INTERNATIONAL PARLIAMENTARY CONFERENCE ON PEACEBUILDING: TACKLING STATE FRAGILITY Rebuilding Public Financial Management Systems: Moving Beyond Aid Dependence Presented by: Mary BAINE, The Commissioner General - RRA 11/14/2018

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 11/14/2018

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). 11/14/2018

The Rwandan Story (Pre Conflict Situation) 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. 11/14/2018

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 Rwanda’s dependence on foreign aid. 11/14/2018

How RRA has improved revenue mobilization 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 11/14/2018

How RRA has improved revenue mobilization (cont’d) 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. 11/14/2018

How RRA has improved revenue mobilization (cont’d) 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%. 11/14/2018

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 11/14/2018

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. 11/14/2018

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. 11/14/2018

Thank you for your kind attention MURAKOZE 11/14/2018