With 1.9 million inhabitants in 2015 and an average annual growth of population of 4%, the capital city of Uganda faces many challenges: 39% of the population lives under the poverty line, 43% of the Kampalese work in the informal sector, and almost 60% of the Kampala population lives in informal settlements. A National Parliament act in 2010 made obsolete the Kampala City Council (KCC) and instituted the Kampala Capital City Authority (KCCA) instead. The KCCA is led by an Executive Director appointed directly by the President and by a Lord Mayor elected by residents.

As for many African cities, Kampala’s revenue still depends strongly from central government’s transfers (70% of the city’s revenue). As Kampala experiences rapid growth and increased responsibilities, there is a need to strengthen financial autonomy by increasing the share of own source revenue in its total income. Local revenue sources administered by KCCA include a dozen tax and fee revenues, five of which provide for over 80% of the total (property tax, road user fees, trading licenses, local service tax, ground rent) and the others provide a few substantial revenues (taxi operation fees, street parking fees, outdoor advertising, land fees, local hotels tax, market, building fees, vaccines fees, passport fees, marriage certificates, penalties and fines, etc.). When the KCCA initiated its activities in 2011, it encountered important challenges in the revenue collection and administration system. Amongst them:  bureaucratic manual system which led to frequent mistakes and high operational costs; absence of a functional city revenue registry which prevented the municipality to track taxpayers and know who had paid or not; delays in collection, reconciliation payments, issuing licenses and receipts; long queues at banks; a system prone to misuse and corruption because of cash collection. In addition, the municipality used more than 151 different bank accounts operating, some without official authorization. All this, led the municipality to have little knowledge on how much money was effectively collected or lost, and to be unable to provide adequate service delivery due to weak revenue mobilization.

Since 2011, KCCA has engaged in a five-year strategic plan intended to steer the authority towards self-sustainability by reforming fiscal structure and modernizing the revenue collection and administration system. One of KCCA main successes has been the automation of revenue administration with the introduction of the eCitie programme. Launched in 2014, eCitie is a unified management information system, that allows for online registration, declaration and payment of local taxes and fees. It offers taxpayers a variety of payment methods options, including payment over the counter, at point of sales, bank payments, mobile payments (mobile money and mobile banking). With the new system, each person or business are provided with a personal identification number, and the information is stocked in a centralized municipal taxpayers’ registry. The online revenue management system also facilitates reporting (both users and managers can consult reports online or via mobile); improves debt collection and refunds, and facilitates enforcement thanks to the use of mobile technologies (SMS reminder of notices and acknowledgement of payments). The project started in the transportation sector (mainly road user fees and taxi operation fees) and is being adapted to other revenue streams such as hotel fees, business licenses and property rates. For fiscal year 2015/2016, total collection by Mobile Money reached approximately UGX 10,9 BN (US$ 3 million) making a fraction of 12.8% of the total non-tax revenue collections as per eCitie.

The financial reforms initiated by the KCCA in 2011 have yield positive results in a very short time frame:

• Increase in revenue collection. KCCA own revenue went from 30 billion Ugandan shillings UGX (US$8.9 million) in 2011 to 110 billion shillings (US$32.5 million) collected in 2016, which corresponds to a rise of 266% over the period. Besides the sharp rise in the amount collected, the share of own sources revenue in total municipal revenue has also increased, going from 36% in fiscal year 2010 to approximately 46% in fiscal year 2016. The growth was mainly due to an expansion of taxpayers’ base as; 110.000 new informal business were included in the tax net, and an increased compliance level of 70% resulting from easier payment method and improved enforcement. In addition, central government transfers and donor funds have also increased over the period, which is also a reflection of the improved performance of KCCA, which has given the National Treasury and other funders confidence that grant monies are being used appropriately. Transfers from central government went from 52BN UGX in fiscal year 2010 (US$14 million) to 126BN UGX (US$35 million) in fiscal year 2016, which means a growth of 242% in 6 years.
  
• Increased operating cost-efficiency in revenue administration. The cost of collection has increased nine?fold between 2011 and 2014. The initial situation had very limited administration capacity, there was a need to establish systems and capacities, including investments such as procuring assets and hiring consulting services. The Directorate for Revenue Collection (DRC) recovered all initial investments in only one year. In the longer term, the cost efficiency of regular operations is expected to improve substantially and to reach 5%.
  
