Caine Wanjau: Making Peace with the Taxman.

Like death and taxes. Taxes. Paying tax is deeply optimistic. It’s the idea of sharing our wealth to make things better for everyone. But first, some context. Kenya has a massive debt problem. Nearly 70.1 percent, or about $82 billion, of the country’s GDP is locked up in public debt, according to government figures, snowballing into overwhelming debt service payments because the country is spending nearly 60 percent of its revenue to service external loans. Interest payments alone are eating up approximately 4.72 percent of GDP.

With the government against the ropes, it proposed a $2.7 billion (about KES 390 billion) finance bill seeking to raise taxes (and quickly), increasing its tax to GDP ratio which hovers around 14 percent to 27 percent by 2030.

Yet this led to massive revolts, which the IMF had forecasted, but the government had largely ignored and was caught flatfooted, yet it all felt as inevitable and inexorable as the kiss at the end of a romantic movie. Eventually, the government withdrew the Finance Bill 2024.

Earlier, in a bid to reduce the cost of compliance for VAT-registered businesses and streamline the sector, the government had initially set January 1, 2024 (later extended to March 30) as the effective date of the implementation of electronic invoicing, casting a larger net on taxpayers. That meant all businesses were expected to invoice each other through eTIMS, with the Kenya Revenue Authority (KRA) required to monitor transactions and have better visibility of claims of value-added tax refunds by companies.

DigiTax quickly saw an opportunity, becoming one of the premier companies to onboard businesses and clients onto the KRA eTIMS platform.

Rangy and lanky, Caine Wanjau, the Cofounder and CEO of DigiTax fills his seat across me at Nairobi Garage in Westlands, where he seeks to be the taxman's high priest, a prophet interpreting the divine word, a messenger with a message: taxes tulizipata, na tutaziacha. Intransigence is an attractive quality, when you are right. Indeed, acceptance of the inevitable, like, say, taxes, even of something that you simply cannot understand, is a much more peaceful way to live.

Understanding DigiTax

What can you tell me about DigiTax? We are a tax compliance platform. We help individuals and businesses streamline the processes of transmitting tax invoices. In Kenya, we have eTIMS, which means that every sale you generate, comes with a tax invoice, managed by eTIMS provided by KRA. We facilitate that process. We are licensed to integrate and enable businesses to transmit that information.

How does that play out for a layman? We have an online portal where you can sign up and generate through your account that is tax compliant. Or through integration, where businesses have an existing system, such as a point of sale or ERP [Enterprise Resource Planning], or any custom software. We can integrate that system into eTIMS on your behalf through our DigiTax platform. You can also use a mobile application, which our software supports.

Did you always imagine you'd be the taxman's facilitator? Good question. Taxes are not where one imagines finding themselves. I have had a career in technology and building software and products. This was a good opportunity for myself and the DigiTax team, especially because of the way eTIMS was destined to target taxpayers requiring different solution options in the market. We saw the opportunity.

How did you identify this opportunity in tax technology? Good question. This goes back to 10 years ago. I remember to generate a tax invoice in those days, you had to buy an ETR (Electronic Tax Register) which you had to be trained on how to use. I felt that with time, technology would make it easier. In 2021, KRA moved to TIMS (Tax Invoice Management Systems), which was still a hardware device transmitting information to KRA almost in real-time. In 2023 the government introduced eTIMS, and I took a chance to put my ideas into action.

Building the Business

New businesses, assumption permitting, may not necessarily have godfathers, how did you get your first clients? I knew success would come from building a good product, so if you brought a solution that simplified the process, people would trust you. Secondly, eTIMS was new for everyone, so we all had to build a solution, present it to KRA, and get it certified, and then the market would make the decision. We took time to build the software and made it relevant to businesses and what they need, which helped us get initial awareness in the market.

What's your client base like? We have corporates who process millions in transactions to SMEs who use specialized software. We also have individuals, and we are ensuring we cover as many segments as possible. Everyone is a client of the government. Our job is to give those clients solutions.

If you can put a number to it, We have over 450 clients. We are processing millions of transactions. In 2024 we got good momentum.

