INFORMATION SYSTEMS AND THE PERFORMANCE OF
GOVERNMENT AGENCIESIN UGANDA: A CASE
OF UGANDA REVENUE AUTHORITY
ABSTRACT
The topic of study was Information Systems on the Performance of Government Agencies in Uganda a case of Uganda Revenue Authority. The study assessed the effect of information systems software, systems infrastructure, user knowledge and skills on performance of URA. The study adopted a cross-sectional survey research design because of the nature of the variables that were at hand; the study also used qualitative and quantitative methodologies for data analysis. Study Population, the entity comprises of 239 employees from which a sample size of 181 respondents was drawn. 100 prominent tax payers were also engaged in the study. According to the results, there is a positive and significant relationship between information systems software and performance at URA. This finding therefore shows that the existence of information systems software has an influence on the performance of URA as an organization. Findings further indicate that there is a significant relationship between information systems infrastructure and performance of URA. The results further conclude that information systems infrastructure is essential in enhancing the performance of URA. The results of the study also show that there is a significant relationship between user knowledge and skills and performance. The study recommends that URA should organize special seminars across the country to train tax payers on how to use information systems software like help tools and ASYCUDA world. The study further recommends that URA should purchase better internet services from service providers who can provide reliable internet to help improve on the systems infrastructure of the organization. URA should design soft ware’s which are easy to use so that even the illiterate tax payers can be in position to pay taxes.
CHAPTER ONE
INTRODUCTION
Governments across the world are investing heavily into the Information systems to enable better financial performance, increased customer satisfaction and growth of government organizations (Asongu& Le Roux, 2017). The UK government for example spent 124.8 billion US dollars from 2008 to 2017 to develop the Information systems to enable them serve their customers timely and efficiently thereby maximizing on their performance (Asongu& Le Roux, 2017). However, there is limited empirical research to describe the effect of Information systems on organizational performance in developing countries like Uganda.
The study investigated the effect of information systems on the performance of government agencies in Uganda, taking a case of Uganda Revenue Authority (URA). In this study, information systems were the independent variable and performance was the dependent variable. The key dimensions for information systems were; Information systems software, information systems infrastructure and user knowledge and skills. While performance was measured inform of financial performance, customer satisfaction and growth.
This chapter presents the background of the study, the problem statement, purpose, objectives of the study, research questions, study scope, justification of the study, significance, hypotheses, conceptual framework, as well as operational definition of key terms and concepts.
The section presents, historical background, theoretical, contextual background, conceptual background.
1.2.1 Historical Background
The evolution of information systems has a long history however, can be specifically traced from the invention of Herman Hollerith’s census tabulator which was invented to process the 1890 U.S. census. This brought the first step in automation and development of the information systems era. According to Pearlson et al., (2016)the UNIVAC I, was the first computer installed at the U.S. Bureau of the Census in 1951 which helped in administrative duties, while in general electric, the computers were installed for commercial purposes in 1954.This later paved way for the full scale adoption of personal computers globally in 1970s.
Information systems have progressed through personal computer era to client server era and currently to enterprise internet. This has been spearheaded by the United States military department since 1945 whose main goal has been to eliminate communication barriers and enable better performance; however, this technological advancement has been adopted by most governments across the globe to help in the improvement of performance (Kim et al., 2009).
According toRicci et al., (2015) the adoption of internet can be traced back with the invention of the World Wide Web in 1991.This gave way to the adoption of internet in government sectors like in health, education and administration globally.
Adoption of computers in Africa can be traced in 1960 with the introduction of the first IBM 1401 data processing system in Johannesburg South Africa which wasinstalled in the IBM Service Bureauand was first unveiled in October 1959 (Dwivedi et al., 2015).
Other African countries started using computers after South Africa especially by the late 1990s, most of the government across the sub-Saharan Africa started adopting information systems in the running of the daily activities and as of 2017. Africa had more than 450 millioninternet users with specific countries like Nigeria individually having 98 million users and Egypt having 49.23 million. This has been spearheaded by countries to enhance better performance (Ziemba, 2017).
Toots, M (2016) asserts that the use of information systems by the government has been adopted by countries in East Africa like Kenyain key sectors like education, health, revenue collection and management of water resources to improve on the efficiency of the government key agencies (Cirera, Lage, & Sabetti, 2016).
The adoption of information systems in Uganda can be traced from the introduction of the first computer ever in Uganda in 1967 in Ministry of Finance and in 1968, the second mainframe arrived at Makerere University, however, it was not until June 2006 that the Government of Uganda created a Ministry of ICT to enhance the adoption of information systems in the government agencies in Uganda (Ramadani, 2017).
