Burundi tax success builds confidence, business image and hospital

February 4, 2015

Burundi tax success builds confidence, business image and hospital

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A gleaming new hospital stands on a hillside in rural Burundi, a tribute to a tax system envied in many parts of Africa and the government’s commitment to home-grown development of one of the world’s poorest countries.

“It was built entirely from our own resources,” says Dr Liboire Nigiri, Director General at the Ministry of Public Health. “Before long Burundians won’t have to go abroad for interventions and surgery. They will use their very own hospital.”

The 150-bed Karusi referral hospital is the latest gleaming example of the way that the government of Burundi has turned around a corrupt and ineffective tax collection system to comply with the demands of East African Community (EAC) membership and modernise its public spending.

The facility which was officially opened in mid-2014 boasts of a gleaming new ambulance parked outside the emergency area, new beds, mattresses, furniture and equipment, flowers budding along its tidy walkways and grass taking root in open areas.

“This facility, paid for entirely from domestic funds, would never have been possible without the leadership of the government and the hard work and dedication of the OBR (Office Burundaise des Recettes – Burundi Revenue Authority) says OBR Commissioner General Dr. Domitien Ndihokubwayo.”

Over the last four years, the government has moved closer to its target of funding its own spending 100% from its own tax and customs revenue.

OBR has been supported by TradeMark East Africa as part of its programme to help EAC governments and private sector institutions modernise and improve transport, trade and business links to profit from some of the highest economic growth rates in the world today.

The government’s share of public spending rose from 62.6 % in 2009 to 77.83% in 2013, increasing every year and drawing officials from Togo to Namibia who wanted to understand how Burundi kept rising on international league tables that measure economic performance and the ease of doing business.

Karusi is just a very striking and visible sign of quiet revolution that has entailed a root and branch reform of a corrupt and ineffective tax and customs system and turned it into a streamlined, modern and efficient revenue service.

One foreign businessman in Bujumbura, who asked not to be identified, said: “In the old days you ‘bought’ your tax clearance certificate with a bribe. You bypassed customs duties with a bribe. Nowadays the only thing a bribe gets in jail.”

Nowadays tax revenues are funding countless primary health care clinics, schools, mosquito nets, free maternal health care and other benefits.

Part of the OBR approach is a public information campaign of roadshows, radio and television programmes and information packs so that the 10 million population understands that tax is not a punishment but an investment in the future.

“Nobody likes paying tax, that’s for certain,” says businesswoman Violette Nshimirimana. “But we all understand now that what OBR is doing is for our benefit, and it’s open and transparent. Rules are rules, and OBR explains them to us. Bribery is not an option now, it’s a sickness.”

One effect of the cleanup at OBR has propelled Burundi up the World Banks’ annual Ease of Doing Business report, a key pointer for foreign investors looking to capitalize on economic growth throughout the EAC.

Burundi climbed 17 places to 140 out of 189 in the 2014 rankings and was named one of the top 10 economic reformers in the world. Africa’s highest performers in the index were Rwanda (30th place) Kenya (129) and Uganda (132).

In raw financial terms, OBR’s revenue has risen 86% from its creation in 2009 to 559.5 billion BF in 2013, a 6% increase over the 2012 figure.

The East African Bribery index compiled by Transparency International scored Burundi at 16.4 in 2013 (Zero is a perfect score) compared to 35.7 in 2012, a 54% improvement and a strong signal to potential and actual foreign investors.

Burundians like Violette are starting to see and feel the change. Dr. Domitien says the results are not just about revenue or a new hospital.

“It’s not just a top-class facility paid for by the ordinary Burundian taxpayer. It’s a sign of the people claiming ownership of their future, ownership of their democracy and fulfillment of their expectations of how their country should be governed.”

“Burundi is setting down a pointer for other African countries, where many people feel disconnected from their governments and what these governments do with the taxes they pay.”

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