Analysis...Capacity Study Analysis Discussion Paper No. 57Diii Contents Acknowledgements iv Acronyms iv Executive summary v 1 Introduction 1 2The Rwanda Revenue Authority in context

European Centre for Development Policy ManagementCentre européen de gestion des politiques de développement

John SaxbyPretoria, South Africa

Developing capacity for tax administrationThe Rwanda Revenue Authority

Anthony Land

A case study prepared for the project ‘Capacity, Change and Performance’

Discussion Paper No 57DNovember 2004

Analysis

The lack of capacity in low-income countries is one of the mainconstraints to achieving the Millennium Development Goals.Even practitioners confess to having only a limitedunderstanding of how capacity actually develops. In 2002, thechair of Govnet, the Network on Governance and CapacityDevelopment of the OECD, asked the European Centre forDevelopment Policy Management (ECDPM) in Maastricht, theNetherlands to undertake a study of how organisations andsystems, mainly in developing countries, have succeeded inbuilding their capacity and improving performance. Theresulting study focuses on the endogenous process of capacitydevelopment - the process of change from the perspective ofthose undergoing the change. The study examines the factorsthat encourage it, how it differs from one context to another,and why efforts to develop capacity have been more successfulin some contexts than in others.

The study consists of about 20 field cases carried out accordingto a methodological framework with seven components, asfollows:• Capabilities: How do the capabilities of a group,

organisation or network feed into organisational capacity?• Endogenous change and adaptation: How do processes of

change take place within an organisation or system? • Performance: What has the organisation or system

accomplished or is it now able to deliver? The focus here ison assessing the effectiveness of the process of capacitydevelopment rather than on impact, which will beapparent only in the long term.

External context Stakeholders

Internal features andresources

External intervention

The simplified analytical framework

Co r e va r i a b l e s

Capabilities

EndogenousChange andadaptation

Performance

Study of Capacity, Change and PerformanceNotes on the methodology

• External context: How has the external context - thehistorical, cultural, political and institutional environment,and the constraints and opportunities they create - influenced the capacity and performance of theorganisation or system?

• Stakeholders: What has been the influence of stakeholderssuch as beneficiaries, suppliers and supporters, and theirdifferent interests, expectations, modes of behaviour,resources, interrelationships and intensity of involvement?

• External interventions: How have outsiders influenced theprocess of change?

• Internal features and key resources: What are the patternsof internal features such as formal and informal roles,structures, resources, culture, strategies and values, andwhat influence have they had at both the organisationaland multi-organisational levels?

The outputs of the study will include about 20 case studyreports, an annotated review of the literature, a set ofassessment tools, and various thematic papers to stimulatenew thinking and practices about capacity development. Thesynthesis report summarising the results of the case studies willbe published in 2005.

The results of the study, interim reports and an elaboratedmethodology can be consulted at www.capacity.org orwww.ecdpm.org. For further information, please contactMs Heather Baser ([email protected]).

Developing capacity for tax administrationThe Rwanda Revenue Authority

Anthony Land

A case study prepared for the project 'Capacity, Change and Performance'

November 2004

Capacity Study Analysis Discussion Paper No. 57D

iii

ContentsAcknowledgements ivAcronyms ivExecutive summary v

1 Introduction 1

2 The Rwanda Revenue Authority in context 32.1 Rwanda in transition: the aftermath of national

collapse and genocide 32.2 Formal legitimacy: the strategic role of the RRA 32.3 Constraints and challenges 42.4 Stakeholders 5

3 Capacity development and the process of change 73.1 Overview of the process 73.2 Agency creation and consolidation (1997-2000) 73.3 Expansion and performance improvement (2001-2002) 83.4 Modernisation and transformation (2003-present) 9

4 The elements of a capable and performing organisation 114.1 Protected space, political support and expectations

to perform 114.2 Leadership and management 124.3 Managing for results 134.4 Shaping the external environment 164.5 Developing technical capabilities 184.6 External assistance as process facilitator 21

5 Capacity, change and performance: key lessons 235.1 Performance record 235.2 Success factors 245.3 The future: Can the RRA avoid the fate of other

revenue authorities? 26

Annex: Individuals consulted 29

References 30

The European Centre forDevelopment Policy ManagementOnze Lieve Vrouweplein 21NL-6211 HE Maastricht, The Netherlands Tel +31 (0)43 350 29 00Fax +31 (0)43 350 29 [email protected] www.ecdpm.org

Department for International Development - DFID1 Palace StreetUK-London SW1E 5HE, United KingdomTel +44 (0)20 7023 0000Fax +44 (0)20 7023 0019

[email protected] www.dfid.gov.uk

Discussion Paper No. 57D Capacity Study Analysis

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AcknowledgementsThis case study was made possible thanks to the generous funding of the UK Department for InternationalDevelopment (DfID).

Many people have contributed to the preparation of this case study. Special words of thanks are due to the following:• Katherine Ford (DfID, London) and the DfID country office in Kigali for identifying the Rwanda Revenue

Authority as a potential case for the wider study and for making initial arrangements for the case study;• James Musoni, Commissioner General of the Rwanda Revenue Authority, for giving me the opportunity to

learn about his organisation and for giving access to his staff and documentation, for providing logisticalsupport during my stay;

• a special word of thanks is due to Eugene Torero, Commissioner for Large Taxpayers for his preparation ofthe study itinerary and arrangement of meetings both inside and outside the organisation;

• all the staff of the RRA who gave up time to answer questions and provide information, and to KieranHolmes, DFID project manager, and the DfID advisers for their insights and support; and

• the members of the ECDPM core team for the wider study on Capacity, Change and Performance - HeatherBaser, Programme Coordinator; Volker Hauck, Senior Programme officer, and Peter Morgan, ECDPMAssociate - who accompanied this research and provided comments and reflections prior to and during thewriting of this report.

Notwithstanding the above, the views and opinions expressed in this report are those of the author and donot necessarily reflect those of DfID, the Rwanda Revenue Authority or ECDPM. Whilst the draft final reportwas reviewed by a number of stakeholders, the author assumes full responsibility for any factual errors oromissions.

Acronyms ASYCUDA++ Automated System for Customs Data CG Commissioner GeneralDAC Development Assistance CommitteeDfID Department for International Development (UK)ECDPM European Centre for Development Policy ManagementGDP gross domestic productGOVNET Governance Network (OECD DAC)IMF International Monetary FundIT information technologyOECD Organisation for Economic Cooperation and DevelopmentRRA Rwanda Revenue AuthoritySWOT strengths, weaknesses, opportunities, threatsTA technical assistanceTIN taxpayer identification numberVAT value added tax

Executive summaryThe Rwanda Revenue Authority (RRA) was esta-blished in 1997, charged with administering the collection of taxes and customs and excise dutieson behalf of the government. In just six years, it hasbecome a performing and respected institutionthat has helped increase domestic revenue genera-tion from 9.5% to 13% of GDP. This case study iden-tifies a number of success factors that have con-tributed to this remarkable achievement.

A locally driven transformation process. This hasbeen a locally driven transformation process, under-written by strong ownership, and driven by a deci-sive leadership;

A clear mandate and expectations to perform. TheRRA was granted a clear mandate and strategic roleto play within government's wider developmentstrategy. From the outset it enjoyed a high degreeof support from official circles, and equally highexpectations to perform.

An organisational status offering space but also protection. The RRA's agency status offered adegree of management autonomy that enabled itto take decisions and manage resources on busi-ness-like principles, and to pursue its mandatewithout interference or distraction.

Balancing 'hard' and 'soft' elements of capacity.Various capabilities have been developed thathave contributed to the organisation's capacity toperform. At one level, this meant working on 'hard'elements of capacity that contribute to internal efficiency and effectiveness; getting structures,systems, procedures and technology right anddeveloping appropriate staff competencies. Atanother level, it meant developing the 'soft' capa-bilities that seem to hold the key to translatingcapacity into organisational performance. Theseincluded attributes such as visionary leadership and committed management that have nurtured adistinct corporate identity and value system, inclu-ding a thirst for learning and critical self-aware-ness.

Looking in but also out. Efforts have also been madeto manage the RRA's external environment. Overtime the organisation has recognised that itscapacity to perform is in part conditioned by exter-nal factors over which it has some degree of influ-ence.

A pragmatic and incremental change process. Largescale, comprehensive and predetermined reformprocesses have been avoided in favour of pragmaticand incremental approaches characterised by adap-tation to emerging needs and priorities and pro-gression over relatively short time frames. Workingincrementally has not meant being un-strategic.

A mature partnership between the RRA and DfID.Over the years, the partners have developed a'grown-up' relationship based on frank exchange,team spirit and shared accountability for results.This has allowed external technical and financialassistance to accompany the local change process,adapting to the local tempo of change and emer-ging priorities.


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1 IntroductionIn November 1997, the Rwandan transitional parlia-ment passed a law (No. 15/97) establishing theRwanda Revenue Authority (RRA) as a body corporatecharged with administering the collection of taxesand customs and excise duties on behalf of the gov-ernment. The establishment of the RRA marked thebeginning of a remarkable process of organisationaldevelopment, which has seen the transformation ofthe government's capacity to manage revenue collec-tion. In just six years, the RRA has become a perform-ing and respected institution that has helped increasedomestic revenue generation from 9.5% to 13% ofGDP. This is in stark contrast to the situation prior tothe creation of RRA. Revenue collection had been theresponsibility of a department within the Ministry ofFinance that was characterised as incompetent, ineffi-cient and corrupt. Revenue collection was not takenseriously by either the government or the public atlarge.

This case study looks at the first six years of the RRAand identifies the factors that have contributed to itsremarkable achievements. What has transformed itinto a performing and respected institution? Whathave been the factors driving change? How importanthas capacity development been to this record ofachievement? How has external assistance facilitatedthe process of transformation?

The wider study of Capacity, Change and PerformanceThis case study is a contribution to a wider study onCapacity, Change and Performance that is being coor-dinated by the European Centre for DevelopmentPolicy Management (ECDPM) under the aegis of theWorking Group on Governance and CapacityDevelopment (Govnet) of the OECD's DevelopmentAssistance Committee (DAC). The wider study, whichis grounded in some 18 case studies across the globe,aims to understand what capacity is and how it isdeveloped, and to provide insights into how externalorganisations can best support endogenous capacitydevelopment processes. Through experiences drawn

from the individual case studies, the wider studyseeks a better understanding of the meaning ofcapacity, of the complex relationship between capaci-ty and performance improvement, and on theprocesses through which capacity is developed.

The analytical framework developed to guide the conduct of these case studies (see inside front cover)adopts a systems perspective and identifies seveninterdependent dimensions: the external context,stakeholders, internal features and resources, externalintervention, capacity, endogenous change and adap-tation, and performance.

This case study is therefore a learning initiative thatseeks to draw lessons from the experiences inRwanda that can inform the wider study on capacity,change and performance.1 It is important to note thatthe case study is not an evaluation and does not seekto pass judgement on any of the individuals, organi-sations or assistance programmes described.