According to URA report, (2015) URA has made great strides in improving service delivery through the adoption of information systems.This has been through introduction of electronic methods like electronic declaration of customs transactions, electronic registration, online payment. In addition to that,in 2010,to offer personalised services to taxpayers, the organization created taxpayer-centric Portal to enable the provision of services without hindrance, and electronic service delivery, anytime, anywhere with quick & high quality hence greater degree of transparency to taxpayers.
Secondly, with the adoption of information systems, most of the borders like Malaba, provide 24/7 services, as well as other places like Entebbe airport.This has reduced in service turnaround time with littleinteraction with the Department and reduction in taxpayer’s visit to URA.Different electronic payment methods have been adopted such as Mobile money, Airtel money, Ezee pay and Pay Way.
Since the establishment of URA in 1991, there have been many challenges related to revenue collection and the accessibility of its services by tax payers, and as of 2003, URA adopted ASYCUDA ++ to enable easier collection of taxes and management. However, realization of the weaknesses of ASYCUDA ++, URA adopted ASYCUDA world in 2011 to enhance better performance within the organization and reduce on unnecessary costs. According to Observer, Ssempogo, (2013) indicates that in 2011 URA decided to upgrade from ASYCUDA++ to ASYCUDA World in order to respond to the ever changing business needs. ASYCUDA World is more robust and flexible and therefore, able to adapt to the different settings.It also provides an easier channel for interconnectivity with other systems.
1.2.2 Theoretical background
According to Diffusion of Innovation Theory by(Rogers in 1962), diffusion is governed by four elements including the innovation itself, communication channels, time and social systems. The fourelements explain the process of change as determined by employees and the whole organization.
Diffusion assumes that the propensity to adopt an innovation is primarily a function of the availability of information. It also assumes that in the dissemination of information particularly at the local scale, personal contacts are of much greater significance than the mass media (Deligiannaki& Ali, 2011).
Diffusion of innovations theory is often simplified to concentrate solely on a product or innovation. Little attention has been paid on the complex cultural, economic, technology and other factors that determine organizational performance (Green et al., 2009). This theory therefore describes the adoption of information systems at URA as a product of availability of information to the management of the organization.
1.2.3 Conceptual background
Information Systems (IS) is the study of complementary networks of hardware and software that people and organizations use to collect, filter, process, create and distribute data. According to Jessup and Valacich (2008),Information Systems encompasses a variety of disciplines such as: the analysis and design of systems, computer networking, information security, database management, and decision support systems.
Valacich & Schneider (2015) indicates that Information Systems is an organized combination of people, hard ware, software, communication network, and data resources, policies and procedures to form the activities that store, retrieve, transform data resources into information. Information systems are interrelated components working together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization.
Takieddine & Sun, (2015) indicates that computer software, or simply software, is a collection of data or computer instructions that tell the computer how to work, in contrast to the physical hardware from which the system is built, that actually performs the work. Computer software includes; computer programs, libraries and related non-executable data, such as online documentation or digital media. Computer hardware and software require each other and neither can be realistically used on its own.
An information system Infrastructure is the foundation or framework that supports a system or organization. Gilmour et al., (2015) indicates that in computing, information technology infrastructure is composed of physical and virtual resources that support the flow, storage, processing and analysis of data. Infrastructure may be centralized within a data centre, or it may be decentralized and spread across several data centres that are either controlled by the organization or by a third party, such as a collocation facility or cloud provider.
According to Kroenke & Boyle (2015)the data centre hardware infrastructure usually involves servers, storage subsystems, networking devices, like switches, routers and physical cabling; and dedicated network appliances, such as network firewalls.
Systems Infrastructure includes; software, hardware, firmware, networks and websitesthat is used by an organizationto facilitate communication (Ajuwon, 2015). In this study,systems infrastructure is taken to mean all the necessary systems facilities like the computers, internet, software, hardware, websites and networks (intra and extra connection) that are used by an organization to facilitate better performance.
User knowledge and skills is defined as the ability of an individual to have the required knowledge to operate the computer systems (Brabham & Guth, 2017). In this study, user knowledge and skills mean the ability of the organizational employees and the clients to interact using computers, internet and all other online services.This will specifically be measured in terms of computer literacy, user competence and education level.
According to Kaplan (2012), performance is a way an organization measures its achievement in line to its strategy and objectives. In this study, performance means the ability of an organization to achieve its targets. Performance is a dependent variable and it has been interpreted to represent financial performance, customer satisfaction and growth.
Performance of the organization is measured in different dynamics mainly through the ability of the organization to achieve its strategic goals and visions. Kaplan (2015) further states that the balanced scorecard is set to align business activities to the vision and strategy of the business, improve internal and external communications, and monitor business performance against strategic goals.
In this study, performance is measured in three key dimensions; Financial performance which involves the organizational ability to meet the shareholders’ expectation and perception.
When the business is able to meet the shareholders’ expectation and perception, we say the organization has performed well.