What's your biggest challenge at DigiTax? Given the newness of eTIMS, there is a lot of effort in informing and educating people on its impact and use and helping them understand what our responsibility as DigiTax is.

The Tax Challenge

There is a hesitation Kenyans have when it comes to tax. What's your prognosis on that? The perception that tax is complex. People think you need to be a specialists to fill out even a tax return but it is not that difficult. That's why large companies have a tax department because this needs a lot of time, effort, and dedication. You don't want to get the numbers wrong. Also, the tax filing process is not always prioritized, leading to everyone waiting to file at the last moment. We find that many people are not aware of what taxes they have to pay, filing the wrong things or filing information based on what someone told them.

How do you target the unbanked, including mama mboga and wananchi who have no access to tax systems? Good question. Through simplifying the process for them and from a legal standpoint, we have reverse invoicing where if you are not in a position to generate the tax invoice, the other party can do it for you. Your only job is to confirm and approve. I don't think people are against having to send their information, it's the effort and process around doing it that people are feeling as a burden.

There is much cash moving around in that informal economy, but it's hard cash the government may not trace. How do you tax and bank the unbanked? Two things. Every business will want a tax invoice so over time, people will start asking for this information regardless of how this payment is made i.e mobile money, cash, card, bank transfer et al. The interface between the formal and informal economy, and if I am a formal business, and I am paying for this service I will want a tax invoice, and by implication, the person in the informal economy will then have to give you a tax invoice and give you the information you need. The question is how do I prepare myself for this transition?

Compliance and Innovation

We are generally a heavily taxed country, between 30% and 35% depending on your tax band. Some people tend to game the system and end up "avoiding" paying the taxes. Is this a challenge that affects your business? At DigiTax we do not process payroll, this is because under the current regulations, there are nine exemptions for etims including payroll, air tickets, financial services et al. eTIMS was designed to give transparency and accountability; if I am trading with you, for me to claim taxes, you need to send me an invoice. Previously, it was a self-reporting mechanism, you'd say what your sales were and expenses. Now it has to exist in the system. The net effect is that I will always ask you for a tax invoice, thus improving accountability.

That brings about the tax evasion and avoidance scenarios with people forging receipts. How is this playing out in your sector? A business will be motivated to claim as many expenses as it can. But are you willing to expose yourself because at some point there will be an audit to justify the expenses? Over time, it gets hard because if I am sending you an expense, it means I am liable to pay that tax, thefore no one wants to pay more tax than they should and everyone wants to claim as much as they should. In a sense, everyone is accountable to everyone; I can only claim if the expense is in the system, but that means someone else is paying that tax. It is a self regulating mechanism.

This is a gotcha question. As an expert in this field, can a country tax itself to wealth? Haha! First, taxes will always be here. Tulizipata na tutaziacha. To the extent that we can help you streamline your processes, we have served our purpose. We want to be the entity that makes it as straightforward as possible to file taxes; the rest, how the taxes are used, collected, et al is beyond our scope.

Future Horizons

A.I. is all the rage now. Is it something you too are exploring? Yes. For us, we actively use it. Internally our software engineers use it to do quality testing and build efficient software. We are keen on using it to give customers feedback on potential issues for instance in customer support where you can type a question and get feedback such that before you call us, you have enough content and material to help you get the necessary support.

I read that you are planning to expand to Zambia? We are actually there. We opened in August 2024 and it is picking well as Zambia too wanted to streamline the transmission of tax information. There shall be a few more countries in the pipeline too.

As you expand across Africa, what distinct trends have you noticed in Kenya versus Zambia regarding tax digitization? In Africa, we're seeing a major shift toward electronic invoicing, with many countries looking to Kenya for insights and knowledge on implementation, much like they did with mobile money. Kenya's approach is particularly ambitious; we are targeting a much broader base of taxpayers than when we just had TIMS, which was limited to big businesses. The data shows that while most of Africa's GDP is tied to the informal sector, governments haven't had mechanisms to capture tax information from these sources. I anticipate we'll see growing participation in e-invoicing across African countries as these systems develop.

