More revenues for the Rwandan Government

Since 2011 KfW has provided total funds of EUR 5.5 million to modernise the Rwandan tax authorities on behalf of the German Federal Government. The country's Office of the Auditor General has benefited from another EUR 2 million. Other donors like the United Kingdom and the EU are also supporting the project, helping to bring about the East African country's ambitious process of reform. As an advantage for the citizens, this gives the government more scope to improve its services and to enhance public investments thanks to increased tax revenues.

Rwanda is one of the poorest countries in the world. The government makes every effort to stabilise the economy and to reduce poverty. Yet growth rates which had been on a constantly high level declined in 2013 before slightly recovering. This decline was an alarm call. Since then the government has enhanced its efforts to boost economic growth and taken measures to raise tax revenues and improve the control of public expenditure by the Office of the Auditor General.

And the results were not long in coming: the ratio of taxes to gross national income was increased from 14.9 per cent in 2012 to 16.1 per cent in the 2015/2016 financial year. This was accomplished by investing in computer equipment and employee training, with a special focus on local tax collection and improving taxpayer registration at the local level. The funds provided by KfW were also used to finance electronic booking machines for retailers to ensure that all revenues are recorded for tax purposes.

The Rwandan tax authorities are also responsible for collecting employers’ social and health insurance contributions as well as managing fees and fines. Hence the modernisation of the tax authorities is playing a role in increasing overall state revenues. This gives the government more scope to improve the services it offers to its citizens and actively shape development.

In addition to increasing revenues, Rwanda aims to improve oversight and increase transparency in public expenditures. Improvements can also still be made in long-term budget planning and adherence to set budgets. To this end KfW is strengthening the Rwandan Office of the Auditor General in the implementation of its modernisation programme. According to its mission of public auditing and financial control, the Office of the Auditor General examines national and local authorities. It is therefore responsible for the proper use of public funds.

The Office of the Auditor General contributes to improve transparency and prevent corruption in the public finance sector. The support by KfW helps it fulfil these tasks: the number of annual audits has risen since the beginning of the project, as well as the percentage of audits without any remarks. In addition, the recommendations by the Office of the Auditor General are implemented more frequently.