Study methodologyOn the basis of a selected literature review, fieldworkwas conducted over a ten-day period in May 2004 inKigali, Rwanda. The fieldwork consisted of a set of in-depth interviews with members of staff ofthe RRA, its board as well as selected stakeholdersincluding the UK Department for InternationalDevelopment (DfID), the main external partner of theRRA. Based on semi-structured questionnaires, andguided by the wider study's conceptual framework,the interviews focused on obtaining mainly qualita-tive information about the process of capacity deve-lopment, the understanding of what capacity is, andhow these relate to performance improvement. A listof individuals consulted can be found in the annex tothis report.

In reading this report, it should be recognised that thefindings and conclusions drawn are based largely onqualitative information obtained from key infor-mants, and relied on the ability of interviewees torecall events over a six-year period. It was not possiblein the time available to undertake a more in-depthanalysis of business processes or of organisationalbehaviour either on the basis of more formal meas-urement techniques or through direct observation.2


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Notes1 The term 'capacity' is used here to refer to the ability of an

organisation or system as a whole to perform. As such, it isnot equated with any subsidiary element such as aparticular 'capability'. Capability refers to a specific ability ofthe organisation to do something in particular, such as tofacilitate or to learn or to manage projects. Finally,'performance' is used to mean accomplishment orexecution or delivery.

2 For instance, it was not possible to go beyond theinformation provided by interviewees to ascertain andverify informal and intangible aspects that are oftenunwritten or unspoken, yet can have a significant bearingon organisational behaviour.

Structure of this reportFollowing this introduction, section 2 outlines someof the pertinent characteristics of the context withinwhich the RRA has evolved. It begins by highlightingaspects of the country's recent history, notably itsemergence from civil strife and genocide, notes theformal legitimacy bestowed on the organisation bypolitical authority, and identifies specific challengesand opportunities that the RRA had to face at thetime of its establishment in 1997. The section endswith an overview of the external stakeholders withwhich the RRA interacts.

Section 3 describes the process through which theRRA transformed itself from a legal text into a per-forming and respected organisation. Section 4 thenexamines the factors that have enabled the RRA totransform itself into a performing organisation.Section 4.1 discusses the key 'enablers' that laid thefoundation for performance improvement andcapacity development. Section 4.2 considers howRRA leadership and management took the initiativeto transform the culture of the organisation, to one

focused on performance and integrity. Section 4.3identifies the elements of a performance manage-ment capability that has been created within theorganisation, and section 4.4 looks at how theorganisation sought to shape its external environ-ment. Section 4.5 considers how the RRA's opera-tional capabilities were developed. Finally, section4.6 looks at the contributions of DfID, the RRA'sprincipal external partner, to this transformationprocess.

Section 5 gives an overview of the RRA's performancerecord, and highlights lessons pertaining to the inter-play between capacity, change and performance. Itsummarises the factors that have contributed to theRRA's achievements and, in so doing, tries to identifythose factors that really made a difference and thathelp explain the organisation's remarkable successesin the midst of otherwise adverse conditions. Thesection ends by speculating on the outlook for sus-taining the gains made in the future.


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2 The Rwanda Revenue Authority in context

The development of the Rwanda Revenue Authorityneeds to be put in context. This section outlinessome of the pertinent characteristics of that context.It begins by highlighting the country's recent history,the formal legitimacy bestowed on the organisationby political authority, and identifies the constraintsand challenges the RRA faced at the time of itsestablishment in 1997. The section ends with anoverview of the external stakeholders with whichthe Authority interacts.

2.1 Rwanda in transition: the aftermath of national collapse and genocide

The organisation's spectacular achievements havetaken place against the background of a countryemerging from trauma. After more than 30 years ofstate division, ethnic conflict and growing economicmalaise, the RRA was born in 1997 into an environ-ment that could best be described as hostile. The civilwar and genocide had left one million people deadand nearly three million refugees in exile, the fabricof society had been torn apart, the state and econo-my had collapsed and infrastructure destroyed. In1997, the Rwandan state was still in a process ofreconstruction but had begun to move to the pointwhere longer-term development issues could beginto be contemplated alongside the ongoing need todeal with issues of regional insecurity as well associal and political fragility within its borders.

Today, it is clear that the government has succeededin galvanising a societal drive to pick itself up and to work towards becoming a prosperous, secure and confident society. There seems to be a strongdesire to succeed and to prove that the country can re-emerge from the depths of crisis. The drive to per-form and the eagerness to succeed are all-pervasiveand go a long way to compensate for the shortagesin capacity that the country faces. The emergence ofthe RRA as a performing organisation is in manyrespects symbolic of this wider drive for national reconciliation and reconstruction. The Rwandan government had also been able to mobilise the sup-

port of sections of the international community thathad pledged support to rebuild the country. Togetherwith its external partners, it has set out an agenda tocreate a united Rwandan people sharing commonidentity and goals. At the heart of this agenda is thefight against poverty and the creation of a democra-tic and inclusive political dispensation.

The Rwandan Poverty Reduction Strategy Paperadopted in 2002 provides the overall policy frame-work for steering the country forward. Yet the chal-lenges are formidable. Today, some 60% of Rwandansremain below the national poverty line, with 40% living in extreme poverty. The UNDP's HumanDevelopment Report 2003 ranked Rwanda 158th outof 175 countries. Yet the economy has recorded anaverage growth rate of 8% per year since 1998 andthe incidence of poverty is reportedly declining.The process of national transformation has beenunrolling at what has been described as 'an extra-ordinary pace'.3

2.2 Formal legitimacy: the strategic role of the RRA

The Rwanda Revenue Authority plays an integral rolein government's broader political vision and develop-ment strategy. It is seen as playing a strategic role in:• increasing the country's domestic revenue gener-

ation capability, which is critical to enabling thecountry to finance its development objectives andpoverty reduction strategy, and to reduce itsdependence on outside assistance;4

• creating an enabling environment for private sector development and attracting inward invest-ment;

• contributing to developing a culture of participa-tion and citizenship as part of a wider process ofestablishing the norms and practices of demo-cratic governance,5 and of bringing governmentcloser to the people; and

• encouraging public confidence in government asan institution able and willing to lead theRwandan people from misery and strife towardsself-esteem and prosperity.

For these reasons, the RRA has from the outset beenable to count on a substantial degree of political sup-port and backing. It has in particular enjoyed the per-sonal support of the President, who has gone on toplay a major part in the campaign to change publicattitudes towards paying taxes and corruption. TheRRA, therefore, started life with all the legitimacy it


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Notes3 See DfID, Rwanda - Country Assistance Plan 2003-2006.4 Revenue collection has grown from 9 to 13% of GDP, yet

government expenditure accounts for approximately 25%of GDP. In view of this significant gap, efforts to improvedomestic resource mobilisation capabilities are critical.

5 In return for paying taxes, citizens should have the right tohold their government to account and to expect efficientand affordable delivery of services.

could ask for, including the political backing andgoodwill that have helped it to succeed in an other-wise difficult environment.

In this regard, the importance attached to promotingintegrity and curbing corruption is fundamental.The government has committed itself to an unambiguous and no-nonsense drive to clean upgovernment. The President has been very visible indriving this point home. Rwanda observers arguethat this commitment is much stronger, and thatcorruption is far less of a systemic problem than elsewhere in the region.

2.3 Constraints and challengesDespite enjoying formal support from the highestlevels of government, the RRA had to contend with anumber of constraints and challenges that woulddirectly impinge on its efforts to emerge as a strong,legitimate and performing organisation.

Limited opportunities for revenue generationA major challenge facing the new RRA was the coun-try's limited tax base.6 For the vast majority ofRwandans (over 90%) who live and work in the ruralareas, the rural economy had been devastated andwas, in any case, largely non-monetised. Moreover,most rural Rwandans were experiencing acute pover-ty, exacerbated by social dislocation and trauma.

The urban economy, although better off, also offeredlimited opportunities for revenue generation. Theformal economy, comprising mainly small, micro- andmedium enterprises, had been devastated and wasonly beginning to re-emerge. The much larger andburgeoning informal sector was by its nature beyondthe reach of the tax authorities. The generally lowlevel of economic activity and dilapidated infrastruc-ture also meant that the level of trade was limited.Meanwhile, there were few individuals earning suffi-ciently high salaries to be eligible for personalincome tax. The civil service, which offered the mainsource of formal employment, was barely able tooffer a living wage.

A sceptical and uncooperative taxpaying publicA second challenge was the fact that few Rwandansbelieved that they should pay taxes. As in any country,there are few citizens who will voluntarily pay theirtaxes. Even those able and required by law to pay taxhad not been used to declaring their earnings, whilstcustoms and excise regulations were regularly

flouted. Taxation was perceived as a punitive meas-ure, or simply as a means by which tax inspectorscould supplement their own meagre salaries.

The country's political history meant that the associ-ation between paying tax and receiving servicesfrom government was missing. The quality of servicedelivery was poor, there was no tradition of politicalaccountability, whilst the tragedy of genocide andcivil strife had made the public services largely dys-functional. Not only did it lack the basic humancapacity to manage core services, but much of thecountry's social and economic infrastructure hadbeen destroyed.

Previous leadership had not placed domestic revenuemobilisation as a core element of economic policy,and the country had come to depend on internatio-nal aid. Self-serving government behaviour, corrup-tion within the revenue collection services and generally inefficient service provision meant that formost Rwandans paying tax was viewed not as a civicresponsibility, but as something to be avoided. Thepublic was understandably sceptical and wary aboutthe government's intentions and motives in settingup the RRA. Changing public perceptions was to beone of the key challenges that the organisationwould face.

Poor reputation of the Rwanda revenue serviceA third and related challenge concerned the reputa-tion and capacity of the former revenue service thatthe RRA was to replace. Like the rest of the publicservices, the revenue service had been affected bythe crisis and was just beginning to function again.Yet many of the department's skilled and experi-enced staff had been killed or had fled the country.Equipment and file data had been destroyed or weremissing. Most crucially, there seemed to be littleincentive to perform and little understanding of thepurpose and functions of a revenue service. Therewas no policy or strategy to guide the department,the legal and policy framework was out of date,systems and procedures were antiquated, and staffhad received almost no training. There was little discipline, with staff coming and going as theypleased. Corruption and bribery, including politicalinterference, were rife and tax collectors had the reputation of being high-handed in their dealingswith the public.7 According to former staff members,the service was largely dysfunctional; as one stake-


Notes6 In 1995-1997 Rwandan tax revenues averaged 8.7% of GDP,

compared with an average of 17.7% of GDP for sub-SaharanAfrica as a whole.

7 Tax collectors had a reputation for closing down businessesthat failed to pay.

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holder put it, 'we were in a deep hole'. With littlepressure to perform either from within governmentitself or from society at large, the revenue servicehad become a neglected sector.

