Date Published: Aug. 31, 2017, 8:08 a.m.
nda ECOPOP is a Civil Society Organization that promotes the development of African territorial communities. Through the promotion of innovation and inclusive local public policies, it works with grassroots communities in advocacy efforts to influence qualitatively the decisions affecting citizens at different scales of intervention. In this perspective, SMART technologies have played an important role in advancing with this objective, while guaranteeing the inclusion of other stakeholders in local governance decisions and scaling up.
Enda ECOPOP is a Civil Society Organization that promotes the development of African territorial communities. Through the promotion of innovation and inclusive local public policies, it works with grassroots communities in advocacy efforts to influence qualitatively the decisions affecting citizens at different scales of intervention. In this perspective, SMART technologies have played an important role in advancing with this objective, while guaranteeing the inclusion of other stakeholders in local governance decisions and scaling up.
Its mission is distributed around three (3) strategic areas: (1) local participatory governance for development to forge an institutional and social platform for sustainable development in local communities in sub-Saharan Africa; (2) human rights and basic social services, working to promote the rights of populations for basic social services; and (3)local economic development by building coalitions to generate income and poverty reduction in local communities by supporting community development initiatives.
Enda ECOPOP articulates its intervention from the local (neighborhood level) to the global (international level), going through the municipal and national scale. Its main activities are focused in the development of studies and research; modeling of interventions to provide tools and methods; capacity building, advocacy and networking for local policy change.
YTAX is a SMART and collaborative system to improve the mobilization of local resources, reinforce transparency and fight fiscal evasion. The tool operates with a cellphone and a mini printer and is operated on the ground by local collectors in municipal markets and bus stations, and managed by the municipal administration. Taxes are parameterized in the device and the terminal further allows locating the place where the collection was made by GPS. Every time a transaction is done, officials can visualize the place and the amount charged. It has been piloted in two Senegalese municipalities in 2015-2016 with the support of Enda ECOPOP and is now in a scale-up phase in eight other municipalities.
In Africa, achieving the autonomy of local governments in a decentralized framework requires the increased mobilization of financial resources. These help to increase the capacity to finance local projects and provide a satisfactory level of basic social services for the local population. In recent years, central State financial transfers fluctuate, on average, around 3 to 7% of the public budget per year in the region. The mobilization of own resources such as tax revenues, remains very weak and it is problematic in most African local governments due to:
Starting with the assumption that good financial decentralization should be based first and foremost on the effective mobilization of local revenues, it is, therefore, urgent to implement innovative solutions for the mobilization of local taxation. It is in this context that Enda ECOPOP has set up a collaborative technological device called "YTAX" (a diminutive of YelenTaxe). Yelen is borrowed from the national languages Ouolof in Senegal (which means awakening) and Bambara in Mali (meaning, light, transparency, smile, ascension). The “Yelen Tax” seeks to put ‘light’ on the tax and to bring back the ‘smile’ to Mayors. This innovation is a step forward for the integration of SMART technologies into local development strategies and the anchoring of collaborative and transparent cities.
"YTAX" is a SMART and collaborative technology to improve the mobilization of local resources, increase transparency and combat tax evasion. The device was featured with the objectives to: (i) identify and give reliability to the tax base; (ii) ensure control, transparency and accountability on the fiscal chain; (iii) communicate in real time the financial information collected; and (iv) collect and record the different municipal taxes.
This initiative originates from the direct demand and needs expressed by local leaders and Mayors in Senegal. Transfers to local governments in Senegal amount 5,5% of public budget and the latter face a lack of local resources.In 2003, Enda ECOPOP conducted a study in Dakar that shown that 80% of the fiscal potential of publicity in the city was not exploited and recovered. Enda ECOPOP has worked since then to articulate the approach on local resources mobilization with local elected leaders in order to identify niche of revenues.
In 2005-2007, Enda ECOPOP prepared a strategy on local revenues mobilization, linked to participatory budget approach. In this context, it completed the first manual on participatory budgeting and one of the components was on local revenues. Ithas kept on working on this thematic in close relationship with leaders: after the strategy elaboration, it realized that there was a need to demonstrate concrete impact and to help municipalities with concrete tools and solutions.
The initial objective of the YTAX was to identify the tax base (e.g. in markets, local shopkeepers selling their products and using the stands; in bus station, the companies of local and inter urban buses, etc.). The identification of the tax base allows determining the fiscal potential. The taxes collected via YTAX system were not new to taxpayers. Tax collection was already happening and was done manually by collectors coming on sites on a regular basis. However, some transactionswere not registered, some partially or subject to corruption, etc. So the Mayor had no real overview of the tax potential on these two sites as the process was discretionary and could be subject to arrangements between collectors, tax payers and the tax inspector.
