EDPRS : Decentralization and development in Rwanda

BY GODFREY NTAGUNGIRA Rwanda’s decentralization programme is proceeding at an ambitious pace and is fundamentally shifting the dynamics of government. The new policy was elaborated in 2006 and is now in its third phase of implementation, covering the period 2008 -12. The programme is expected over time to help enable the government to provide public services in a much more inclusive and accountable way. It is strongly supported by donors, as reflected in the proportion of overall official aid flows to Rwanda now being allocated for decentralisation. Substantial numbers of central government staff were transferred to districts following local government elections in 2006, indicating a very high degree of political commitment by the government as well. Government initiatives and administrative focus structuresWide-ranging reforms were undertaken by the government of Rwanda which include; the reorganization of the administrative divisions. The country has decentralized powers and created administrative units in strengthening of the rule of law, anti-corruption measures and public sector reform. The policy broad objective To ensure political, economic, social, managerial and technical empowerment managerial and technical empowerment of the local population to fight poverty of the local population to fight poverty effectively at close range, through effectively at close range, through entrenchment of democratic decentralized entrenchment of democratic decentralized governance. Registered Progress The implementation of the decentralization policy is at present guided by the framework which was approved by the cabinet of ministers in 2007, which is a five-year Decentralization Implementation Program (DIP) that started in 2008 and planned to conclude activities in 2012. While Rwanda has experimented different development approaches aimed at eliminating poverty, not all of them have been successful with substantial and tangible outcomes. The DIP has therefore been outlined to further address Rwanda’s poverty reduction agenda. Results from decentralization implementation 1. Local Government Revenue base defined, administration reinforced and local tax sharing mechanisms and co-financing capacities enhanced and reporting/monitoring systems operational 2. Roles, responsibilities and interventions of the sector ministries are clarified and harmonized with the decentralization policy 3. CDF institutional capacity as well as system of Capital Transfers for local governments development support strengthened. 4. The ministry of local government today is able to fully manage the decentralization process and provide timely information and reports to other stakeholders. 5. Local government and grassroots (sectors and cells) structures operating functions fully planned, budgeted, financed and managed. 6. Local government leaderships confidently and fully engaging sectors and cells in pursuing local social and economic development strategies and developing partnerships with other local and national actors 7. System of local governments LG baseline costs and fiscal transfer criteria developed, streamlined and operationalised through CDF financial mechanisms in the long run Nonetheless, some lessons and challenges have been identified in the course of implementing the DIP. The outstanding lesson is that there is a strong need for synchronizing the elements of national reforms. Most significant is also that some revenues have been decentralized to local governments in order to support the decentralized responsibilities they are meant to implement. Fiscal and Financial devolution of powers In Rwanda, the fiscal and financial decentralization process started in 2001. It consists in the transfer of financial resources, the increase in financial autonomy and the devolution of decision-making powers to local authorities that allow them to implement the functions and responsibilities that have been delegated to them. The government of Rwanda has established a system of transfer of resources from the central government to local governments to ensure the delivery and access of quality basic services to all the citizens. Through decentralization policy two main ways for the government transfers funds dedicated to service delivery to the districts. These include block grants and earmarked grants. These sources of revenues are supplemented by districts’ own revenues collected from taxes and user charges (decentralized fees) devolved to them as well as funds provided by partners in development. Depending on a district’s capability to mobilize its own resources, the block transfers are used to enable the district to supplement its operational needs. This is currently done by sharing among all districts 5% of previous year’s national domestic revenue. The majority of service delivery is being financed through a series of earmarked grants, whilst block transfers finance districts’ administrative functions and provide discretionary funds to supplement their own revenues. Revenue management systems It is imperative to improve the revenue (taxes and fees) management system in Local governments and encourage the transition of small business enterprises from informal to formal economy. Together with a clear and comprehensive local tax policy, this strategy will allow sufficient revenue generation by local authorities. The central government is working to improve revenue administration procedures in local governments and establish clear links between them and the Revenue Authority. It is also ought to develop a comprehensive legal basis which includes a modern and efficient property tax, business license and rental income tax legal framework. Accountability If decentralization fails to increase citizens’ influence over the public sector, the principal benefits of decentralization will be lost. One of the key determinants of local accountability is indeed the system for electing local authorities and members of sub- national legislatures. Accountability is commonly understood to require information to hold power holders answerable, and incentives to encourage compliance. Rwanda’s long term Vision 2020, is heavily framed by the legacy of past bad governance politics. Vision 2020 is targeted primarily at the Rwandan population, and relates to security, national unity and socio-economic development. Despite improvements, interviews carried out The government’s decentralisation agenda faces considerable challenges. Programmes being implemented at district level are on the whole still conceived centrally, with the role of District administrations subsumed into an implementation role with little real devolution of choice over design or prioritisation. There is a village level (umudugudu) planning process which is beginning to take shape and encouraging local people to participate in discussions on project proposals. The fundamental challenge is that stakeholders have limited understanding of their rights and obligations, and the presumption in favour of upward accountability in the system is deep rooted and widespread. Community participation in planning Through the councilors at all levels of local governments, communities formulate and initiate development action. They also oversee their implementation and suggest priority areas for the local government through budget conferences and other planning meetings. Transparency In some governmental institutions, evidence of unethical behavior among their leaders undermine their credibility and reduces a proper use of resources available for socio-economic development and infrastructure. The government has done a lot to enhance the capacity of the community to take charge of their destiny. The society is encouraged to demand more accountable governance through better civic education programs. Conclusion Together with a clear and comprehensive local tax policy, this strategy will allow sufficient revenue generation by local authorities. The central government is working to improve revenue administration procedures in sub-national governments and establish clear links between them and the Revenue Authority. It is also ought to develop a comprehensive legal basis which includes a modern and efficient property tax, business license and rental income tax legal framework. Ends

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EDPRS : Decentralization and development in Rwanda