According to Carvanna,(2003) Customer satisfaction is defined as a result of comparison between what one customer expects about services provided by a service provider and what customer receives as actual services by a service provider.
Customer satisfaction is customer evaluation of service provider whether it has met their needs and expectations (Zeithaml & Bitner 1998). Anderson &fornnel, (1995) suggested they were two concepts of customer satisfaction.
In this study, the growth of the organization is measured by its ability to meet its targets and exceed them. If the organization is able to meet its targets, it has growth while if it fails to meet its target, we say it’s not growing.
Growth of an organization is usually expanded into three sub categories, that is to say; to make profits to continue in existence (survival). Growth is the ultimate measure of success of a business. Without growth then obviously there will be no fulfilment of other objectives.
According to (Cole, 2016) the use of information systems in an organization has been linked to improvement in employee productivity, easier communication, timely response to customer orders, wider coverage and general customer satisfaction, Parasuraman, (2017) further notes that improvement in productivity of employees in an organization as a result of the use of information systems helps in enhancing better performance of the organization.
On the same note Kaplan, (2015) indicates that information systems adoption in organizations especially in Japanese automobile industries have brought in numerous benefits which has greatly improved on the performance of the automotive sector in Japan.
1.2.4 Contextual Background
To meet the main objective of Uganda Revenue Authority, it sets monthly and yearly revenue collection targets to its employees. These targets are a result of a strict enforcement of carrying out URA business by employees through emphasizing strict verification by URA staff on implementing information systems like E-TIN registration, e-payments, e-taxation, e-registration and e-motor vehicle registration (Turyakira, 2011).
Table below showing the deficits and target of Uganda Revenue Authority
| Year | Target (in billions of UGX) | Revenue (in billions of UGX) | Deficit (in UGX billions) |
| 2017/2018 | 15,062 | 14,460 | 602 |
| 2016/2017 | 13,177.15 | 12,719.63 | 458 |
| 2015/2016 | 11,634.87 | 11,230.87 | 404 |
| 2014/2015 | 1,265.152, | 1,287.454 | 139 (Surplus ) |
| 2013/2014 | 8,534.03 | 8,031.03 | 503 |
Source: URA Report (2017).
Uganda Revenue Authority adopted Information systems to enable it in the management of the revenue collection however, it has been facing deficits in its collection as indicated in the table above. Uganda Revenue Authority has employed Information systems in the collection of taxes to ensure that there is compliance among the tax payers because of the user friendly systems like E-registration, e-taxation, e-Tin registration, and e-payments to reduce on the collection deficits (Kabafuzaki, 2010).Uganda Revenue Authority has continued to receive budget deficits which has been shown by the financial years 2015/2016 and 2016/2017. It has accumulated total deficits of 862 billion Ugandan shilling from 2015 to 2017 despite implementing information systems for the last five years.
Information systems are believed to have a significant boost on the performance of organizations worldwide as they grapple with new ways to generate revenue, engage customers and streamline time-consuming tasks.URA adopted Information systems in 2003 into the domestic taxes department to increase revenue collection, improve quality of administration, reduce costs of compliance and provide services to the tax payers all the time from anywhere (Kangave et al., 2016).
Despite the adoption of information systems by URA in 2010, it is still faced with numerous challenges like poor customers’ service, deficit in revenue collection and low productivity of the internal staff which has led to poor performance of the organization. Gaalya (2017) further reports that poor revenue collection has led to the failure by Uganda Revenue Authority in meeting the revenue collection target as shown by the increased deficits. In 2016/17, URA collected Shs12.7 trillion about 14 per cent of Gross Domestic Product against a target of Shs13.1 trillion, more to that, URA also made revenue loss of Shs404billion in the financial year 2015/2016and a deficit of 2.6 trillion in financial year 2017/2018. In addition to the above, the ASYCUDA world has been reported to be complicated by the users therefore with the rising deficits in revenue collections departments at URA, the organization may fail to hit its revenue target in the coming financial years leading to a total organizational failure as whole.Thesechallenges faced by URA therefore warrantedexamining the effect of information systems on performance of government agencies in Uganda with specific reference to Uganda Revenue Authority.
The study sought to establish the effect of Information systems on performance of URA.
- To assess the effect of Information systems software on the performance of URA.
- To establish the effect of systems infrastructure on the performance of URA.
- To examine the influence of user knowledge and skills on the performance of URA.
- What is the effect of Information systems software on the performance of URA?
- What is the effect of systems infrastructure on the performance of URA?
- What is the influence of user knowledge and skills on the performance of URA?
1.7Hypotheses
H1 Information systems software significantly affects the performance of URA.
H2There is a significant positive effect of system infrastructure on the performance of URA.
H3User knowledge and skills does notaffect the performance of URA.
