Study touts digital payment benefits

Dar es Salaam. Tanzania’s tax revenue will rise by $500 million (about Sh1.1 trillion) yearly if the government adopts digital payment systems, a new study shows.

The study from the United Nations-based Better Than Cash Alliance also provides findings about the large potential gains for governments, businesses and citizens when digitising payments.

The study on Tanzania’s digital payment initiatives was launched in New York, US, yesterday,.

It revealed that with digital payments Tanzania has so far empower ed its tourism industry by reducing economic leakage from cash payments, such as conservation park entry fees, by over 40 per cent, supporting investment and employment.

The country has also reduced bureaucratic inefficiencies, including that on import customs clearance from nine days to about one day as well as increasing transparency between citizens and governments, by digitizing tax payments which has provided electronic proof of payments and protects people against fraud.

“Tanzania’s results in driving the shift from cash to digital payments are very impressive.

The country has developed significant experience that has led it to achieve gains in revenue at double digit rates while also delivering social benefits for its citizens,” said the Better Than Cash Alliance managing director, Dr Ruth Goodwin-Groen.

The study, whose findings were availed to The Citizen in Dar es Salaam yesterday, also provides important insights on how further expanding digitisation of payments in Tanzania can fast-track the country’s economic modernisation.

For instance, it states, digitizing Value Added Tax payments and supporting formalization of businesses could increase tax revenue in Tanzania by at least $477 million per year.

The new report reveals how Tanzania overcame obstacles of adopting digital Person-to-Government (P2G) and Business-To-Government (B2G) payments.

“For example, when small scale traders were reluctant to digitize their point-of-sale payment capabilities because they were required to bear the full costs of purchasing electronic billing machines, the government partnered with the Tanzania Trader’s Association to subsidize the costs,” the report reads.