Enda ECOPOP started working on SMART technologies, producing the first module of YTAX in 2013. After several evaluations and changes to respond better to the needs, the definitive module was ready in 2015-2016.
YTAX has been initially experimented in two Senegalese municipalities, in MBacké (around 300,000 hab, central Senegal) and in Dalifort (100,000 hab., suburbs of Dakar).The two sites of experimentation were the municipal market and the bus station. It applied to taxes related to roads, markets (‘souk’), stall, parking, and slaughter.
Every year in January, the municipal council deliberates and decides on the amount of tax applied during the year (Article 195 (CGCL): ‘recettes de fonctionnement de la commune’). It is on the basis of this approved municipal decision that Enda ECOPOP supports the fiscal administration to parameterize the data in the mobile phone (tax x; amount y). It is then possible to customize the App to every single municipal situation and decisions and this process is done for each tax the municipality wishes to collect (on publicity, livestock transport, etc.).
This means also that no legislative or regulatory modifications were necessary to implement this experience. The solution works on the basis of the existing competencies of municipalities, for the taxes which the local government is able to decide the base and the rate.
The first attempts to implement YTAX encountered resistance from the tax collectors and the administration. The Mayors were on the contrary very eager to implement the experience as they could see its potential.
The collector is equipped with the terminal (cell phone and mini printer) and passes to the taxpayers to recover the taxes already codified by a municipal deliberation. Each taxable person receives, on payment of the tax, a receipt containing a unique number which will permit control at a later date. By issuing the receipt, the geo system locates both the collector and the taxpayer that are registered in the system. The receipt provided supersedes (or supplements) the receipts traditionally issued by the collectors .Previously, they were using a notebook and receipts to collect daily, weekly or monthly taxes. The YTAX system is not replacing the notebook, which is an official document. But what is required to the collector is that every time they collect a tax, they have to key in a specific button of the App. On average, 4 to 6 collectors are employed by the municipality, depending on the size of the territory and amount of tax to collect.
The Mayor (or his representative), thanks to a secure web browsing (on a computer or tablet) can follow in real time the operations of collecting tax resources on the municipal territory. They have access to three major information i) who collected (name of collector); ii) where it has been done (geo-localization); iii) the amount collected. This constitutes an enormous improvement in terms of transparency and municipal management, as previously Mayors were not aware of this detailed information.
In each neighbourhoods of the municipality, there are “conseils de quartier” or community councils. Selected representatives operates as ‘tax controllers” and they are also given the mobile with the same App installed. As they have a very good knowledge of the territory and the people, they can go and check the tax identification and collection. The citizen and social oversight is key to the process and has enabled a greater application and implementation. It was actually one of the ways to overcome the initial resistance: the peer and social “pressure” obliged the collector to use properly the new tool.
It is worth noting that the resistance did not come from the tax payers or the citizen themselves – who are ready to pay as long as it is transparent and they know the use of it – but rather from intermediaries that had individual interests in keeping the “old system” in place.
From the beginning of the experiment, there were expectations from the citizens, eager to know more about this new experiment related to budget and financial resources. Enda ECOPOP supported the municipality to organize communication campaigns to show the link between services and tax. Training to elected leaders, citizens, community councils and local economic actors were also provided.
Finally, in order to increase the citizen ownership, some form of participatory budget has also been introduced. The municipality presented the annual budget to the population and a portion of the investment budget (% depends on the amount of revenues collected and on each city) is dedicated to participatory decision making and investment priorities are decided by the citizens.
The next step foreseen is the integration of mobile banking in order to allow the payment of the tax directly via the phone (following the mobile banking model of Mpesa or Orange money).
As soon as a municipality joins the system, the different stakeholders involved in managing municipal taxes are registered in the system by the Tax Administration Officer. Each stakeholder, depending on its function (collector, inspector and Mayor’s Office), is given a user account and a corresponding device which enables them to use the system:
The Collector is provided with a terminal (mobile telephone and printer) and visits taxpayers in order to collect the taxes that have been fixed by the municipality.
The Tax Inspectors have an administration interface which can be accessed from any computer or tablet. Thanks to a secure navigation system, they are able to check and monitor the collection operations carried out by each collector.At the end of the working day they can print out the status of each collector in order to facilitate and streamline the transfer of the collected funds.
The Mayor’s Office, as a result of a secure web browsing system (on a computer or tablet) can monitor in real time the collection of fiscal resources in the municipality.
The tax controller is mobilized by the local government (it can be chosen from the neighborhood councils or the civil society). It is equipped with the mobile phone and can pass after the collector to check the effectiveness of the collection. To do this, they key in the number of the receipt issued by the collector which is in the taxpayer’s possession. This operation allows him to verify the collection, to identify the taxpayers who may have been omitted by the collector and to make the collection operation and the tax base more reliable.
