Leakage or Low Base? E-Payment Systems and Revenue Collection in Zambia

Revenue authorities and local councils in Zambia have often justified upward revisions of taxes, rates, and fees on the assumption that low collection figures signalled an inadequate tax base. In June 2026, Lusaka City Council offered a striking test of that assumption: after seven revenue services migrated onto the government's e-Council digital platform, monthly collections rose from roughly K61,000 in January 2026 to K13.9 million in June-an increase officials described as 22,000 percent-with no change to any statutory rate. This paper asks whether that jump, and comparable increases recorded elsewhere in Zambia's digitisation programme, are better explained by the recovery of revenue previously lost to cash-handling leakage than by genuine growth in taxable activity. Drawing on the Lusaka case, national platform statistics from the Government Service Bus and ZRA's Smart Invoice system, Auditor General reports, and peer-reviewed studies of e-payment adoption in Zambian and comparable African local authorities, the paper develops a simple accounting framework that decomposes any observed revenue increase into a leakage-recovery component and a base-or-ratechange component. It argues that a substantial share of Zambia's historical revenue shortfall reflected collection leakage rather than an undersized tax base, while noting that the country's own tax authority has separately pointed to base limitations as a genuine constraint-meaning the two explanations are not mutually exclusive and must be disentangled case by case. The paper concludes that collection efficiency should be Chisenga, H. Leakage or Low Base? E-Payment Systems and Revenue Collection in Zambia audited before rates are revised, and proposes a policy checklist for distinguishing the two explanations for use by councils and the Zambia Revenue Authority.