Fragile human resource baseThe country's human resource base was particularlyfragile. Not only had one million people been killedand three million forced into exile, denying the coun-try many of its most capable and experienced, butthe education system had been thrown into a stateof collapse. A massive human capacity deficit hadbeen created that was going to take at least a gener-ation to overcome.8 Compounding the problem wasthe fact that since independence the country had notinvested in the development of secondary and terti-ary education institutions. This meant there was asubstantial shortage of Rwandans with post-primaryeducation. In 2002, 33% of the population aged 15years and above had no education, 60% had only pri-mary education, 7.1% had post-primary or secondaryeducation, and only 0.4% had some tertiary educa-tion. Meanwhile, in the civil service, 79% of core civilservants had not completed secondary education in1995, although this proportion fell to 51% by 1998.9There was also a shortage of institutions - as well astrained staff to run them - to build up a new genera-tion of professionals.10

The problem was especially acute with respect toprofessional areas relevant to the revenue service.The country had been producing virtually no profes-sionals in the fields of accountancy, financial man-agement and tax administration,11 but also in areassuch as statistics and information technology. Notonly did this affect the government's own capacity tomanage tax administration, it also meant that theprivate sector was inadequately served with tax andaccountancy professionals. A glaring gap was theabsence of professional organisations serving asintermediaries and providing accountancy, audit andtax consulting services. Also missing was a profes-sional association able to regulate and set standardsof practice in these areas.

To some extent this human capital deficit, broughtabout by years of neglect, and then by genocide andcivil strife, has been mitigated by the return of anestimated 2 million Rwandans who had taken refugeoutside the country during the 1960s, and whobrought with them international experience, exper-tise and education. Besides their technical abilities,these returnees brought with them a high degree ofmotivation and commitment to rebuilding theircountry. A commitment to change and renewal, andidentification with the vision of the new leadership,rather than the lure of attractive salaries, seem tohave stimulated a process of return migration.

2.4 Stakeholders The RRA interacts in different ways with severalstakeholder groups: the government, taxpayers, andlocal and international partners.

The government of RwandaThe RRA is a public sector agency, created by law andultimately accountable to parliament. The govern-ment provides the legal and policy framework withinwhich the RRA operates and provides the organisa-tion political support and legitimacy. Spending ministries are the net beneficiaries of the RRA, in sofar as the organisation collects domestic revenuesthat are distributed through the Treasury to thesedepartments. In this respect, the government can beconsidered the RRA's prime 'customer'. Within themachinery of government, the following are of special significance:• The President has from the outset played a signifi-

cant role in promoting the RRA, in encouragingRwandans to pay their taxes and in insisting onpublic service integrity, transparency and accoun-tability. The president has also led a campaign ofzero tolerance towards corruption.

• The Ministry of Finance and Economic Planning isthe RRA's parent ministry and is therefore directlyresponsible as board member for monitoring thepolicy framework and operations of the organisa-tion. It also provides the policy links betweendomestic revenue mobilisation and broaderstrategies of macroeconomic management, publicsector reform and poverty reduction.

• The Ministry of Commerce (including theInvestment Authority) is a board member and acritical stakeholder from the point of view of man-aging the relationship between the collection ofrevenues and creating an enabling environmentfor private sector investment and development.


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Notes8 The crisis had also exacerbated the already poor health

status of Rwandans, with an upsurge in the rate of infantmortality, the incidence of HIV/AIDS and othercommunicable diseases, and a wide range of physical andmental injuries.

9 The rate of literacy in 2002 was estimated to be 47.8% forwomen and 58.1% for men.

10 Between 1994 and 2000, the country apparently producedmore graduates than the entire period 1964-1994!

11 Up to 2000, there was no faculty of commerce or businessadministration at Rwanda's National University.

• The National Bank of Rwanda is a board memberand a critical stakeholder in terms of monitoringthe link between domestic revenue generationand the management of fiscal and monetary policy.

• The Ministry of Public Service has a special interestto see how the agency model on which the RRA isbased works in the Rwandan context, and to drawlessons for the wider process of public servicereform (capacity building, performance improve-ment and service delivery).12

TaxpayersTaxpayers interact with the RRA as enterprises,individuals, traders and travellers, and contribute revenues through the payment of various taxes andcustoms and excise duties. They constitute the RRA'sother 'customers' whose interests must be counter-balanced with those of the government, to whomthe authority is ultimately accountable. Almost 90%of taxpayers are based in the capital, Kigali. This isthe group that the RRA interacts with on a daily basisand on whom it ultimately depends for its perfor-mance and support. Three categories of taxpayer canbe distinguished:• Large taxpayers comprise local and international

companies operating in Rwanda. This is a newand growing category of taxpayer. Although rela-tively few in number, they account for almost80% of collected revenues. Such companies usual-ly have sophisticated financial managementsystems and can be expected to be knowledge-able about their tax obligations. The compliancerate among this category is now very high company tax 95% and VAT 87%).

• Small taxpayers comprise local small and mediumenterprises as well as individuals. Although signifi-cant in number, this group accounts for less than20% of revenues collected due to low incomes,poor accounting practices (don't keep books ofaccount), lack of knowledge of the law, lower compliance rates and more general difficultiesassociated with their identification and registra-tion (no fixed addresses). This category alsoincludes the large but unregulated informal sector.

• Local and international traders, investors and visi-tors involved in the import and export of goodsand services, which interact with the Customsand Excise Department.

Taxpayers are also consumers of governmentservices and as such may also be regarded as indi-

rect stakeholders. In this respect, public supportfor paying taxes depends in large part on the levelof satisfaction with the quality of services delivered by the government. This is because the main justi-fication for paying taxes is that it enables the government to deliver basic services. If there is dissatisfaction, then the level of compliance andcooperation risks falling.

Local and international partnersThe RRA relies on a number of local and internationalpartners to assist it in implementing its mandate.These include:• The Rwanda Private Sector Federation serves as an

interlocutor with and a focal point for the RRA inseeking compliance and understanding on revenue issues among large, medium and smallenterprises.

• Police, army, local authorities and counterparts inneighbouring countries are important partners injointly tackling smuggling and tax evasion.

• Tax and financial consultants play a critical roleas intermediaries in facilitating the preparationof tax returns and company financial reports, inauditing books of account, and in providingrelated services to the taxpaying community.

• Revenue authorities in the East African regionhave been an important source of knowledge,expertise and peer support and have helped theRRA to avoid the mistakes made by others.

• Cooperation partners such as DfID (the RRA's prin-cipal external partner) and the InternationalMonetary Fund (IMF), which provided targetedassistance on tax policy matters, have been majorsources of financial and technical assistance inthe process of organisational capacity develop-ment, serving as facilitators of change and mentors to the RRA leadership.


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Notes12 The President uses the RRA as an example of good practice,

and the press has often cited the RRA as an example ofwhat public service should be.

3 Capacity developmentand the process of change

This section describes the process through which theRwanda Revenue Authority transformed itself into aperforming and respected organisation.

3.1 Overview of the processWhilst enjoying the full support of the Rwandangovernment and the donor community, the manage-ment and board of the newly established RRA facedsignificant challenges in developing an effective andrespected system of revenue administration.Internally, there was a need to shed the legacy of thepast and to create an entirely new organisation capa-ble of performing, guided by clear goals and objec-tives, driven by new management and governanceprinciples, and supported by professional staff andmodern business processes. Externally, there was aneed to transform the image and standing of therevenue service and to establish a new relationshipwith its stakeholders based on trust and cooperation.A major effort would be needed to change the atti-tude of the public towards the very idea of payingtaxes. It would also be important to secure the sup-port of other parts of the government bureaucracy.

How did the RRA rise to the challenge? As this andthe next section demonstrate, capacity developmentand change have been part and parcel of the RRA'sexperience since its establishment. There are two distinct but interrelated dimensions to this process,which have allowed the RRA to evolve in just a fewyears into a dynamic and performing organisation.

First, there has been what may be termed an endoge-nous process of organisational learning and adaptationthat has seen key stakeholders progressively masterthe management of the RRA and its external environ-ment through a process of learning by doing and con-tinuous monitoring. This process may be characterisedas more intuitive than planned, more organic than

technocratic, and influenced by more intangible fac-tors that include aspects of culture, values and atti-tudes. Through this process, various organisation-widecapabilities have emerged, such as for strategic plan-ning, organisational learning and self-awareness, aswell as the management of change, that have con-tributed to the RRA's overall capacity to perform.

Second, a series of more tangible capacity develop-ment interventions comprising various forms oforganisational strengthening and human resourcesdevelopment support have accompanied this endoge-nous process. Reliant to a large extent on externalassistance provided through DfID, this support, whichby its nature has been more technocratic and supplyoriented (dealing with structures, systems, technolo-gy, training), has helped the RRA develop a set of keymanagement and technical capabilities that areessential to the delivery of its core mandate.

With the benefit of hindsight, the RRA's capacitydevelopment and change process may be dividedinto three approximate phases. It is important tonote, however, that these phases were not part ofany preconceived plan.13 It is also worth remember-ing that by any standards, the RRA remains a youngorganisation that is still in the throes of rapid growthand learning.14 The three phases are: agency creationand consolidation (1997-2000); expansion and performance improvement (2001-2002); and modernisation and transformation (2003-present).

3.2 Agency creation and consolidation (1997-2000)

This first phase saw the legal establishment of theRRA in 1997 and its hiving off from the Ministry ofFinance, followed by a period during which the basicelements of the new organisation were put in placeand where immediate remedial measures were tack-led. This enabled the RRA to become functional inkey operational areas, capable of maintaining aninflow of revenues.

With a board of governors appointed, the focus ofattention in the first years was on setting up theorganisation as a going concern. In this regard it wasimportant to ensure that the authority could imme-diately begin functioning and that there would notbe a break in revenue flows. With assistance fromDfID, various proposals were developed to help theRwandan authorities decide how best to set up thenew organisation.15 In so doing, Rwanda was also


7

Notes13 These phases are only illustrative and are not formal

phases. They should not be confused with the phasesassociated with DfID support of which there have to datebeen five.

14 See Taylor, J., 2003. Organisations and Development (CRDA).15 Meanwhile, the IMF, which had been party to the

discussions leading to the establishment of the RRA, agreedto focus on support to tax policy reform within the Ministry,leaving tax administration reform to DfID. In practice, theDfID project manager at the RRA and other advisers havesupported the reform of tax legislation and advised theMinistry accordingly.

able to benefit from the experiences of other rev-enue authorities that had been established earlier inthe region. Attention focused on deciding on anorganisational structure, roles and responsibilities,formulating a personnel policy and recruiting staff.Investigations into the feasibility and modalities ofintroducing VAT in Rwanda were also carried out atthis time.

It was decided to recruit an expatriate CommissionerGeneral (CG) who had regional experience16 to headthe organisation, in large part to help avoid repeat-ing mistakes of the past and to benefit from the lessons of experience elsewhere. It was also felt thathaving an expatriate CG at this initial stage couldreduce any risk of patronage and corruption creepingin to the new organisation, thereby helping to makea break with past practices. It also gave the boardtime to find the right Rwandan eventually to takeover the running of the organisation; indeed, ensu-ring effective Rwandan leadership was recognised tobe crucial to the long-term success of the authority.

