LEARNING SERIES >> Improving efficiency in domestic resource mobilization through the digitization of revenue payments
Ensuring that tax and non-tax revenue payments happen efficiently is essential for the smooth delivery of essential public services.
However, some see these payments as cumbersome. The digitization of person to government (P2G) and business to government (B2G) payments, in line with the UN Principles of Responsible Digital Payments, can be highly effective in addressing this concern and improving resource mobilization.
Our research on Success Factors in Tax Digitalization, the Pan-African Peer Exchanges on Digitizing Government Payments Amid COVID-19 in partnership with the United National Economic Commission for Africa (UNECA) and various country level initiatives have revealed this immense potential.
Digitize vs. Digitalize
Digitization refers to the process of changing from analog to digital formats, such as transforming paper currency into an electronic or digital store of value, increasing accessibility, and usability.
Digitalization refers to the use of digital technologies to change an operating model and transform operational processes, providing additional revenue and value-producing opportunities.
Source: Gartner 2019
Digitalizing the tax administration system can help improve transparency and address tax avoidance, ultimately helping to fund essential services. As the Honorable Rwandan Minister of State in Charge of National Treasury Mr. Richard Tusabe said at the inaugural Pan-African Peer Exchange, “payments digitization should be seen as a driver for growth and not as a government cash cow.”
To realize this potential, a robust digital payments ecosystem must also increase convenience for users, build trust, ensure data privacy, and improve efficiency in domestic resource mobilization, aligning with the UN Member States’ 2030 Agenda for Sustainable Development. Other crucial elements include committed political leadership, investments in strong infrastructure, a robust policy framework, and effective public-private partnerships.
In this two-part series, we reflect on our learnings of key challenges, opportunities, and priorities in the design of effective revenue P2G payment digitization solutions.
- Overview: Improving efficiency in domestic resource mobilization through the digitization of revenue payments
- Part 1: Tax digitalization: building a trusted ecosystem through a common vision
- Part 2: Our learnings from digitizing P2G payments in a customer-centric way