Cease handling cash from April 2014, agencies told

Friday, November 8, 2013

PHOTO | SALATON NJAU President Uhuru Kenyatta speaks during the launch of the IBM research lab in Nairobi, on November 8, 2013. The President said establishment of the lab in the country is “a vote of confidence” in Kenya as an investment destination.   NATION MEDIA GROUP

In Summary

• In an August report, Controller of Budget Agnes Odhiambo estimated that Sh1.5 billion had been lost in the first four months of devolution due to revenue leakages
• County collections have declined in each succeeding month since March and in June, counties collected Sh1.46 billion

By MUTHOKI MUMO

President Kenyatta has given government agencies up to April next year to implement a cashless payment system in a fresh bid to fight corruption.

In a directive issued on Friday, Mr Kenyatta said state agencies have until April 1, 2014 to cease handling cash and migrate all their payment systems to a digital platform.

Upon implementation, Kenyans paying taxes, applying for passports or even visiting government hospitals will have to complete transactions using mobile money, credit cards or any other modes of electronic payment. Government suppliers can also expect reciprocal treatment.

“This is a directive issued this morning. As of next year, April 1, we expect that there will be no payments in cash. All payments for government services will be carried out through digital platforms,” he said.

The government reckons that reliance on electronic payment systems would eliminate revenue leakages as well as fight corruption among civil servants.

Revenue leakage, through corruption or irregular payments, has been a chronic plague in Kenya. Last year, the then City Council of Nairobi estimated a significant part of its revenue never reached the city’s coffers due to leakages. The contagion has spread in the counties.

In an August report, Controller of Budget Agnes Odhiambo estimated that Sh1.5 billion had been lost in the first four months of devolution due to revenue leakages and apathy among county staff.

DECLINING COLLECTIONS

In March, authorities reported collecting Sh2.07 billion in revenue. As the county governments became more efficient, it was expected that the collections would rise. However, the collections declined in each succeeding month and in June, counties collected Sh1.46 billion.

“The reason why this is being done is because it will help seal leakages of government revenue. It will ensure that all revenue that government collects will end up in its destination — the Kenya Revenue Authority. It will also increase transparency and enhance delivery of services,” said Information Communication cabinet secretary Fred Matiang’i.

Mr Matiang’i noted that the Treasury has already gazetted the regulations that will guide digitization of government payment systems. The President and Mr Matiang’i were speaking during the launch of the IBM research lab in Nairobi yesterday. The lab, established in partnership with the ICT Authority, is the first of its kind in Africa and is located at the Catholic University of East Africa.

Mr Kenyatta said set up of the lab in the country is “a vote of confidence” in Kenya as an investment destination. A team of IBM scientists has focused its efforts on developing commercially viable technologies that will simultaneously address developmental challenges in water availability, urban planning, health, education, agriculture and transport.

“The investment that IBM is making in this country and in this region is evidenced by this lab,” said IBM country general manager, East Africa, Mr Nik Nesbitt.

The lab has already developed two projects within the transport and digital advertising sectors. Twende Twende, a mobile app that allows Kenyans to predict traffic flow and to avoid jams, is currently being piloted in Nairobi on the Safaricom and Airtel networks. Mattangazo, another project, allows small businesses to target commuters in wi-fi enabled matatus with location-based advertisements.

Earlier this week, Mr Kenyatta launched the first Huduma Kenya centre in Nairobi. The centres are one-stop shops for citizens to access government services and to obtain documents including birth certificates, national identity cards and passports.