All of the staff of the former revenue departmentwere required to undergo an examination of compe-tency and integrity as part of a re-recruitment exer-cise. This process was administered by outsiders toensure impartiality and to guard against possiblepolitical interference. It also provided an opportunityto weed out non-performing or untrustworthyemployees, and to ensure that most of the staff ofthe new organisation were there for the right reason.They were rewarded with a generous remunerationpackage that was amongst the most attractive in thecountry.

Later in this period, consultants were hired to helpset up an information technology department, whichhitherto had not existed, and to identify IT areasrequiring immediate attention. In other depart-ments, attention was paid to consolidating andupgrading systems and procedures in order toimprove the overall efficiency of operations.

Besides attending to these internal organisationalmatters, a start was made at improving the image ofthe organisation and in mounting a campaign aimedat encouraging the public to comply with their taxobligations. To assist management in this process,'policy champions' were identified, including politi-cians, community leaders and representatives of theprivate sector. Together, the RRA and these policy

champions made significant efforts to 'spread theword', stressing the strategic importance of revenuecollection for national reconstruction and develop-ment. It marked the beginning of a concerted effort tochange the attitudes of Rwandan society to paying taxand towards a stance of zero tolerance of corruption,something that has continued over the years.

3.3 Expansion and performance improvement(2001-2002)

This second phase witnessed more profoundchanges, with an overhaul of senior management,expansion of operations, more intensive and hands-on technical assistance, and evidence of performanceimprovement in relation to amounts of revenue collected.

With the basic organisation in place, the RRA wasable to begin a more involved process of developingcore competencies and working towards improvingoverall performance. This period also saw the estab-lishment of the VAT Department, which in a shortspace of time began to excel in terms of achievingrevenue targets. Although the option of restructu-ring the RRA along functional lines was considered atthis time, it was felt that the organisation was notyet ready for such a transformation.17 It was there-fore decided to focus on developing core competen-cies within the existing framework.

A critical juncture occurred in 2001 when the boardoverhauled senior management. The expatriate CGwho had successfully managed the transition from agovernment department to a semi-autonomousagency was replaced by a Rwandan. Many of the for-mer directors and commissioners were also replacedwith a new cadre of younger recruits, some of whomhad worked their way through the organisation,although others were recruited from outside. The significance of this management transformationcannot be underestimated. It seems to have injecteda new vitality and confidence into the organisation,and marked a final break with the old order. The newCG used this opportunity to nurture a new ethos andculture within the organisation, together with a newvision and management approaches. Crucially, thefoundations of a culture of performance and integri-ty were laid down that continue to drive the organi-sation.

This change in senior management provided anopportunity for DfID to intensify its assistance to the


8

Notes16 The incumbent had headed the Uganda Revenue Authority.17 Due to weaknesses in areas of core competence, e.g.

auditing, and other logistical constraints.

RRA, particularly with respect to the provision ofadvisory support. Attention was given to humanresources development including the introduction ofthe rudiments of a performance-based appraisal sys-tem, as well as a code of conduct and measures forassuring staff integrity. The period also saw theplacement of technical assistance (TA) personnel in anumber of line management positions, combiningadvisory and training functions with selected imple-mentation responsibilities. Advisers were also postedto work alongside senior management to assist indeveloping stronger management systems and cor-porate planning and monitoring processes.

During this period, the RRA saw revenues increasefrom 9% to 12.5 % of GDP, while its standing amongthe public at large and the tax paying community inparticular seemed to be improving. It also saw management emerge with a stronger sense of purpose and ownership of the organisation and agrowing understanding of the relationship betweenchange, capacity and performance. Although lackingformal expertise in tax administration and tax policy,management was emerging as a stronger partner toDfID, better able to set the pace of reform and todetermine the content of the capacity developmentprocess. At the same time it was clear that moreneeded to be done to make the RRA efficient andcapable of increasing the revenue take as well asbecoming more responsive to customer needs.

3.4 Modernisation and transformation (2003-present)

This most recent period has seen the introduction ofmore transformative change with a refocusing of theorganisation towards the customer, the modernisa-tion of business processes including automation, anda greater focus on performance-based humanresources management (see Box 1). Meanwhile thefocus of TA has shifted from long-term to short-termsupport.

This third phase in the transformation of the RRA canbe associated with the decision to rethink the way inwhich the organisation should approach its core busi-ness. Beginning with an internal process of reflectionthat started in 2002 but which took off in 2003, theRRA adopted a customer-oriented or service deliveryapproach, which meant fundamentally rethinkinghow the organisation should function.18

The board approved a new structure in November2003, and in early 2004 the RRA was restructuredalong functional lines (see Box 2), with the intentionof working towards a one-stop shop19 concept. Such a shift involves more than just reshuffling depart-ments; it carries implications for the way business is managed and, most important, introduces theideas of service quality and customer satisfaction.The new orientation has prompted closer investiga-tion of business processes, has given added impetusto efforts to strengthen the management of humanresources,20 has provided a more rational context forthinking about the role of computerisation, and hasdrawn attention to the importance of tailoring services to customer needs. It has also prompted areview of the legislative framework within which the


9

Notes18 A joint DfID/RRA assessment of the progress thus far

suggested that while significant improvements had beenmade, some fundamental obstacles remained, whichrequired a more substantial rethinking of how best tomanage the RRA. It was also felt that the early momentumwas being lost and that a new drive was needed to lift theorganisation to a higher level.

19 A one-stop shop approach is efficient (reduces transactioncosts) and enables better targeting of services according toneeds of customers (taxpayer needs can be considered intotality)

.20 Setting in train a systematic review of all posts.

Box 1: Elements of the modernisation process

• Harmonisation of the legal system.• Restructuring to address the new vision and

strategy.• Staff capacity building, based on a systematic

needs analysis.• Client capacity building: raising the awareness

of customers about their rights and responsibili-ties, and developing the professionalism of intermediaries such as tax consultants and customs forwarding agents.

• Introducing new processes and procedures tofacilitate implementation of work, and to ensureeffective controls.

• Improving the quality of service, such as reduc-ing the number of contact points to ensureintegrity, transparency and cost effectiveness.

• Introducing IT systems across the board.• Improving the infrastructure and work

environment.• Procurement of equipment, including vehicles.


10

The RRA (www.rra.gov.rw) is a semi-autonomousgovernment agency accountable to the Ministryof Finance and parliament through its board. Fullyfunded through the state budget, the RRA enjoysdiscretionary powers (management autonomy)that are defined and circumscribed by law. TheRRA is mandated to collect revenues from incometax, value-added tax, customs and excise duties,as well as various other taxes.

The composition of the board balances a concernfor representativeness and competence.Chairmanship of the board rotates and is open toany of the eight members. The Authority'sCommissioner General is supported by amanagement team comprising fivecommissioners and four directors. The RRAcurrently employs 644 staff, 90% of whom areunder the age of 45. The RRA has three revenuecollection departments:• The Large Taxpayers Department collects

revenues from large private sector enterprises,including foreign-owned businesses, whichaccount for some 80% of tax revenues.

• The Internal Revenue Department collectsrevenues from small and medium enterprises aswell as individuals. These are large in number,but contribute only a small proportion of totalrevenues. Typically these are simpleorganisations but lack effective financialmanagement systems and expertise and manyare unfamiliar with their legal tax obligations.Many are unregistered, particularly those in theinformal sector, and therefore represent apotential for expanding the tax base.

• The Customs and Excise Department collectsrevenues emanating from import duties andtaxes, including VAT. It is responsible forpreventing restricted and prohibited goods fromentering the country, processing ofdocumentation on exports, facilitating transits,and controlling smuggling.

These three departments are supported by theRevenue Protection Department whose functionis to minimise revenue losses by detecting and

preventing external tax evasion, i.e. smuggling, aswell as other forms of evasion occurring across allother departments. The other supportdepartments are:• The Planning and Research Department

coordinates all planning and monitoringactivities across the organisation. It collectsstatistical information and issues a quarterlybulletin on revenues, analyses trends, reviewsemerging policy issues, and advises the Ministryof Finance accordingly. It also acts as liaisonwith all external partners such as DfID andsister authorities in the region.

• The Human Resources Department implementsthe RRA's human resources policy. It manages allmatters to do with the recruitment,development, promotion and retention ofpersonnel, as well as personnel administration,including salaries and disciplinary matters. Itsupports the overall capacity developmentprocess by linking personnel and organisationaldevelopment.

• The Finance Department is responsible for theaccounting of all revenues and expenditures,and for preparing financial statements asrequired by law. Its main role is to assurefinancial accountability according to agreedrules and procedures.

• The Information Technology Department isresponsible for the development andmaintenance of IT across the organisation. Thebusiness development section looks at ITopportunities and quality assurance, whilst thetechnical support section looks after thedatabases for operational areas and providesnetwork and hardware maintenance.

• The Quality Assurance Department is made up ofthree units: internal audit focuses on ways toimprove the efficiency and effectiveness ofbusiness processes. Internal affairs investigatessuspected corruption and malpractice, with theaim of improving staff integrity, and sensitisesstaff on the code of conduct, conditions of service,etc.The new quality assurance unit focuses onimproving service delivery and customersatisfaction.

Box 2: The Rwanda Revenue Authority in 2004

RRA functions, to identify gaps and inconsistenciesthat had been constraining the organisation in carry-ing out its mandate.21

Steered by the RRA management and board, thechange process is closely supported by the DfID project manager (an expert in tax administrationand reform), whilst the changes are being imple-mented by reform teams composed of RRA manage-ment and staff. Short-term TA continues to play akey support role in the design and introduction ofnew systems, procedures and work practices associated with the modernisation programme.The change process is helping the organisation torefine its thinking about performance and to recog-nise the need to take more account of the externalenvironment within which it operates. Measures ofperformance have been expanded from an initialfocus on revenue targets to include measures of costefficiency and customer satisfaction.

4 The elements of a capable and performingorganisation

This section examines the factors that have con-tributed to the transformation of the RRA into a per-forming organisation. Section 4.1 discusses the key'enabling factors' that laid the foundation for perform-ance improvement and capacity development. Section4.2 considers how RRA leadership and managementtook the initiative to transform the culture of theorganisation to one focused on performance andintegrity. Section 4.3 identifies the main elements ofthe performance management capability that hasbeen created within the organisation. Section 4.4 looksat how the organisation sought to shape its externalenvironment. Section 4.5 considers how the RRA's oper-ational capabilities were developed. Finally, section 4.6looks at the contributions of the RRA's principal exter-nal partner, DfID, to this transformation process.

4.1 Protected space, political support and expectations to perform

Political ownership From the outset the RRA has received visible andcontinuous support from the highest political levels,reflecting a high degree of ownership and commit-ment to the transformation of Rwanda's revenueservice. Not only has this contributed to raising thecredibility and standing of the organisation in theeyes of the public at large as well as its staff, it hasalso impressed on the organisation the strategic roleit is expected to play in meeting government's widerdevelopment objectives.

