By David Himbara
The RWF1.4 trillion or US$1.3 billion tax revenue generated from June 2019 to June 2020 can finance only 49 percent of the national budget. The total number of taxpayers in Rwanda is a mere 229,497 in a country of 13 million people. Of 229,497 taxpayers, 228,279 or 99.5 percent are small and micro employing between 1 and 30 people. Here is a banana republic par excellence.
The October 2020 Rwanda Revenue Authority (RRA) Report demonstrates the fact Rwanda is a banana republic through and through. The tax revenue generated from June 2019 to June 2020 was RWF1.4 trillion or US$1.3 billion which can finance only 49 percent of the national budget. The total number of taxpayers in Rwanda is a mere 229,497 in a country of 13 million people. Of 229,497 taxpayers, 375 are categorized as large taxpayers or 0.1 percent of the total; 843 are medium taxpayers or 0.4 percent of the total; and 228,279 are small or micro taxpayers or 99.5% of the total. In other words, the overwhelming majority of Rwandan taxpayers at 99.5 percent have an annual turnover of between RWF12 million or US$11,923 to RWF50 million or US$49,646, and employ between 1 and 30 people.
The worst news in RRA’s report is the Rwanda-Uganda trade, which collapsed. It has been two years since General Paul Kagame closed the Rwanda-Ugandan border, a crazy thing to do that has hit hard the small and micro enterprises that historically operated thriving cross-border businesses. The imports from Uganda dropped by 99.3 percent in 2020. Rwandans are not allowed to cross to Uganda, while Ugandans don’t are cross to Rwanda. Kagame is perhaps unaware of what is known as the gravity model of international trade – the distance between two neighbours being zero, the trade naturally gravitates towards each other. Furthermore, the cultural overlap, the similarity of consumption patterns, the likeness of demand and factor endowments, the low delivery costs, and the short lead times make the neighbouring markets a natural extension of the domestic market. The formerly thriving Rwanda-Uganda border posts at Cyanika, Gatuna, Kagitumba, and Mirama Hills are dead.