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Rebuilding Public Financial Management Systems: Moving Beyond Aid Dependence
Presented by: Mary BAINE, The Commissioner
General - RRA
5/23/2017
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Introduction
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The Rwandan Story (Pre and Post Conflict Situation)
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How RRA has improved revenue mobilization.
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How has Parliament Contributed?
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Challenges Still at Hand
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Conclusion
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The legitimacy of any government and its
ability to deliver on social infrastructure and
developmental activities to a large extent
depends on its ability to mobilise revenues.
When stability is restored we often observe a
transformation in the nature of aid and the
composition of resources (from over
dependence on foreign aid to significant
contributions from domestic sources).
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Pre- and During-Conflict Rwanda: Right from the
late 1950’s all the way to the mid nineteen
nineties, Rwanda was marred by periods of
political turbulence based on ethnic grounds
which culminated with the unfortunate 1994
genocide
At that time and the period immediately after,
Rwanda depended on the goodwill of donor
nations for the very existence of its people. The
bulk of resources mobilised at the time was
composed of foreign assistance to cater for basic
consumption needs.
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Post Conflict Rwanda: After liberation by the
Rwanda Patriotic Front, the new government
faced monumental challenges. First and foremost
was the need to restore normality and reinstate
the rule of law
Efforts
were
therefore
directed
towards
overhauling the entire domestic revenue
structure,
which
eventually
led
to
the
establishment of the Rwanda Revenue Authority.
This institution was to spearhead all reforms in
taxation, bring about accountability and reduce
Rwanda’s dependence on foreign aid.
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Capacity building; in the initial stages of RRA’s
birth, DFID provided technical assistance, often
in line positions, and also helped in sending RRA
officers to neighbouring East African states to
learn from them,
Computerization of operations; DFID has been
equally instrumental in the computerisation of
both the domestic and customs operations,
introduction of an IT-based HR system and a
financial management system in our support
departments to mention but a few
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Infrastructure
development:
With
DFID
support, we have been able to undertake a
number of infrastructural developments like
renovating border posts, introducing the
network and electronic backbone and
outfitting the current RRA offices, installation
of solar panels at border posts, use of low
voltage printers and use of dot-matrix
printers at border posts, and many more.
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Tax Revenues: Collections have greatly increased from small
RWF 55 bn in 1998, to RWF 400bn of anticipated revenues in
2009/10.
At the inception of the RRA, domestic resources mobilised
contributed 39.5% 1998 to national budget. This has
increased to 55.2% in 2008.
Compliance levels: large taxpayers (who contribute
approximately 75% of the total taxes) now almost 100%
compliant.
Share of GDP: moving from approximately 9% in 1998 to
around 14% currently, the intention is to have this ratio
increase annually by 0.2%.
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This has been mainly through enacting laws
that facilitated short and long-term revenue
mobilization strategies.
Close monitoring and follow up of whether
the different initiatives are being effectively
implemented.
Close
cooperation
between
the
tax
administration and the parliament
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Compliance; especially in the Small and
Medium Taxpayers Segments.
Informal Sector; Considerable part of the
economy is still in the informal sector –
difficult to bring into the tax net
Land locked country; which increases the cost
of doing business and ultimately affecting
domestic resource mobilisation.
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Rwanda as a country understands that
moving a way from total dependence on aid
is not an option but a reality.
To make this a reality, aid received has
facilitated in building capacity to mobilise
domestic resources.
This has already started producing dividends
as witnessed by the steady increase in
domestic revenue collected.
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