Clear mandate and expectations to perform In this regard the mandate of the RRA is clear andunequivocal. Its mission and core business have beendefined in terms of the administration of revenue col-lection services. Performance is comparatively easy tomeasure since its achievement is measured primarily interms of how much money it is able to collect.22Having a single-issue responsibility has helped the RRAto organise itself around this task, and to avoid beingdistracted by other potentially competing objectives.23From the outset there has been pressure on the organi-sation to meet revenue collection targets that have


11

Notes21 Much legislation was outdated; the income tax law dated

back to 1964 and customs law to 1968.22 Although this basic indicator has been supplemented by

other performance measures (see below).23 Although it has been argued that revenue authorities may

also perform the symbolic role of making the presence ofthe state felt within society (see Boesen and Therkildsen,2004).

been negotiated with Rwanda's development partners.In this respect, the eyes of the donor community arealso on the RRA to see it play its part in raising the por-tion of the budget financed through domestic revenuesand, in so doing, in tackling poverty and contributing tonational renewal. This has generated an external pres-sure on the organisation to perform.

Organisational autonomy Although the RRA remains a public organisation created by an act of parliament, its agency status hasenabled it to manage its own affairs at arms lengthfrom political authority. Free from the normal constraints imposed by public service rules and regu-lations, the leadership and senior management havebeen able to adopt a more business-like approach24(see Box 3). Its agency status has also enabled it todevelop a distinct corporate identity, and has allowedmanagement to imbue a culture of integrity and per-formance, which has also helped to create a sense ofpurpose and ownership among staff at managementas well as at lower levels.

Box 3: Opportunities for managing human resources

The RRA's agency status gave it an immediateadvantage in terms of managing its humanresources:• It could select the most competent and trustwor-

thy employees from the old revenue service.• It could develop its own human resources policy

and accompanying systems and procedures. Themanagement was able take a much more proac-tive approach to human resources management,looking at it as a strategic resource in a way thatwould not be possible if it had been part of thecivil service.

• It was able to set conditions of service, notablysalaries, that were considerably better than thoseoffered by either the civil service or the privatesector at the time. In 1998 the RRA was regardedas the 'employer of choice', which certainly helpedin the recruitment and retention of high-calibrepersonnel, especially in management positions.

The advantages of organisational autonomy com-bined with access to comparatively generous budgetand personnel resource allocations25 also created theopportunity to attract donor interest to invest in its

transformation process. Organisational autonomyalso created a certain 'protected space' within whichthe RRA could grow, whilst helping to shield itagainst what was otherwise a harsh external envi-ronment. It certainly helped shield the RRA frompolitical interference in management, personnel andresource allocation decisions, while helping to severany pre-existing patronage relations. The RRA wasalso able to distance itself from the generally poorreputation of the public service.

The combination of political support and organisa-tional autonomy cannot be underestimated, andtogether created favourable conditions for transfor-mation. If the political support helped provide theRRA the needed legitimacy and standing to develop,then its agency status gave it the operating space itneeded to discharge its functions in a more business-like and results-oriented manner. In this regard, theRRA began life in quite an advantageous position.

4.2 Leadership and managementStrong and visionary leadership supported by effec-tive management were needed to take advantage ofthe opportunities offered by agency status to trans-late political aspirations into results on the ground.The RRA's board and senior management have beeninstrumental in steering the change process and increating a performing organisation.

A capable boardThe RRA board has played a critical role in facilitatingthe growth of the organisation and in managing theinterface between internal management and exter-nal stakeholders. Boards can be the make or break ofan organisation. A bad one can interfere excessivelyin management affairs, usurping the legitimate roleof the chief executive. Equally, boards may fail tobuffer the organisation from outside interventionand, in the context of quasi-governmental organisa-tions, from political interference. Boards can also beinactive, serving merely to rubber-stamp decisionsrather than taking a professional interest in the well-being of the organisation.

Experience suggests that the RRA board has had alargely positive influence on the organisational devel-opment process. Senior management has enjoyed thesupport of a competent and committed board thathas sought to protect the autonomy of the organisa-


Notes24 These seem to have embraced the principles of results-

based management.25 Although in the early years budget predictability was

apparently an issue.12

tion, while assuring accountability to its stakeholders.It has also provided the necessary support to facilitatethe internal process of capacity development while atthe same time respecting managerial autonomy. Theboard has also ensured that its own position is notusurped by higher powers.

The board has helped set in train the development ofa performance culture and is acutely aware of theexpectations placed on the organisation to perform.Performance monitoring is viewed as one of its coreresponsibilities.26 The board has made it its businessto keep informed on issues and regularly seeks theviews and opinions of both staff as well as externalstakeholders. Informal networks have helped theboard members keep their fingers on the pulse,ensuring that the organisation is aware of emergingtrends and opinions. Their political access has alsobeen important in gauging levels of support for theorganisation among the country's leadership and inseeking assistance when necessary.

Trust and confidence in senior management to man-age the day-to-day affairs of the organisation hascontributed to these roles being respected. Equally,the Ministry of Finance's confidence in the board hasmeant that interference in organisational matters hasbeen rare. This is significant given the mandate of theRRA to collect revenues on behalf of the Treasury.27

It is interesting to note that the capacity of the boardto understand and discharge its duties is not some-thing that has had to be formally developed. In thisregard there has been no specific capacity develop-ment support targeted to the board. Rather it seemsthat the capacity was assured by virtue of thecriteria28 and procedures in place to select members,and the good fortune in finding candidates of suit-able calibre within the country. As noted by the CG,this is a very competent group of people who areexperienced, take their responsibilities very seriously,and fully understand the needs of the business.

Board meetings are hotly debated events requiringmeticulous preparation by management.

Having a competent and respected board has notonly assured that management has the kind of back-ing it needs; it has also helped strengthen the stan-ding of the organisation more widely. Moreover, theparticipation of private sector stakeholders has alsoassured broad-based support for the organisationbeyond the confines of government.

Competent and motivated senior managementAcquiring and developing senior managementcapacity has been key to the success of the RRA interms of both delivering results on the ground aswell as in steering the organisational developmentprocess. The board used the advantages afforded bythe RRA's agency status, in particular the opportuni-ties for discretionary management authority, com-bined with attractive conditions of service, toappoint and retain a cadre of managers that hasproven itself competent to manage the affairs of theorganisation.

This competence was most apparent with theappointment in 2001 of a new Commissioner Generaland of a new management team. Their appointmentmarked a turning point in the life of the organisa-tion. Not only did it mark a break with the past andwith it the vestiges of what may be termed old-stylebureaucratic management, it also set in motion adetermined effort to transform the culture to onecharacterised by performance, integrity, adaptabilityand a desire to learn. This culture has provided afavourable framework within which to develop corecompetencies and organisation-wide capabilitiesand, in the process, to make effective use of externaltechnical assistance. It has also helped ensure theconfidence of the board and of stakeholders at large,safeguarding the organisation's autonomy andaverting the risk of interference by the parentministry in management matters.

4.3 Managing for results

Towards a culture of performance and integrityThe RRA's leadership and management have beeninstrumental in developing and imbuing a culture ofperformance and integrity within the organisation.This has provided the basis for nurturing a cadre ofprofessional tax and customs officials and, in theprocess, creating a well-respected organisation. It has


13

Notes26 Three sub-committees on strategic planning, finance and

human resources have been set up to enable the Board tosupport management decision making.

27 But, as happened in the early years, if there wasdissatisfaction with the RRA's services, complainants woulddirectly appeal to the Minister who might then feel entitledto intervene.

28 The composition of the Board balances a need forrepresentation by key stakeholders and technicalcompetency provided by persons of high standing. Theeight Board members include the chairperson (appointed bythe Prime Minister); the Secretaries General of theministries of finance and industry (ex-officio); the governorof the National Bank of Rwanda; three distinguishedmembers in their relevant fields appointed by the PrimeMinister on the recommendation of the Cabinet; and theCommissioner General.

also given impetus for the development of what maybe termed a performance management capability thathas begun to permeate all levels of the organisation.

Leadership and management have set the tone forhow staff members are expected to perform and con-duct themselves. This has helped develop a certainesprit de corps, or corporate identity among the staff,around which there is a growing sense of 'ownership'of the organisation. Particular emphasis has beengiven to recognising performance and to encouragingstaff to feel that they are part of a wider effort.Equally, the importance of upholding the higheststandards of integrity has been impressed on staff atall levels, building on the wider efforts of thePresident to clean up government and promote zerotolerance of corruption. The staff clearly recognisethat the biggest risk to the RRA is loss of integrity,and that any allegations of corruption could quicklyundermine the confidence and support of the public.

Management styleThese values are increasingly reflected in the organi-sation's style of management, which has, over time,become less bureaucratic, hierarchical and more par-ticipatory (team-based) and results-oriented.Department heads and middle-level managementenjoy greater delegated authority while at the sametime are held to account for results.29 Managers areencouraged to make the most of the humanresources at their disposal - by better deployment ofstaff, encouraging teamwork, setting performancetargets for groups and individuals, and continuoussupervision and monitoring - in order to help stafffeel they are part of the life of the organisation.Many of the staff interviewed for this study identi-fied the style of management as the most significantfactor driving motivation and performance. They alsowelcomed the improved communications, with infor-mation now flowing in both directions, and thegreater opportunities for a say in decisions affectingtheir day-to-day work.

At the same time, it was pointed out that seniormanagement is sometimes unwilling to 'let go', andto delegate responsibilities to middle-level manage-ment and junior staff. As a result senior manage-ment is overworked while the full potential of morejunior staff is under-utilized. This situation also carries longer-term consequences in terms of theneed to groom a new generation of leaders andmanagers to succeed the current incumbents.

Another feature of the management style has beena thirst for learning and a preoccupation with mon-itoring performance. The drive to excel has encour-aged the organisation continuously to monitor itsperformance at all levels and to compare results onthe ground with organisational capacity. In so doingthe RRA has developed a capability for continuouslearning and, with it, a growing appreciation ofhow to manage the process of organisationalchange and development. Linked to this has been agrowing awareness of how external factors impacton organisational capacity and performance, and ofthe consequent need to manage that environment(see below). Staff emphasise how they are encour-aged to continuously look for ways to improve service, and to compare their achievements withthose of their sister organisations in the region. Atthe same time, the leadership acknowledges itsown weaknesses and remains open to suggestionson how things may be improved.30 This has also setthe tone for a learning organisation.

The relative youth of staff at all levels (90% are under45) seems to have facilitated acceptance of this corpo-rate culture and management style, bringing to theorganisation a certain vitality and thirst for learning.

Performance management capabilities Giving further substance to the commitment to performance and integrity are capabilities thathave been developed across a number of functionalareas - in particular planning and research, humanresources, internal audit and information technolo-gy. In combination, they seem to have enabled theorganisation to develop what may be termed capabilities for organisational learning, self-aware-ness, change management and performance moni-toring.

