KRA seeks private funder for new multibillion revenue collection system

The Kenya Revenue Authority (KRA) is seeking a deep-pocketed private firm to bankroll and build a billion-shilling arsenal of drones, AI systems and a new digital platform to hunt tax evaders, in a landmark shift to privatised funding for its core operations.

 In a first for the tax agency, tender documents show that the chosen “Strategic Partner” will be required to fully fund the massive technological overhaul upfront, then recoup its investment, costs and profit from KRA over a decade-long deal.

 The new financing model is detailed in a recently published Request for Proposal (RFP) reviewed by The Standard.

 “The Strategic Partner shall make all necessary capital investments,” the tender states, outlining a public-private partnership (PPP) framework. The partner will recover its outlay through “periodic installment payments” from KRA over an estimated ten-year contract tied to the successful rollout of the system.

 The project is split into three lots. The first and largest covers a complete revamp of KRA’s internal systems, including new AI tools for fraud detection and a centralised data analytics hub. The second lot is focused on enforcement hardware: Enhanced Non-Intrusive Inspection systems, Unmanned Aerial Vehicles (drones), and Marine Patrol Boats for border and coastal surveillance.

 The drones and patrol boats are intended to track illicit trade and smuggling, with their surveillance data fed into analytical engines to cross-reference physical movements with financial transactions, flagging discrepancies that suggest evasion.

KRA reckons this tech push will accelerate its race to meet soaring revenue targets.

KRA’s Commissioner General Humphrey Wattanga has explained that AI analyses millions of data points, including bank statements, to spot anomalies in real-time, uncovering evasion patterns missed by human auditors.

The third lot focuses on project management, business process re-engineering, change management, and stakeholder engagement at the revenue authority 

The new tender formalises and dramatically scales this approach. By having a private firm carry the upfront cost—which requires the winner to have a minimum annual turnover of Sh5 billion and evidence of Sh10 billion in creditworthiness for the main lot—KRA reckons it mitigates its own budget risk. 

Payments to the partner will be triggered only upon achieving specific performance milestones. With a full-year target of Sh2.968 trillion, requiring 15.4 per cent growth, the pressure on KRA is intense. 

The authority is simultaneously expanding the tax base, targeting over five million small businesses in the informal sector.