The parliamentary Standing Committee on National Budget and Patrimony has called on districts to urgently work their way out of the cycle of dependence on central government’s budgetary financing, saying each has potential to generate own revenue to finance their operations.
The committee was scruitinising proposed budgetary allocations for districts for the next fiscal year.
The lawmakers said districts hardly finance 10 per cent of their operations, leaving the central government to shoulder the burden of bankrolling almost everything that needs funding.
They challenged districts to try to match the national self-financing trend, whereby domestic resources have grown over the years – currently accounting for more than 60 per cent of the national budget.
The committee chairperson, Constance Rwaka Mukayuhi, also urged government to promote exports especially through growing the industry base in the districts.
“This will help districts to improve the welfare of the people and help increase export base,” she said.
“We embraced and strengthened decentralisation programmes so that we can build local government entities capable of not only managing development projects, but also to come up with development initiatives that are in line with their potential and ultimately make districts self-reliant,” she said.
However, MP Mukayuhi added, “we have realised that after some time, it is not the case, rather districts are increasingly looking up to the Ministry of Finance and Economic Planning (MINECOFIN) for funding.”
MP Marie Therese Murekatete said there are districts that can be self-reliant in terms of funding their operations because they have opportunities they only need to exploit.
“You realise that districts limit themselves in terms of generating their own resources, because they know that MINECOFIN will give them the money,” she said.
Municipal bond the solution?
The committee also expressed concerns that districts generally lack the skills required to devise projects. For instance, they said, districts have no capacity to make use of the Rwanda anti-Climate Change Fund (FONERWA), which has so far mobilised over $120 million (about Rwf98 billion) to finance environmental and livelihoods protection projects across the country.
Districts, they said, often fail to meet FONERWA criteria for funding.
Nyaruguru District mayor François Habitegeko and his Gisagara counterpart Jerome Rutaburingoga largely blamed the lack of interest among investors to put their money in some districts on lack of basic infrastructures such as paved roads and electricity.
“Some people are not comfortable with dusty, unpaved roads,” Rutaburingoga said.
Appearing before the committee to defend their budgetary allocations for the fiscal year 2017/18, several district officials said that some development projects delayed to take off or to be completed because MINECOFIN or donors delayed to disburse money.
Caleb Rwamuganza, the Permanent Secretary at the Finance ministry and Secretary to the Treasury, told the MPs that government was working closely with districts to improve on their capacity to conceptualise and manage projects.
MP Mukayuhi said that municipal bonds can help the districts in generating own resources through helping them finance profitable projects.
On this, Rwamuganza said that, for one to offer municipal bonds, there are requirements they should meet including having clean financial statements and means to repay the debts under the bond.
“For districts to start issuing bonds they should have enough funds. This requires that we first grow their revenue and means in a sustainable manner,” he said.
He said that, the ministry last year started assessing district performances in public funds management and revenue generation and the exercise will continue next year after which the municipal bond approach could be piloted in the City of Kigali and a few districts before it can be replicated countrywide.