The Planning and Research Department has been the focus of considerable attention, and substantialinvestments have been made to strengthen its capabilities. Its development from a comparativelylowly statistical office into what is today somethingof an information and knowledge hub reflects thestrategic value of the department to the RRA's per-formance management capability. Today, the depart-ment's key functions include:


Notes29 All that the CG insists on is receiving from departmental

heads weekly 'flash reports' outlining key achievements andchallenges.

30 It was noted that even if management does not alwaysinitiate new ideas and concepts, it is quick to take on boardnew concepts and run with them. In this regard, there is astrong desire to acquire knowledge and a remarkablecapacity to absorb.

14

• Monitoring financial and economic trends in thewider environment (national and regional) thatmay influence the business and performance ofthe RRA, and using this information to supportmanagement and board decision making.31

• Providing the focal point for the organisation'sstrategic review and corporate planning process.The department plays a key role in seeing howthe different parts of the organisation contributeto the achievement of overall goals. It is alsoresponsible for facilitating the development of aplanning and monitoring capability within eachdepartment32 and for ensuring that performancetargets are carried through from departmentallevel to individual staff members.

• Facilitating the annual review process. The depart-ment arranges a type of annual capacity self-assessment cum SWOT analysis that enables theorganisation to identify factors constraining per-formance at all levels. Checklists are sent to eachdepartment to review selected aspects of theiroperations and to assess possible training needs.The department also facilitates biannual man-agement retreats during which all levels of man-agement can reflect on performance and assessthe impact of external factors on the organisa-tion.33

The Human Resources management function has also been the focus of substantial capacity develop-ment and is one of the core areas of support underthe modernisation programme. Managementrecognises the centrality of its human resources inorganisational performance and has used the oppor-tunities afforded by its agency status to worktowards developing a team of tax and customs professionals. This in turn has meant ensuring that ithas an effective human resource management capa-bility.

The current modernisation initiative is providing fur-ther opportunities to upgrade this capability. TheRRA has learned that offering attractive salariesalone cannot guarantee performing and motivatedpersonnel, and that a more holistic approach to per-sonnel management is required that integrates allaspects of recruitment, training, promotions, dis-missals, etc.34 The steps currently being taken to putin place an integrated and computerised humanresources management system - including a compre-hensive performance appraisal system that willeventually link pay to performance35 - is a reflectionof the strategic role of this function in the wider pro-motion of organisational performance and accounta-bility. The recent reorganisation has provided a fur-ther opportunity to carry out job reviews, conductneeds assessments, identify skills gaps and in theprocess achieve a better match between personneland organisational needs.

The Quality Assurance Department has the potentialto make an important contribution to the organisa-tion's performance management capability. The tra-ditional function of monitoring business processesprovides in itself a capability to analyse the efficiencyand effectiveness of operations. With attention nowshifting towards issues of cost containment andimproved service delivery, the department has had toadapt its own capabilities. For instance, a new qualityassurance unit has been created that will lookbeyond the conventional responsibilities of an inter-nal audit department to focus on service standardsat the point of delivery.

The department has also had to adapt its style ofworking particularly with respect to the way it inter-acts with other parts of the organisation. Previously,its working style could be characterised as top-downwith a 'policing' approach, whereas today a moreparticipatory learning approach is used that aims toengage its (internal) customers in addressing identi-fied weaknesses. This seems to be paying off to theextent that the department is now looked upon as a'resource' by operational departments that can helpin improving operations.

Moreover, the department's internal affairs unit playsan important role in safeguarding the integrity andgood name of the organisation. It is responsible forensuring that staff are familiar with the code of con-duct and for following up on allegations of fraud,bribery and related malpractice. Clear procedures have


15

Notes31 Note that there are no higher educational or policy

institutes in Rwanda that can offer this service.32 By strengthening their planning and reporting systems.

Initially, there was resistance as the system seemedburdensome, but increasingly it is viewed as usefulmanagement tool.

33 This process is becoming more participatory. In 2003, forinstance, the job analysis was done on a participatory self-

34 As noted elsewhere, this advantage has eroded over time asother employers in both the private and public sectors haveraised levels of pay and other benefits.

35 Regular performance appraisals are now being carried outthat systematically review the performance of staff, identifyconstraints, compare competencies against job descriptionsand consider options for further training, redeployment,etc.

been put in place to enable it to do this and to take dis-ciplinary action if necessary.36 In order to act as a deter-rent, the department emphasised the importance ofenforcement and of having in place a system that isregarded as predictable, transparent, firm but, also, fair.Crucially, the system has to be seen to be used and, inthis regard, management is emphatic on the need tocome down with full force on individuals found guilty.

Information technology holds great potential to facili-tate knowledge management across the organisationand has come to play a significant role in enhancingits capability to process information related to per-formance management. Although IT is especiallyimportant for supporting core business processesassociated with tax collection and customs and excise(discussed elsewhere), it is also helping to improve theeffectiveness of the various planning and research,human resources and internal audit functions dis-cussed above. IT enables timely and accurate collec-tion and dissemination of information from acrossthese various functions that can aid overall decisionmaking, and facilitate better integration of functionsacross the organisation. IT is also playing its part incurbing opportunities for corrupt practice by reducingthe number of direct handling or contact points andenabling faster data processing and analysis.37

Given the comparative weakness of IT support servic-es in Rwanda in general, the RRA has invested inbuilding a quite robust internal IT support capabilitythat is responsible for identifying opportunities for ITapplications within the organisation, providing tech-nical backstopping to deal with problems as theyarise (and reducing the need to rely on outside assis-tance), and training staff across the organisation tobecome IT literate.38

4.4 Shaping the external environmentThe RRA has also been quick to learn the importanceof managing its external environment as part of thestrategy to improve organisational performance. Thishas included managing stakeholders and publicopinion, building strategic alliances with partnerorganisations and stakeholders, and monitoringchanges in the policy environment.

Managing stakeholders and public opinionFrom the start the RRA was faced with the need totransform its relationship and standing with externalstakeholders. Although it enjoyed the formal supportof the government, the political leadership, and the

donor community, the attitude among the public atlarge was at best cynical and at worst hostile. Theorganisation has worked progressively to improve thissituation. A first challenge was to change the public'sattitude to the very idea of paying tax and, in sodoing, to promote a tax-paying citizen culture. Fromearly on, with the direct support of the President, themanagement and board have launched various initia-tives to inform the public that it is their duty andresponsibility to pay taxes, including:• holding an annual 'taxpayers' week', which

includes street parades and the award of certifi-cates and prizes;

• emphasising integrity and zero tolerance of cor-ruption in public speeches, and the adoption of apolicy of naming and shaming wrong-doers;

• sensitising opinion leaders and political figures towhat they can do to encourage complianceamong their constituents; and

• working with partner organisations to reinforcetheir own efforts to disseminate information aboutpaying taxes. In this regard, the Rwanda PrivateSector Federation has been an important ally.

A second and closely related challenge has been topromote the good standing of the organisation itselfin order to overcome the negative perceptions associ-ated with the old revenue service, which had beenviewed as corrupt, inefficient and customer unfriendly.The strategy has been to emphasise the core values ofthe new organisation with respect to performance,accountability and, increasingly, responsiveness to theneeds of its customers. The shift towards a customerservice orientation reflects the growing awareness ofthe need to offer a quality service to the taxpayingpublic and to be responsive to public concerns. Theshift has helped the organisation recognise the differ-ent publics with which it interacts and of the need tocustomise services according to their particular needs.

Operational departments (now organised around tax-payer groups) have more of an external focus and arebetter placed to understand the needs of their cus-tomers and to respond accordingly. In turn this hasmeant that they have become more sensitive to the


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Notes36 The need to have in place a strong system to deal with

integrity matters is also a recognition that good pay is notnecessarily an assurance against corrupt behaviour. Whilstgood pay can help to retain people with integrity, it doesnot necessarily stop temptation. In contrast, poorremuneration risks attracting poorer quality staff and canresult in staff being tempted by bribes, etc.

37 It too can be misused, especially with regard to fraud, suchas the falsification of documents.

38 IT technicians have been deployed across all departments,and ‘business analysts’ from within departments have beentrained to act as an interface between IT professionals andusers.

factors that contribute to effective service deliveryand are beginning to monitor customer satisfaction.

A better appreciation of the capabilities required ofdifferent departments to attend to different publicsis also emerging, resulting in more focused trainingon customer handling techniques. The recent cre-ation of a quality assurance unit represents a shift inemphasis away from internal procedures to externalservices in a further effort to strengthen the overallcapability to monitor the interface between itselfand its customers (see below). As a result of thesevarious efforts, the RRA is confident that the attitudeof the public towards tax payment has changed and,with it, attitudes towards the RRA have changed forthe better. An indicator of this is the growing level ofcompliance, but it has also been confirmed throughsurveys of the taxpaying public.39

Public recognition not only gives legitimacy andrespect, which are strong motivators for employees,but it also places pressure on the organisation tofocus on retaining that respect. In this way, theorganisation has begun to establish a relationshipwith its customer base and, with it, a type of down-ward accountability that reinforces its formalaccountability to parliament.

Building strategic alliances with partner organisationsThe RRA has established networks and built coopera-tive relationships with a wide range of organisationsthat help it to implement its mission. In this respectit has learned that its own capacity to performdepends in part on the cooperation of others. Someof these relationships may seem quite obvious. Forinstance, the Revenue Protection Department reliesto a large extent on cooperation with the police andarmed forces as well as on a developing network ofinformants. The Customs and Excise Departmentrelies on cooperation with counterpart services inneighbouring countries to coordinate activities(including the effective sharing of information)aimed at thwarting smuggling rings and attempts atcustoms evasion. The organisation has worked close-ly with members of the Rwandan Private SectorFederation to carry out awareness campaigns regar-ding compliance, and has used the Federation as aplatform for exchanges on tax-related matters withthe business community.40 As noted above, the

organisation has also worked with opinion leaderswithin that community to impress the importance ofchanging attitudes to tax payment in general.

The RRA has also invested in the development of theinstitutional capacity of consultant accountants andauditors working in the private sector, in recognition ofthe strategic role of such intermediaries in the entire


17

Notes39 Of course the point is made that no one really likes to pay

taxes so it is difficult to expect the public to look toowarmly upon an organisation whose job is to take moneyfrom them.

40 The executive secretary of the Federation recently asked theRRA to appoint a contact person to facilitatecommunication and follow-up actions between itsmembers and the RRA.

Box 4: Measuring performance

The main performance measure is the amount ofrevenue collected by the RRA collects, which ispresented in absolute terms and also as apercentage of GDP. Annual targets are set by theMinistry of Finance and form the basis for theorganisation's workplan and results framework.

As the organisation has grown and priorities havechanged, additional aspects of performance havebeen identified and integrated into the resultsframework. Besides revenue collection, importantperformance variables include cost effectiveness andcustomer satisfaction. Another importantconsideration is the organisation's reputation - inparticular with respect to integrity and corruption,but also in terms of being seen to be fair in sharingthe tax burden.