The whole process is supported by Enda ECOPOP who accompanies the Mayor’s office and trains the collectors’ and controllers teams to use the device.
Enda ECOPOP initially invested on the mobile App with its internal resources to develop the test module, under a pilot and exploratory project. Given the fact that the demand was coming directly from the municipalities, they also facilitated the implementation of the pilots.
The initial investment was around 1,000 US$ and the training of municipal agents and collectors was ensured by the municipality.
It is worth mentioning that it is a simple yet effective project. It has introduced a SMART solution to an existing manual system, without creating additional layers of bureaucracy or hiring additional collectors. It used the existing resources and worked on the integration of the new tool into the administration and community procedures and habits.
For the rollout phase in 8 municipalities, the cost is estimated at around 101,000 US$ including the investment in equipment and materials, YTAX software development for municipalities and training.
The implementation of this device has achieved some important improvements in terms of municipal and fiscal management:
Finally, it has improved the performance of municipal services, through a governance approach based on citizens’ needs. It allows to better consider the essential rights of citizens.
In terms of concrete figures and impacts on municipal finance, the experimentation of YTAX has made possible an increase in local revenues in the Senegalese pilot municipalities. In Mbacké, the amount collected for the tax on occupation in municipal markets rose from an average of $87 per day to $630 after the first three months of the trial in 2014. In the municipality of Dalifort (in the suburbs of Dakar), the amount collected for the tax livestock increased from $285/day to $1448/day after the first month of the trial in 2015.
The first evaluation showed that the municipality could to recover seven times more in terms of revenue from the tax on market and bus station.
The global evaluation of the pilot phase is on-going and will give more accurate financial data.
There are two major difficulties that have been observed in the implementation of YTAX.The first one is associated with the resistance from two essential actors of the chain ineffectiveness of the tax collectors who have difficulty operating the kits; inadequate commitment of some tax inspectors from the deconcentrated tax administration.
The resistance to change of these intermediaries is still important as the new system disturbs the informal ‘agreements” between collectors and preceptors (receiving up 25% of the revenues).The continuous leadership from the Mayors and the relatively good acceptance of the population to pay the tax are the positive factors to balance this trend: the collective interest should eventually surpass the individual interests. The second challenge is of technological nature. So far Enda ECOPOP has kept and saved the data in a server on ‘the cloud’. However the server is small and Enda has not the capacity to host and keep big amount of data (cost of the server, of its maintenance). MBacké has withdrawn from the pilot precisely because it could not keep the data and Dalifort will keep on going by itself. Enda ECOPOP sees 2 (two) options to overcome this constraint to effectively implement a collaboration agreement with the Central state, specifically with the Senegalese State IT Agency (Agence De l’Informatique de l’Etat, ADIE). The Agency could host the server and data and support the institutionalization and systematization of the experience;to negotiate and sign a collaboration agreement with interested municipalities. They would reserve a small portion of the revenues to reverse to Enda ECOPOP which would in exchange host the data and maintain the server.
There is a very strong demand from cities and municipalities and Enda ECOPOP keeps on received many requests from Mayors asking for support on this specific revenue collection question. The Government of Mali has also approached Enda ECOPOP to start implementing the YTAX in Mali. However, Enda is maintaining at the moment a cautious approach based of Action Research, before scaling it up at the regional level.
A first scale up phase will be implemented in 8 municipalities of Senegal thanks to the support of USAID in the framework of the GOLD project (Gouvernance Local pour le Développement). The project if foreseen for a 5 years timespan and it aims at
This will be based on the main lessons learned of the experience in Mbacké and Dalifort:
Secure the leadership will;
Train and raise awareness of tax inspectors and tax collectors, as this is where the main resistance will come; Involve as much as possible the citizens (communication campaign on tax payment, communication campaign to explain the use of revenues, etc.);Anticipate and work on the technological architecture to host the data; Enda ECOPOP sees two main elements that will tell if the experience is a sustainable and effective:
The level of appropriation and ownership of the central government
Depending whether the Ministry of Finance will accept the tool and integrate it into his national strategy, it will make a difference in the effective implementation of the YTAX and significant revenue impact nation-wide. A first promising step is the recent partnership and agreement signed with the Agence de l’Informatique de l’Etat, and Enda ECOPOP counts on a technological transfer to the central level.
The effective increase of the tax recovery rate.
If municipalities manage to recover 50% of their fiscal potential, it can already be considered as a success. In this regard, the introduction of mobile banking directly integrated in the App to dematerialize the collection process is considered as a key element to leverage and improve the tax recovery rate.