a degree, be attributed to deficient operational resources, weak internal control mechanisms, malfeasance and importantly, the lack of enterprise wide systems to deliver effective governance.

Local governments may deliver on their mandate by embracing holistic e-Governance, entwining operational management, automating inter/intradepartmental workflow, standardizing processes, enforcing control mechanisms, tracking of applications, and delivering of citizen services. Empirically, increased citizen engagement precipitates revenue upsurge and timely revenue receipts.

The collaboration

Strathmore University -@iLabAfrica’s consulting arm, Strathmore Research and Consultancy Centre (SRCC) is leading a consortium that includes Namu, the creators of “CountyPro”, and iPay limited in offering County Government’s integrated end-to-end County Operations Management and Revenue Collections solution.

“CountyPro” is an award winning solution for automating operations/revenue collections in County Governments. The solution manages centralized/decentralized County Government processes, and provides analytical and decision support systems at the County, Sub County, and Ward level. “CountyPro” is the recipient of Certificates of Merit by Skoch International for successive years, for excellence in automating local government functioning, revenue collections and citizen services delivery.

Additionally, the product conforms to Kenyan laws and regulations, and is also compliant with internationally governed security protocol, and global e-Governance standards. The system embraces all the departments and divisions of County Governments, including the management of business permits, land rates, building permits, public works, encroachments, licensing, market rates, housing rentals, parking, encroachments, citizen grievances, revenue collections, GIS enabled land records systems, solid waste disposal, vehicle management/tracking, e-tendering, county finance, and electronic citizen service delivery.

The consortium works closely with the Strathmore Governance Centre, which seeks to promote effective governance in the public, private and civic sectors in the Eastern African region. The centre conducts research and analysis on governance issues, facilitates dialogue, identifies educational needs, develops systems, processes, tools and programs designed to fulfill governance deficiencies.

 The project

Strathmore University, in partnership with Namu and iPay recently collaborated to implement a pilot in Gatundu North and Gatundu South Sub Counties of Kiambu County. The pilot, which commenced on April 07, 2014, enabled the residents of Gatundu North and Gatundu Sourth in making online applications for Single Business Permits, tracking application status, and receiving electronic Single Business Permits.

The project additionally featured online Property Registration, and property transactions, together with Land Registry search, and Land Rates/Arrears payments .It also features revenue collections on the ground, including revenues from Parking, Market Fees and Cess. Attendants were equipped with hand held gadgets, which collated collections in the backend, in real time.

All modules were equipped with payment options, comprising mobile money, debit cards, credit cards, charge cards, and agency banking, as also, business intelligence and decision support systems to track payment collections in real time, discern revenue trends, and revenue segmentation – across the revenue sources.

In keeping with Strathmore Consortium’s rationalism, the ICT Authority has recently secured funding to support ICT readiness in delivering services, and strategic Information Systems for Counties, which is supported by USD 30 million funded by the World Bank.

Next Step

County governments are encouraged to source solutions that automate county processes, integrate backend systems, diminish operator dependency, lower costs, and deliver citizen services, as opposed to merely digitize receipts, and pitch multiple payment channels to citizens.

In conclusion, while handheld POS terminals and electronic payment systems aid the process of citizen services delivery – in isolation, such systems are not an elixir for revenue augmentation for County Governments.

 Article by:Tirus Wanyoike

Business Development Manager – @iLabAfrica, Strathmore University

M:(+254) (0) 723 885 209
E: tkamau@strathmore.edu 

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