Organisational performance is today understood toconsist of a combination of factors, includingeffectiveness in terms of revenue collection, costeffectiveness and service delivery. Organisation-wideperformance indicators are translated intodepartmental targets and, in turn, divisional, group,team and individual performance targets.Thusperformance targets are set for the collection of VAT,customs and excise duties, and income tax fromlarge and small taxpayers.

For the Revenue Protection Department, annualtargets linked to revenue retrieval are set for theintelligence division. For the surveillance division thetargets are more difficult to quantify, but relate toreductions in smuggling.Various process indicatorsare also used, including targets for the number ofaudits performed in a given period, the number ofsmugglers apprehended, levels of registration, ratesof compliance, or cases of corruption.

process of tax administration. Until now, the sector hasbeen poorly organised with no formal professionalbody in place to set standards and regulate the per-formance and behaviour of members. By helping thesector to organise itself into a professional body, theRRA hopes to create a stronger and more trustedstrategic partner that can support its own efforts tobroaden the tax base and increase levels of compliance.

The organisation has also invested in maintaining aproductive and open relationship with external part-ners - namely DfID and the IMF - through whom theRRA has accessed considerable financial and techni-cal resources that have contributed to its develop-ment (see section 4.6).

Further afield, the RRA has been an active member ofthe Association of East African Revenue Authorities.Over the last decade, substantial experience hasbeen gained in setting up and managing revenueauthorities in East Africa as well as in parts ofSouthern Africa, from which Rwanda has been ableto learn. Through this regional association the fledgling RRA has been able to access expertise andexperiences, which have helped it avoid mistakesmade by others and to capitalise on lessons of goodpractice. It has also been able to build strategicalliances around cross-border and regional issues.

Scanning changes in the policy environmentThe organisation has recognised the need to monitorchanges taking place in policy and legislation at thenational, regional and global levels. It has thereforestrengthened its research and policy analysis capaci-ty within the Planning and Research Department,which is also mandated to serve as the contact pointfor its external partners. The board also plays animportant role in bringing to the attention of man-agement emerging policy issues with which itsmembers are conversant. The organisation alsorecognises the need to be proactive in bringing tothe attention of relevant authorities, laws and regu-lations that are constraining it in carrying out itsmission. Whilst tax policy and the related enablinglegislation are the proper responsibility of theMinistry of Finance, the RRA, with the support of theDfID project manager, has been reviewing the areasof law where changes are needed.

4.5 Developing technical capabilitiesThe performance management capabilities discussedearlier have provided the framework for developing

the 'technical' capabilities required to carry out theRRA's core business - revenue collection.

The progressive strengthening of such technicalcapabilities has remained a priority of the organisa-tion and has received particular support from DfID.Initially, attention was given to ensuring that basicsystems and procedures across operational depart-ments were in place and that the staff are able tocarry out basic tasks. Thereafter, attention shiftedtowards professionalising the entire service with afocus on improving overall efficiency and effective-ness. Recently it was decided to modernise the entireapproach to tax administration in order to boost theorganisation's revenue collection capability, while atthe same time reducing costs and raising servicestandards. In developing the technical capabilities ofthe organisation, attention has been given to:• ensuring that the maximum potential revenue is

collected;• minimising losses through error or fraud;• minimising transaction costs;• serving customers in a manner that is convenient

and responsive to their needs; and• carrying out tasks in a manner that is fair, impar-

tial and transparent.

Building up the core technical capabilities hasinvolved various aspects of organisational and staffdevelopment, most notably getting structures right,developing staff competency, and putting in placeappropriate business processes (systems, procedures,information technology, etc.).

Getting structures rightAs part of the modernisation programme, opera-tional departments were regrouped around taxpayercategories to enable the organisation to becomemore responsive to client needs and as a basis forimproving service delivery standards. The reorganisa-tion has also created opportunities for greater costeffectiveness and efficiency in the management ofbusiness processes.

The new customer orientation encourages opera-tional departments to adopt more of an externalfocus and to hone their services to the particularneeds of their clients. In turn this has pushed depart-ments to think more strategically about the kinds ofcompetencies staff need to achieve their objectives(see below).


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The reorganisation is at the same time creatingopportunities for greater horizontal integration andbetter communications between the different opera-tional and support departments. It also provides abasis on which to build integrated business process-es supported by an IT platform that can facilitate thetimely exchange of data across the organisation. Thereorganisation is helping management and staff togain a better sense of how the different departmentscontribute to the overall mission. So, while it hasencouraged a degree of departmental specialisationlinked to servicing the needs of particular customers,the restructuring has also meant that certain areasof technical expertise such as auditing can be sharedacross departments, thereby enabling a more inter-disciplinary approach to the performance of tasks.

Developing staff competency From the outset, the biggest challenge has been todevelop a cadre of tax administration professionals -the organisation's performance ultimately relies onhaving in place adequate numbers of staff compe-tent in the fields of tax administration, customs andexcise, and revenue protection services. This task hasbeen challenging for several reasons:• most of the staff retained from the old organisa-

tion had received no formal training - in thisregard, there were few tax administration profes-sionals;

• many experienced administrators and tax collectors had perished during the genocide andcivil war;

• there was no formal training policy or trainingcapability within the organisation; and

• there were virtually no training institutions inRwanda producing graduates with appropriatequalifications.

With the support of DfID, the organisation has takenupon itself the task of developing a cadre of tax professionals through a mix of on-the-job training,mentoring, short courses and selected longer courses. Provision is now being made to establish anin-house training facility that will provide the organi-sation with its own internal capability to further professionalise its staff.41 The focus on in-servicetraining is important. At first the organisationthought it would be able to recruit people from themarket with requisite qualifications and experience,but this has not proven to be the case, for the reasonscited earlier. It was therefore decided to recruit gener-

alists from the university (public administration, busi-ness and commerce, IT and lawyers) and to developthem internally into tax and customs professionals.

Staff development has focused on developing coreskills and competencies related to the various spe-cialisations associated with revenue collection (taxadministration, customs and excise, VAT) and variousfunctions (inspection, audit, etc.), including a soundknowledge of laws and regulations and accountancyprinciples and proficiency in implementing work routines. Equal attention has been given to instillingvalues of integrity and, most recently, to developingcustomer handling and interpersonal skills. Assuringstaff integrity is important in any organisation, but iscritical to the performance of a revenue authority.It is important in terms of helping to minimise lossesor under-collection of revenues due to theft, fraud orbribery. It is also vital to establishing the credibilityand reputation of the organisation and in sending amessage to taxpayers that there is no tolerance offraud, corruption or evasion.

Customer relations is an aspect that has grown inimportance as the organisation has come to under-stand that its performance can be assessed not onlyin terms of how much revenue is collected, but also interms of the quality of the services it provides to itscustomers. In considering customer relations, the RRArecognises that, first, although it does not provide aservice in a traditional sense, it is a service providerand has the responsibility to serve the public in anappropriate manner. Second, customers are the part-ners of the RRA, and that treating them in an appro-priate manner will help to maximise compliance andcooperation, resulting in higher collection levels.

The reorganisation of operational departmentsaround taxpayer groups has helped reveal some ofthe different competencies that staff must have inorder to carry out their duties. In other words, staffcompetencies need to be customised to take accountof their clients.• Being seen to be efficient and professional is espe-

cially important for the staff of the LargeTaxpayers Department, which interacts with thelarger taxpayers, including foreign multinationalsthat have invested in Rwanda. Officers emphasisethe need to be IT proficient and conversant withthe kinds of financial management systems thatthese customers use. They also note the impor-tance of trying to keep one step ahead of their


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Notes41 The RRA is currently investigating opportunities for

twinning its new training institute with anotherorganization (such as a training institute in a moredeveloped revenue authority) as a way to fast track thedevelopment of the facility, train trainers and developcourses.

customers who enjoy the services of tax andfinancial professionals. This calls for continuoustraining and access to the latest information.Officers also recognise the need to create a goodimpression in terms of competence and in inter-personal skills, not only to ensure cooperation andcompliance from their customers but also becausethey have a role to play in presenting Rwanda ashaving an investment-friendly environment.

• In contrast, the staff of the Internal RevenueDepartment deal with individuals and organisa-tions that more often than not are unfamiliarwith laws and procedures and who do not usuallykeep their accounts in order. These customers aremore likely to be reluctant to pay and to have hadbad experiences of dealing with tax officials inthe past. Interpersonal skills associated with deal-ing with such customers are especially important- particularly for auditors who cannot rely onfinding up-to-date and accurate data in financialmanagement systems. Officers working for theInternal Revenue Department have thereforemore of an 'outreach' role to play. This requireshaving sufficient staff so that they can spendmore time with individual customers,42 and withappropriate customer handling skills. They have aparticular responsibility to improve the overallimage of the service, to engender trust and asense of fairness.

• The demands facing officers of the Customs andExcise Department are different again. Unlikemore established taxpayers, their customers areoften transitory, require immediate service andinteract on multiple occasions. There is an evengreater premium on providing timely, efficientand friendly service. People management skillsare essential. Yet at the same time, in the face ofefforts to withhold information and the pressureto minimise inconvenience to travellers andtraders, they need to be vigilant as well as able tothink and act quickly and analyse situations onthe spot on the basis of a sound knowledge ofthe law and instruments.

• The situation facing the Revenue ProtectionDepartment is significantly different. Unlike theother operational departments, the RPD does notreally have 'customers'. Dealing with abnormalcases of fraud and smuggling needs specialisedskills related to information and intelligence gath-ering. Issues of integrity are particularly significantas staff are faced with regular opportunities forengaging in bribery or corrupt practices. The

environment is also continuously changing, withthe emergence of new forms of smuggling, newtechnologies and increasingly sophisticated practices. The staff therefore need to keep them-selves informed of such new developments and becapable of handling new situations appropriately.

Developing appropriate business processesTax and customs administration is by its natureinformation and process dependent. The ongoingmodernisation programme is anchored around aneffort to improve the ways in which data areprocessed using internationally recognised goodpractice. The intention is to put in place robustsystems that are easy to use (for both staff and customers), speed up operations, reduce transactioncosts, facilitate communication between depart-ments and minimise risks of error or abuse in dataprocessing. Given the organisation's current stage ofdevelopment it is expected that these improvementswill yield significant increases in performance in theshort to medium term.

Computerisation plays a key part in this upgradingprocess, offering a number of obvious but significantadvantages over the former manual paper file sys-tem. Besides contributing to speed and accuracy, italso allows for a better deployment of staff - shiftingpersonnel from routine administrative tasks to morespecialised jobs such as auditing. It also allows amore strategic approach to the identification ofpotential areas of fraud or evasion through selectiverisk analysis.

