Will Artificial Intelligence pay for money-leaking State firms?

Artificial Intelligence

Many firms are turning to Artificial Intelligence to secure their bottom lines.

Photo credit: File | Nation Media Group

More State-run firms are turning to Artificial Intelligence (AI) and surveillance tools to maximise revenue collection and seal loopholes amid financial constraints.

A wide range of surveillance infrastructure is being set up to track electricity use, monitor lifestyle, and increasingly deliver public services on digital platforms that are hard to cheat or corrupt.

Among those shifting to AI is Kenya Power, which has been losing almost a quarter of generated electricity to theft, leakages, and transmission networks weaknesses. It has also been in perpetual losses despite growing its customer base from 2.3 million in 2013 to 8.3 million. For every one percent of electricity lost, Kenya Power bleeds approximately Sh800 million worth of revenue.

The company now says it will turn to smart meters and an intelligent system that will connect all the gadgets to a central location and track electricity use, power outages, and load on transformers as well as read meters remotely to help bring down the losses to eight per cent.

Kenya Power said it is installing energy accounting meters at regional levels as well as 55,000 smart meters. This year alone they will bring in 50,000 smart meters for new customers.

Non-vending meters

“Installation of energy accounting meters is already complete at the regional level. Installation of border meters between counties is ongoing,” Kenya Power board chairman Vivienne Yeda said in response to shareholders.

She said the firm will also scale up war on losses focusing on prepaid non-vending meters, quality meter reading, and will schedule an inspection of small businesses and large power users.

The Kenya Revenue Authority (KRA) has already gone big on AI as it races to keep up with the ever-changing business environment. “We have increased adoption of modern technologies such as artificial intelligence, machine learning, electronic invoicing and blockchain by businesses, which has the potential to ease integration with strategic partners, thus facilitating acquisition of third party data to support and enhance tax compliance,” KRA Director-General Githii Mburu says in a strategic plan for the next three years.

The taxman has created a new division known as Technology, Innovation, and Artificial Intelligence (TI&AI) and plans to increase hiring of new specialist intelligence officers by up to 50 per cent to 322 to drive its quest for enhanced collections.

And this is yielding fruit. KRA has recently upped vigilance that has seen the taxman hit revenue targets on an improving global economic environment as well as implementation of revenue enhancement initiatives.

The taxman surpassed its tax collection target in the four months to October by Sh27.09 billion, netting Sh631.03 billion between July and October, against a target of Sh603.94 billion - translating to a performance rate of 104.5 per cent.

“Information and intelligence will be paramount in enhancing tax, compliance, and curbing corruption, tax evasion, and fraud. The main strategies to be implemented are to undertake robust intelligence management, detect, disrupt and deter tax evasion and out of tax options Treasury needs IT more than ever,” KRA said. KRA’s IT-led transformation has seen it introduce several systems including the Integrated Customs Management System (ICMS), Cargo Scanner Management Solution, Regional Electronic Cargo Tracking System (RECTS), as well as the Excisable Goods Management System (EGMS).

The taxman will also revamp the tax audit function to identify non-filers, nil-filers, arrears and obligations, and raise assessments on non-compliant cases.

However, the systems have faced challenges on implementation with claims of internal sabotage and attempts to either avoid or rig them.

EGMS, for instance, has faced severe resistance from the industry, and only started to mark and trace non-alcoholic beverages in November 2019, more than four years after the signature of the contract with the supplier.

Non-alcoholic beverages now account for over 70 per cent of the volume of products marked by the system. As of May this year, less than 50 per cent of the minimum volume of products covered in the contract has been marked due to delays caused by players.

This has been a significant glitch in expected revenue growth for Kenya and in the recovery of the significant investments made by the supplier.

Five officers working at the Regional Electronic Cargo Tracking System (RECTS) were fired this year and put under investigation for tampering with the system.

They were suspected of helping divert transit cargo colluding with rogue traders to divert goods meant for export.

If the taxman can get its act together IT will be the silver bullet in helping turn Treasury fortunes around.