According to a UN-based Better Than Cash Alliance report, by digitising Value Added Tax (VAT) payments Tanzania could increase its tax revenue by at least US$477-million per year – which is described as "significant" for a country with a total GDP of around US$47-billion and a low tax/GDP ratio of around 12%.

The Better Than Cash Alliance, to which the UN Capital Development Fund serves as secretariat, has issued a statement based on the findings of the Report, which suggests that the East African country has empowered its tourism sector, cut bureaucratic inefficiencies and increased transparency between citizens and governments.

"Tanzania's results in driving the shift from cash to digital payments are very impressive. The country has developed significant experience that has led it to achieve gains in revenue at double digit rates while also delivering social benefits for its citizens," said Dr Ruth Goodwin-Groen, MD of the Better Than Cash Alliance.

"Tanzania is building a firm foundation for strong and inclusive growth and we look forward to further progress."

The report has also revealed how Tanzania overcame obstacles of adopting digital Person-to-Government (P2G) and Business-To-Government (B2G) payments.

"For example, when small traders were reluctant to digitise their point-of-sale payment

capabilities because they were required to bear the full costs of purchasing electronic billing machines, the government partnered with the Tanzania Trader's Association to subsidise the costs," reads a statement from the Alliance.

The organisation, representing a partnership of governments, companies and international organisations, says other countries have initiatives to digitise payments.

Kenya aims to double tax collections over the next three years via its tax filing electronic system, iTax, while in Uganda the Kampala Capital City Authority's automated tax collection system boosted revenue by 167% in a single year, it adds.