Perhaps the government will be happy when you answer this: what do you foresee as the opportunities in tax collection in the sector/s you play in? The government will be looking to increase revenue through this initiative. They want to make the process more transparent and efficient. Part of the problem with tax collection is the burden and effort required to be tax compliant so by simplifying it, more people can participate. Secondly, looking at how this has transpired, there will be major opportunities for innovation in tax compliance like new software, new products, etc.

Do you also play executioner for the government and hand over people who are not tax-compliant? No, we don't have the capacity and capability as our role as an integrator is to transmit information. We rely on the taxpayer to send that information.

When DigiTax gets to where it's going where will it be? We want to open in more countries. Two, we want to continue to add value to our clients and those who use DigiTax. We started with electronic invoicing but we are also seeing opportunities in tax compliance. Finally, to offer solutions and products that can target as many potential taxpayers as possible, like integrations, but we foresee many more ways to generate these tax invoices, that is our next innovation area.

The Personal Side

Beyond being the 'taxman', how do you see yourself? Haha! Interesting. I see myself as a businessperson, so the tech background is incidental. Generally speaking, at DigiTax we have many departments, including the work Nicetta Nyagah and the team do. There are many areas of the business I pay attention to, but we will never wish away taxes, and DigiTax is here for anyone who needs tax solutions. We can offer them something they find appealing.

If you weren't this successful businessman, what would you have become? A technology role in a company. I have served in many technology related capacities, software engineering, and coding. I picked that up when I was young.

Were you exposed to it as a child? Yes, but then I got into this when a friend's father showed me their computer, how they use it, and the software. He was a programmer and I could feel this is something I am interested in. It's been a hobby and a career. There is nothing better than doing the work that is your passion. That motivates you to do your best work.

What has this career given you that perhaps being a chef wouldn't have necessarily given you? I don't know if a chef is the right comparison haha! But I have a sense of purpose, a lot of the tools we have built have helped society in various ways. It's been fulfilling. I have travelled the country and beyond, engaged with farmers, and thought about software solutions for them, mama mbogas too etc. It has made me think creatively around working with constraints.

Looking back over your career, which projects seemed the most daunting at the time? The work I did before starting DigiTax. I was a CTO [Chief Technology Officer] at Twiga Food and we built software and solutions for a whole supply change starting with farmers, logistics, distributions then selling to the kiosk owners and mama mbogas. I spent seven and a half years there building solutions you can see make a difference. Before that, I was working in the matatu sector building solutions to make them make money from their vehicles. We would put advertising screens with a device to track the matatu so the owner benefited from free fleet tracking software.

Life Beyond Work

How do you keep work away from home? Balance. Covid taught us we can work from home but have balance. I use technology at home but it is important to know the when. Keep in mind that we are an essential service so people are generating this information at all points and times of the day so we have to be available for our clients.

What is a habit you are picking up for this year, 2025? Reading. 2024 was busy work-wise. But I want to read more.

Which is a book you read that challenged the way you think? The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz. It was written by an entrepreneur who talks through his journey, making tough decisions, and how. It has helped me through similar decisions and what my mental framework around it. I also like reading autobiographies, they help you see how others navigated life, their successes and challenges, and how you can apply it to yourself.

What is a book you wish you read sooner? The Hard Thing About Hard Things. And also books about AI. AI has been around for a long time. It was called machine learning, how you train a system to know things. AI is just an improvement on that, and now it is front and centre.

What keeps you up at night? Haha! Being responsible for many things; the people you work with, meeting your responsibilities, what's due to them. We are a critical service, so we must proactively think about issues and challenges and address them. But also positive things: what is the future of DigiTax, how can it get better and achieve its full potential? That's what I call a positive headache.

Do you believe in luck? Are you a lucky person? I believe that luck is preparation meeting opportunity. You will chance into things and if you are prepared for it, people may call it luck, for you it's just the day that it happened.

If you could teach the world just one thing about tax, what would it be? Taxes are not as bad as they are made out to be. If you think of the benefits that come from taxes, you should be encouraged: social services and safety nets. What is it helping me achieve and what is it taking away from something that was my responsibility? It Is not easy but it is possible.

Is there a question I should have asked that we haven't? I think we have covered most things. What I had in mind we have talked about them. I am good.

By Eddy Ashioya

NOTE: FINTAK interviewed Cain on February 2, 2025.