INTERNATIONAL PARLIAMENTARY CONFERENCE ON PEACEBUILDING: TACKLING STATE FRAGILITY

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INTERNATIONAL PARLIAMENTARY CONFERENCE ON
PEACEBUILDINGTACKLING STATE FRAGILITY

• Rebuilding Public Financial Management Systems
  Moving Beyond Aid Dependence

Presented by Mary BAINE, The Commissioner
General - RRA
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Outline

• Introduction
• The Rwandan Story (Pre and Post Conflict
  Situation)
• How RRA has improved revenue mobilization.
• How has Parliament Contributed?
• Challenges Still at Hand
• Conclusion

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Introduction

• 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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The Rwandan Story (Pre Conflict Situation)

• Pre- and During-Conflict Rwanda Right from the
  late 1950s 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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The Rwandan Story (Post Conflict Situation)

• 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
  Rwandas dependence on foreign aid.

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How RRA has improved revenue mobilization

• Capacity building in the initial stages of RRAs
  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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How RRA has improved revenue mobilization (contd)

• 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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How RRA has improved revenue mobilization (contd)

• 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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How has Parliament Contributed?

• 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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Challenges Still at Hand

• 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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Conclusion

• 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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Thank you for your kind attention
MURAKOZE