Information systems have become the centre of all developments in any economy. It has thus become inevitable to embrace computer use in any work. The government of Uganda designed a strategy aiming at changing the operational design and culture of the public sector to better improve on performance of its agencies.
Information system: The implementation of any information system requires advance technology infrastructure like for web based application that requires dedicated server and user friendly web interface. Below presented is the conceptual framework showing how Information systems relates to performance of government agencies.
Independent Variable Dependent Variable
Information systems Performance
|
Financial performance · Shareholders expectation · Shareholder perception Customer satisfaction · Customer perception · Customer expectation · Customer interaction Growth · Exceeding targets · Achieving targets
|
| 1. Systems software
· Application software · Operating software |
| 2. Information systems infrastructure
· Internet connection · Computers and laptops · Intra-net connection · Smart phones
|
| 3. User knowledge and skills
· Computer literacy · User competence · Education level |
Figure 1: conceptual framework
Source: Kaplan (2012)
According to the figure illustration above, Information systems was the independent variable influencing organizational performance. Information system was looked at in aspects of systems software, the infrastructure used, and user knowledge and skills which mainly related to the competence of the employees in an organization to improve on performance.
Kaplan (2012) in the industrial age, enterprises used to evaluate their performance on financial scores only. However, in the modern era with adoption of Information systems, performance now is measured in terms of growth, customer satisfaction and financial performance.
Kaplan, (2012) further states that managers and constituents of non-profits are increasingly concerned about measuring and managing organizational performance. Financial measures alone, or even supplemented with a collection of ad hoc nonfinancial measures, are not sufficient to motivate and evaluate mission accomplishments.
The study would be of great significance to the policy makers, key stake holders, both in URA and other government agencies like government parastatals and public service.
The study would help the management of URA understand the problems of poor information systems in the organization and how best improvements can be made to achieve better performance in the organizations.
The study would help policy makers understand the causes of poor performance in their different organizations and how to overcome them using application and operating software.
The study would provide relevant information to the key stake holders in different government agencies on the different ways of using information systems to achieve better performance.
The study would highlight the relevance of user knowledge and skills on information systems to the achievement of better performance in the organization.
The study may provide information to the future academicians on the influence of systems software like application and operating software and their relevance on the achievement of better performance in the organization.
1.10 Justification of the study
The study was carried out because of the following reasons; In spite of the benefits of Information systems like improved communication, increased transparency, and access to information for citizens, digital diffusion of information is often achieved at high cost by government agencies (Kaplan, 2012).. Ugandan government also adopted Information systems practices with the view of enhancing better organizational performance in its key departments. However, the government agencies in Uganda have experienced numerous challenges of poor performance.
This therefore, prompted the researcher to investigate into the effect of information systems on performance of government agencies in Uganda.
The content scope of the study concentrated on Information Systems and performance of government agencies. It further expounded on the effect of Systems Software, Systems infrastructure and user knowledge and skills. The performance of government agency has the dimensions of; financial performance, which was measured in terms of Shareholders expectation and Shareholder perception while Customer satisfaction was also measured in terms of Customer perception, Customer expectation and Customer interaction and lastly Growth which included; exceeding targets and achieving targets.
1.11.2 The geographical scope
The study was carried out from Uganda Revenue Authority (URA) which is under the Ministry of finance. Uganda Revenue Authority is located at plot 95 Kampala road, Nakawa Industrial Area, Kampala, Uganda.URA is found in Nakawa Division of the city of Kampala, approximately 6.5 kilometres (4 miles), by road, east of the city centre, off the Kampala-Jinja Highway.
1.11.3 Time scope
The period of data considered from Uganda Revenue Authoritywas from 2010 to 2018. This was the period Uganda Revenue Authority adopted Information systems like ASYCUDA world to enhance better performance in revenue collection (Sanya, 2015, 2nd November).
1.12 Operational definition of key terms
Information systems: This refers to the use of electronic systems like the computers and mobile phones to transfer information from one person to another to facilitate business transaction.
Systems software: This refers to the computer programs which are used to enable the organization manage its activities like Microsoft, excel, power point and Tally. There are both application and operating software.
Systems infrastructure: This refers to the different hard ware and software systems required for a computer program to run and to enable the organization or an individual to be able to accomplish their need in computer, such include; monitors, hard disks, modems, laptops, desktops, floppy disks, flash and memory card.
User knowledge and skills:Refers to the technical expertise required for an individual to use computer applications.
Performance: This refers to the level at which the organization can effectively utilize the resources at its disposal.
Customer satisfaction: This refers to the ability of an organization to serve the customer the right product, of the right quality, at the right price, in the right time.
Growth: This refers to the increase in an organization’s revenue as compared to expenditure and other fixed costs.
Financial performance: This refers to the ability of the organization to manage its costs and enable it grow to achieve sustainability.
