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Mobile money innovation critical for revenue collection

I was listening to the radio recently when one presenter expressed their affection of the new Zimbabwe Revenue Authority (Zimra) system. They talked about how the web-based approach is so convenient that one can actually register his/her company for tax purposes and get tax clearance certificates without visiting any Zimra offices. Impressive and well-done to Zimra. As I was listening to the presenter, I was just thinking, “I hope this goes beyond tax registrations to tax collection”.

Munyaradzi Nyakwawa

If we are really serious about revenue collections, I think it’s high time government considers other channels of revenue collection. The models that we have been using are still effective, no doubt about that, but we have of late been advised on how our resources are going down due to company closures. On the contrary, we have also heard that the SME and informal sector are growing and are now the biggest employers, yet their contribution is not being felt by even the slightest movement in the revenue basket. How about mobile money?

Zimra could benefit from mobile money if financial inclusion flourishes
Zimra could benefit from mobile money if financial inclusion flourishes

Zimbabwe needs resources for essential development needs. We need these resources in a timely and predictable manner, and we need to maximise the use of these resources. The economic climate that we have experienced in the last decade has increased the challenges of providing timely, predictable funding. Time for innovative financing for development.

Before the 2008 global financial crisis, it was easy for developing countries, including Zimbabwe, to access donor funds. Post financial crisis official development finance fell by huge margins and most developing countries were affected. Some countries went to the extent of legalising gay relationships, against their cultural beliefs, in order for them to get assistance.

Our challenge as Zimbabwe is, are we going to be able to restore healthy aid levels in this environment of the continued world financial crisis and cultural manipulation? The answer is probably no, hence we need to think outside the box and find new ways that can complement the existing sources of finance. The only thing that can have that sort of impact at this moment is some sort of innovative finance in revenue collection.

Why innovative financing is now critical
What then is innovative finance and how does it help us in our situation? Innovative finance can be defined as any financing approach that helps to:
Generate additional development funds by tapping new funding sources:

Zimbabwe can start by looking beyond conventional mechanisms such as budget outlays, we have had budgetary constraints for a long time and we can change our fortunes by using mobile money as a form of revenue collection. If every shop operating in Zimbabwe is registered and the shop owners are allowed to remit their quarterly returns using mobile money, how much more would Zimra collect in terms of revenue? Over and above the mobile money companies’ contribution to the national basket, they can be helpful to the government as a channel for collecting revenue.

Enhance the efficiency of financial flows:
By definition, efficiency means achieving maximum productivity with minimum wasted effort or expense. In our case, mobile money has proved to be efficient by reducing delivery time and costs. Given the popularity of mobile money and the recent revelations by Potraz that over 6 million customers now have mobile money accounts, I strongly feel government should start considering revenue collection through mobile money. Maybe then, the number of defaulters will be reduced. Mobile money may mean that we end up having so many small companies and individuals paying little sums as tax, which is better than our current situation where only a few companies and individuals are paying their taxes.

The primary case for innovative finance is to increase revenue flows and aiding revenue collection. However, mobile money will also help reduce our financial exclusion statistic. Business may start encouraging the use of mobile money as they will need e-float to be able to remit.

Munyaradzi Nyakwawa is a digital financial services consultant and financial inclusion analyst. He can be reached on munyaradzi.gerald.nyakwa-wa@gmail.com or on LinkedIn

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