• Reduced corruption and fraud. Thanks to the reduction of manual processes and bureaucracy, the elimination of cash collection, an increased control through processes automation and real-time update of customer registers and money entry. The reduction of KCCA bank accounts from 151 to 16 in 2015 allowed to increase traceability and to reduce risk of misuse.
  
• Improved management of funds. More knowledge about taxpayers and how much revenue is collected resulting from the new automated system, enabled the municipality to improve projections, cash flow planning, budget management and plan the roll out of new services and infrastructure. KCCA has now a full team dedicated to revenue analysis and projections and a city fiscal policy to guide the allocation of funds.
  
• Increased expenditure in public services. The amount spent on repairs and maintenance of services has more than doubled from 2012 to 2014. Reflecting KCCA’s efforts to rehabilitate much of the city’s infrastructure. KCCA has formulated a five-year capital investment plan that includes slum upgrading, street naming, road reconstruction, an integrated public transport system, storm drainage, disaster management, upgrading the city’s healthcare schools and recreation facilities, as well as various economic development initiatives.
  
• KCCA received its first credit rating in Uganda’s history as a result of its sound financial management. In May 2015, Kampala was rated ‘long-term A’ and ‘short-term A-’ by Global Credit Ratings, a South African rating agency. This has allowed KCCA to access funding from international institutions such as the World Bank, and it will also open the perspectives for KCCA borrowing or issuing bonds.
  
• From the citizen point of view, the eCitie project has increased quality of services by reducing delays in delivery and reducing mistakes. It has also increased convenience by offering the option to pay in instalments and greater capillarity of sales point of Mobile Money than traditional banks and tax collection offices, avoiding long queues and travelled distances. The reform contributed to increase client awareness about how the system works (websites, information library, etc.), deadlines and amount to be paid (automated reminders and notifications through SMS and other channels).
  

According to Mr. Batungwa Frank Tumusiime, Manager of business processes at the KCCA, the key elements that have ensured the success of the project include:

• A strong and clear political support from KCCA leadership, and particularly from the Executive Director, that ensured that actions were taken rapidly.
  
• A strong institutional capacity: KCCA established in 2011 the Directorate for Revenue Collection, which strengthened in-house capacities by hiring experienced staff, offering regular training, improving wage to increase motivation and stability, and buying modern equipment. The DRC includes a Research and Business Analysis unit which played a particularly important role in completing critical studies, drafting operation procedures, projecting revenues, and proposing reform measures.
  
• Make thorough studies beforehand in order to identify the challenges that prevent seamless revenue collection and adequate actions to improve tax collection and management, instead of just raising tax rates.
  
• Partnerships with a variety of institutions and strong dialogue with all stakeholders, particularly banks and telecom companies, to ensure that citizens would be able to make payments at any bank or with any operator. The negotiation with banks was crucial as the eCitie programme enables people without a bank account to effect payments with Mobile Money. Collaboration with national agencies, such as the Uganda Revenue Authority, the Uganda Registration Service Bureau and the National Social Security Fund, were key to share information in order to verify and update databases and registers but also to ensure that the eCitie programme was compatible with other existing systems. A strong dialogue with trade and business associations was important to ensure success of the initiative.
  
• Communication: Although compliance has increased, there is still a strong lack of voluntary tax payment culture. KCCA has been also facing difficulties to ensure enforcement during the election period. Communication and sensitization campaigns are still needed to make sure the citizen understands its obligations and rights. The local government must also create communication channels to receive the citizens’ enquiries and feedback. Related communication campaigns showing how funds are being used are crucial to make sure that extra revenue is reinvested in public services and that the citizen knows it.
  
• Combine traditional and innovative solutions. The administration encountered resistance from the citizens who still fear to use technology or do not have the capabilities to do so; so it has to offer alternatives adapted to different category of people (elderly, illiterate, rural population, etc.). As such, the eCitie payment through Mobile Money is compatible both with smartphones and simple phones without internet. And citizen can choose to pay through the traditional way (at bank) and the innovative way (mobile money). KCCA also maintains a Revenue Service Centre at the authority’s headquarters for customers that still prefer going into an office to pay their taxes and fees.

• Official website of the KCCA:http://www.kcca.go.ug/
• About the eCitie programme:https://ecitie.kcca.go.ug/portal/
• About KCCA reforms:https://nextcity.org/features/view/kampala-africa-urban-development
• About KCCA financial reforms
• About KCCA first credit rating :