Paying tax in Tanzania: at the touch of a button without a day’s travel

Digital payment of tax and trusted partners cut out tiresome journeys and give Tanzanian municipalities revenue for education, health and infrastructure.

A day trip to the tax office? Until recently, this was a reality for people living in rural areas in Tanzania, as they had to travel to a Local Government Authority (LGA) office to pay their taxes. Depending on where they lived, this meant travelling up to 100 kilometres – a journey that took the whole day. In the Longido and Ngorongoro districts, this is now a thing of the past. A mobile payment system – similar to electronic payment by card – has been introduced, and this has significantly reduced the effort and costs involved for citizens. They can now conveniently pay their taxes close to home – to people they trust. Local employees are responsible for collecting the payments. These are largely people from the same village who have been to the same school and live in the neighbourhood. They know and trust one another. This makes people more willing to pay taxes – and the tax revenue of the municipalities increases as a result.

Digital administration – more money for education, water and health

On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH worked closely with nine local LGAs to implement the system. GIZ provided the LGAs with 103 mobile devices and trained staff on how use them.

Revenues from local taxes and market and licence fees give the municipalities an important financial basis to invest in education, water supply and health care, for example. Around 40 per cent of the revenues are used for these purposes.

‘Our infrastructure and safety have improved’, says local shop owner Tyson Huho from the Ngorongoro district. The concept has caught on and is now being expanded. In 2019, the Tanzanian Government procured more than 7,000 mobile devices. A total of 185 local government authorities in Tanzania are now using the devices and an accompanying guide developed by GIZ.