Tax and the city – how Muove is empowering cities in Brazil to tax and spend more efficiently

Rodolfo Fiori and Ricardo Ramos are cofounders of Muove, a technology platform that was launched in 2017 and is changing the way cities across Brazil implement their local taxation policies and allocate spending. Muove, which celebrates its first birthday in August 2018, is about reducing inefficiencies across the system in order to increase the revenue available to the city. CPI's Jorge Hargrave, based in Brazil, speaks to them.

Operating in Brazil's complex public policy environment

[RF] The Brazilian context is unusual. We have 5,570 cities and the vast majority (89%) have fewer than 50,000 inhabitants. Literacy levels among mayors and senior civil servants are low, and there is little in the way of institutional capacity or social capital at local level. Most city administrations struggle to implement even basic social policies and lack a systemic approach. Fiscal problems are endemic, and governments have failed to reap the benefits that technology has brought to other sectors of the economy. Despite experiencing a new and positive moment where new tech firms targeting government problems are flourishing, Govtech in Brazil is still in its early stages because public procurement legislation does not encourage innovation.

[RR]

We've both worked with small city governments and we knew that it is typically costly to put people on the ground to support them. The solution had to be technology-based. We created a platform that can offer an analysis of inefficiencies in the fiscal system and give a list of possible actions, guidance on prioritising outcomes, and step-by-step implementation advice. To identify inefficiencies on municipal revenue and expenditure, Muove specialists collect

available data from every city in Brazil and analyse them with their proprietary algorithms. The company has collected different types of data on each of the 5,570 cities.   

The platform is supported by a team of specialists in Sao Paulo. and the package entitles cities to regular advice and guidance from the team, as well as access via WhatsApp to a virtual community of civil servants in cities across Brazil, people who are dealing with the same inefficiencies at local level. The first two weeks with a new city are dedicated to training the civil servants and we can provide further training on the job depending on the difficulties the platform identifies.

[RF] We currently have 10 cities who are using the full package, and we have an arrangement with the state of Sao Paulo whereby all 645 cities in that state will have access to the platform without the specialist support.

We know Muove can't solve every problem a city has, but it can help them get into a much stronger position to start tackling the issues that matter on the ground. It is also developing into an increasingly rich resource as we build knowledge and experience in the city communities and through our blog.

We make zero judgement around politics. Politics is part of public policy decision making and we've designed our methodology around that so as to avoid conflict and delay. To facilitate co-operation we've built in three points at which the mayor is asked to validate the process: accepting the key inefficiencies to be tackled, agreeing to the action plan, and okaying the tasks within the action plan. We've had few issues with corruption, but that's partly because the cities using the platform are committed to improving services.

Direct and indirect impacts and cultural change

[RF] There is definitely an element of cultural change that comes about within city administrations as they use the platform. Muove brings intelligence but also offers a methodology and support system that demonstrates how to analyse the problem, create an action plan and implement it. This is incredibly motivating for people based in administrations that haven't worked in this way before.

[RR] The direct impact is financial. In the 10 cities currently using the platform with the full package, we are on track to make an average saving of 6% of overall city budget. That's an extra 6% towards improving public services. We're not yet able to measure the indirect impact but anecdotal evidence is extremely positive. One city mayor earmarked savings to improve public spaces and has so far refurbished five squares in the city with the savings his administration has made.

[RF] The platform does not work directly with citizens, so although we expect increased legitimacy to be a part of the legacy of a city's engagement with Muove, we do not measure this directly. However, there is a part of the platform that is open access and free to use. Through this, citizens can check the quality of services and financial management in their city government. To date, more than 60% of Brazil's 5,570 cities have been checked in this way.

Early success and the challenge of growth

[RR] We've enjoyed some recognition within the community that's undertaking social impact work in Brazil. This year Facebook along with Artemesia, a major player in the field, started a Centre for Innovation, Brazil. In competition with over 700 other businesses we were one of 10 startups chosen for acceleration based on our use of technology and data to generate social impact.

I feel proud when we get feedback from civil servants in the later stages of a project where they feel that we've helped them to accomplish something positive. They may previously have felt very isolated facing a particular challenge in a small city administration, but through the process they have been connected to a larger community of professionals where knowledge can be shared. That sense of empowerment and achievement has a cumulative effect for the city as greater efficiency begins to free up funds.

[RF] We have a target of 500 cities using the platform on the full package by 2024. We have the ability to help every city in Brazil, as long as we keep the focus tightly on the fiscal aspects of inefficiencies. We had thought about going broader, for example by looking at inefficiencies in health and education, but those are specialised areas and we've learned that a tight focus on finances is the necessary first step in an overall process of improvement. To put it in context - in 2016, 86% of Brazil's cities had ‘severe' financial problems, which means many were unable to pay the salaries of teachers, doctors and other public servants. The fiscal has to come first.

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