10 key highlights of Rwanda’s 2020/21 budget

23 Jun 2020

Finance and Economic Planning Minister, Uzziel Ndagijimana Monday presented the final budget to the lawmakers in which the government will spend Rwf3.2 trillion in the 2020/2021 fiscal year.

The government spending will be aligned with the economic recovery plan for the next two to three years, and the country’s seven-year transformation strategy for 2017-2024.

All MPs present, including senators and deputies, approved the finance bill.

Below are the key highlights from the budget;

1. Tax revenue to reduce

Total tax revenue collections for Treasury have been projected to reach Rwf1,421.4 billion in the fiscal year 2020/21, lower than the Rwf1,569 billion projected in the revised budget financial year 2019/20 by Rwf147.6 billion.

The decline in the tax revenue collection is due to the current economic situation with the effect of the pandemic Covid-19.

The Covid-19 pandemic has shuttered the economies of all countries, and Rwanda has advised several measures including the closure of borders which limited the fast spread of the virus.

“This, however, took hit on many of our economic activities as many people were grounded at home,” Ndagijimana told MPs.

He said the government will resort to increasing external borrowing to respond to the economic effects of the pandemic in the medium term.

Total domestic resources are estimated at Rwf1,969.8 billion, which accounts for 60.5 per cent of the total budget.

External resources are projected at Rwf1,275.9 billion that accounts for 39.3 per cent of the total budget.

2. Development budget

The total expenditure on development projects is projected at Rwf1,298.5 billion, which represents 40 per cent of the total budget.

Domestically financed projects are estimated at Rwf703.4 billion, while externally financed projects are projected at Rwf595.1 billion.

To do this, the government has among other things set aside a package to continue to invest more capital in the Rwanda Development Bank (BRD) to enable it to play an increased role in the expansion of the private sector to accelerate growth.

Some Rwf7.2 billion will be invested in BRD next fiscal year.

3. RwandAir to receives boost

The Covid-19 pandemic has taken a big hit on the transport sector and the tourism sector, and RwandAir has been among those key businesses that have felt the impact as travel was halted and countries closed borders.

The Finance Minister said air transport services in Rwanda will reduce by 70 per cent while Foreign Direct Investments (FDIS) will reduce by 62 per cent this year due to the Covid19 pandemic.

Under the approved budget for the next year, the national carrier RwandAir whose operations have been adversely affected by the virus will be financed at Rwf145.1 billion.

4. Job creation prioritised

Government has prioritized job creation and entrepreneurship, among other things, dedicating at least Rwf16 billion to the sector.

Through different government projects, the National Employment Programme and private sector activities, there is a plan to generate at least 205,500 new jobs for Rwandans.

Government will also support 7,560 graduates of Technical and Vocational Education and Training (TVET) with startup toolkits to allow them to create their own jobs.

5. SMEs support

Small and medium sized enterprises (SMEs) are some of the businesses that have felt the impact of the pandemic, and as such, the government has decided to extend support to 550 SMEs to help them recover.

They will get business advisory services.

At the same time, 50 SMEs and cooperatives will be trained in e-commerce skills.

6. Made-in-Rwanda

The Government’s initiative to support domestic production of goods and services will receive Rwf7 billion. This will particularly enable domestic firms to ensure safety standards of their products.

Some 20 factories will benefit from the budgetary support, allowing them to adopt latest technologies to be able to create new innovations for the local and export markets.

Six export firms in particular will gain support from the Export Growth Fund, allowing them to be competitive at the international market.

The support towards Made in Rwanda is expected to reduce trade deficit, which rose by 17 per cent last year.

7. Rwf243.3 billion for transport

The government allocated Rwf243.3 billion towards accelerating transport projects. This includes construction, rehabilitation and upgrade of national roads.

Feeder roads will be developed and maintained while the demarcation of railway corridors will continue, particularly in districts of Gatsibo, Nyagatare, Nyabihu, Rutsiro, Gakenke and Nyaruguru.

Emergency Mobile Bridge will be acquired while the Rubagabaga and Satinskyi Bridge will be constructed, and four ports will be constructed at Kivu Lake – at Rusizi, Rubavu, Karongi and Nkora.

8. Improving agriculture

Some Rwf122.4 billion has been set aside to increase agricultural productivity through the use of improved agriculture inputs using inorganic fertilizers and improved seeds.

Irrigation projects will be supported including Gabiro Agri-business project (18,00ha), Mpanga (659ha), as well as extending support to disaster hit agriculture activities in Rwamagana, Rurambi, Bugarama, Umuvumba, Gatuna and Kamiranzovu.

Cash crops production for export will be strengthened through increased production of coffee and tea, as well as expropriation for new investments in tea production.

Post-harvest losses will be reduced through establishing new drying shelters and storage facilities, which will enable the government to store 7,000 tons of maize and 3,000 of beans.

9. Social protection package

The government dedicated Rwf129.2 billion under the next fiscal budget to scale up coverage of programmes designed to support vulnerable households.

The budget will enable the government to expand the Vision Umurenge Programme (VUP) to benefit more households across the country

It will also enable the roll out of the revision of Ubudehe categorization and development of social registry to improve efficiency in targeting and coordination of social protection programmes.

Some 541 new houses will be developed for survivors of the 1994 Genocide against the Tutsi, while other 44,822 houses will be built for the extremely poor households.

10. Health, education

The government also allocated a significant share of the funds to the education and health sectors, with each sector getting Rwf492 billion and Rwf261.1 billion respectively.

New hospitals, health centres and health posts such as Nyabikenke Hospital, IRCAD, Munini hospital and mental health day care centre will be constructed, thanks to the health package.

The education package will enable the government to reduce overcrowding in schools and long distances to schools through massive school constructions of new classroom blocks.

The school feeding programme will be expanded to include primary schools, while access to TVET will be increased and ensure absorption of 9-year basic education graduates by constructing and equipping IPRC Huye learning cenTRE

: Julius Bizimungu

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