Having in place state-of-the-art systems also givesthe staff a sense of pride and confidence, and helpsto project the image of an organisation that is mod-ern and efficient.43 For customers, increased automa-tion combined with initiatives to simplify proceduresand forms and to create a one-stop shop (a single taxpayment point), is expected to result in greater levelsof compliance as well as the recognition that it is lesseasy to 'cheat' the system.44


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Notes42 However, this results in a poor cost to revenue ration and

the RRA actively considering ways to improve it. Alternativemethods of tax assessment and collection from taxpayersat the lower end of the scale include devloping objectivemeans of establishing presumptive income (e.g. mileage oftaxis, number of restaurant customers, etc.), increasingbusiness licensing fees as a substitute for taxes in somecases and ensuring that licences are not renewed iftaxpayers are in default.

43 Although this is no substitute for basic staff competency.44 This includes introducing a common tax identification

number (TIN) for all registered customers that will facilitatethe integration of tax and customs assessment processes.

• For the Customs and Excise Department, the intro-duction of ASYCUDA++,45 which links up seven ofthe ten steps associated with the processing ofcustoms clearances, is described as 'a miracle'. Thesystem will enable them to reduce the time ittakes to process documentation from an averageof two days to just several minutes. It will alsoreduce the department's dependence on informa-tion provided by intermediaries (e.g. shippingagents), enable greater selectivity of inspectionsbased on more sophisticated risk analyses, andreduce losses due to human error.

• For the Revenue Protection Department, automa-tion can significantly enhance the speed withwhich intelligence work is undertaken. It isexpected that information sharing betweendepartments will be improved and this will facili-tate inter-departmental cooperation.

• For the Large Taxpayers and Internal RevenueDepartments, the process of tax administrationwill be fully integrated, linking up the variousstages of the process: registrations, returns,assessment, collection, audit, enforcement andrisk analysis.46

The reorganisation of the authority, as well as plansfor a purpose-built revenue collection office, is alsofacilitating this process.

4.6 External assistance as process facilitatorDfID has been and remains the RRA's principal partner. It has supported the RRA since its establish-ment in 1997 through the provision of financial and technical assistance amounting to close to £15million (€22 million).47 This is a substantial amountfor a single programme, reflecting DfID's commit-ment to the development of revenue generationcapacity in Rwanda as part of its wider country sup-port strategy.

DfID support to the RRA has been implemented infive phases. The first two phases focused on the pro-vision of advisory services relating to the establish-ment of the RRA, and the subsequent three haveinvolved more substantial support to the strengthen-ing of organisational and human capacities. There isno doubt that DfID support has made a major contri-bution to the organisational development processand the RRA is quick to point out that credit for theachievements must be shared with DfID.

Given the level of DfID's contribution to the capacitydevelopment process, and taking account of thecomparative weakness of the RRA when it was firstestablished, the risks of external assistance drivingthe process and of effectively disempowering localstakeholders were very real. Yet experience wouldsuggest that this has not been the case. Ownershipand vision has rested squarely with the Rwandanpartner, with DfID assuming a role of process facilita-tor, providing strategic and technical advice, as wellas the necessary financial resources. Over time amature partnership between the DfID country officeand the RRA has evolved based on frankness, open-ness and trust, a clear division of tasks and responsi-bilities and a shared responsibility for outcomes.48

The following paragraphs attempt to summarise thekey features of DfID support and of the relationshipthat has evolved between the two partners.

A flexible and pragmatic approachThe RRA has appreciated the flexible and pragmaticapproach adopted by its external partner. DfID ispraised for having remained responsive to emergingneeds and for providing (with a few exceptions)appropriate technical support and financialresources, while at the same time leaving decisionmaking firmly in the hands of RRA's senior manage-ment and board.49

Since it would take a considerable number of yearsfor the RRA to develop into a strong and matureorganisation, DfID recognised the advantages ofadopting a flexible and relatively short-termapproach to project design. This perspective did notmean that it was not strategic nor did it signal a lackof commitment to long-term support. Rather, itreflected the belief that it would be inappropriate todesign a comprehensive and longer-term programmein a situation of rapid change and relative uncertain-ty. Under these circumstances, and taking account of


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Notes45 ASYCUDA++ (Automated System for Customs Data),

developed by UNCTAD, is a computerised customsmanagement system that covers most foreign tradeprocedures.

46 Automation has so far focused on improving back officeprocesses, but will eventually contribute to providing fasterand more efficient customer services at the front officethrough the one-stop shop concept and eventually e-government.

47 Up to the end of 2005.48 This has been facilitated by the strong working relationship

between DfID and the Rwandan government since DfIDestablished its country programme in 1997.

49 DfID is considered to be far less bureaucratic than manyother development partners, able to take decisions quicklyand to disburse funds promptly. Being able to do so hasenabled DfID to be responsive to the emerging needs of theorganisation and to avoid delays that might otherwiseoccur and that can easily disrupt local processes.

the capacity of the organisation to absorb change, amore incremental and iterative approach seemed fit-ting that could be monitored and adapted as neededby the partners on an ongoing basis.

Teamwork and effective monitoring mechanismsThe spirit of partnership and shared responsibilityfor outcomes has been reinforced by a teamworkapproach at all levels. TA and local partners havebeen encouraged to work side by side as teammembers and meet regularly to discuss strategicand policy matters as well as emerging operationalissues. An illustration is the participation of TA inthe various 'modernisation teams' that have beenset up to support the restructuring and transforma-tion process. Monitoring mechanisms have been set up to facilitate routine feedback between thepartners and encourage open and frank dialogue.Key elements have included the project steeringcommittee that meets quarterly, and sub-commit-tees that meet weekly to deal with individual project components. Output-to-purpose reviewshave also served as useful monitoring instrumentsand have indirectly contributed to the organisa-tion's learning capability.

Project management supportA critical factor in making this process approachwork has been the provision of a full-time projectmanager to function as a neutral interlocutorbetween DfID and RRA management. Core responsi-bilities have included administrative functions relat-ed to the deployment, supervision and monitoring offinancial and technical resources (including supervi-sion of TA), and advisory functions related to sub-stantive matters to do with tax policy and adminis-tration as well as the management of the changeprocess. Over time, and as the organisation has hadto make more strategic choices about what and howit should be developing, the significance of these latter functions has become more pronounced. Inthis regard, the appointment of an experienced taxprofessional as project manager in 2002 has enabledboth DfID and RRA management to take a more criti-cal and strategic look at the organisation's develop-ment. In recent years the project manager has beeninstrumental in giving shape to the current phase ofthe capacity development process.50

An important distinction can be drawn herebetween the role of RRA board and managementin steering the transformation process and

championing change, and the role of the projectmanager (and technical advisers) in providingstrategic guidance to management with respect tothe rolling out and sequencing of reform activities.Over time the RRA management has been betterable to absorb such technical advice and to reachits own decisions on how best to advance thereform process.

Equally important has been the nature of the work-ing relationship between the project manager andthe DfID office. Experience suggests that this rela-tionship needs to be strong and there needs to befrequent communication and feedback between theDfID office (usually through the governance adviserand project officer) if the needed level of flexibility inproject management (which is vital for success) is tobe achieved.

Technical assistance (TA)Technical assistance has been a core element of thesupport provided by DfID to the RRA. TA has per-formed a variety of functions, including providingadvice and mentoring services, performing selectedline management functions, supporting the designand implementation of new systems and procedures,and providing classroom and on-the-job training.52Overall, TA is viewed as having made a significantcontribution to the development of managementand technical capabilities within the organisation.The TA input has been highly appreciated, although,as in any process, there have been instances whereneeds were inappropriately diagnosed or whereexperts have proven unsuited for the job.

There has been comparatively little guidance provid-ed to advisers on 'how' they are expected to developcapacity. This seems to have been something largelytaken for granted and has therefore been subject toindividual interpretation. The advisers currently inpost emphasise the need to combine substantiveknowledge with an ability to communicate and work


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Notes50 In this respect, it is important to note that the RRA is still a

young organisation that inherited limited professionalexpertise. Also, the DfID office has expertise on broadaspects of public sector management, governance andcapacity development, but it did not have in-houseexpertise on tax administration and reform. The currentproject manager argues that tax administration projects areuniquely complex and need oversight by a tax professionalon a full-time basis.

51 Some criticism was made to the effect that the initialtraining was too basic, and that there was a preference formasters-level training.


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as team members with counterpart staff. Whilstacknowledging that some guidance on how to facili-tate change and develop capacities could be helpful,the advisers cautioned against prescriptiveapproaches, emphasising the importance of adapt-ing working methods to the situation on the ground.They also stressed the importance of teamwork,getting involved in day-to-day work routines andremembering that they do not have a premium onall knowledge.

Over time there has been a progressive shift fromreliance on long-term resident advisers to the use ofminimal long-term advisers combined with targetedshort-term experts to tackle specific tasks. This shiftreflects growing confidence in the ability of manage-ment to direct the affairs of the organisation and todrive the change process. TA was considered especial-ly important in the early years in order to supportthe introduction of new systems and procedures, aswell as to develop management skills and a soundunderstanding of tax administration.

Financial assistanceWithout DfID support, it would not have been possible to finance a substantial part of the organi-sational development process that the RRA hasundertaken. Whilst the organisation's running costshave been met from the state budget, it did not haveadequate means to invest in its own organisationaldevelopment, whether in terms of covering the costsof training, bursaries, hiring experts or purchasingequipment. By providing all of these inputs in a timely and flexible manner, DfID has considerablyaccelerated the pace of change within the RRA.

5 Capacity, change and performance: key lessons

Beginning with an overview of the RRA's perform-ance record, this section highlights lessons pertain-ing to the interplay between capacity, change andperformance, and summarises the key factors thathave contributed to the RRA's achievements. In doingso, it tries to identify those factors that have reallymade a difference and that help to explain theorganisation's remarkable successes in the midst ofotherwise adverse conditions. The section ends byspeculating on the outlook for sustaining the gainsmade in the future.

5.1 Performance record In a short space of time the RRA has created a namefor itself as a performing and credible organisation.Its short life has been characterised by a process ofrapid transformation from a moribund governmentdepartment into a functioning and performingorganisation. Since its creation, there has been asteady increase in revenue collected - from 9% ofGDP in 1998 to 13% of GDP in 2003. It is also notedthat since 2001 the RRA has consistently exceededthe revenue targets set by the Ministry of Finance.52

Through a continuous process of organisationalcapacity development, significant progress has beenmade in strengthening core management and tech-nical capabilities. The RRA's standing in governmentcircles remains positive and it is held out as a modelof good practice. Public attitudes toward the pay-ment of taxes have changed significantly, as haveperceptions of the organisation itself. Today manykey stakeholders have a positive attitude towards theRRA and give it their full support. The governmentand political leadership continue to extend goodwillto the organisation and to provide active support.Key international stakeholders including DfID andthe IMF are more than satisfied with the progressthat has been made not only in terms of the contri-bution the RRA has made to domestic revenuemobilisation, but also in terms of helping to create aculture of integrity, efficiency and transparency.Whilst not cleared completely, levels of corruptionare lower than they were in 1998 and better than in

Notes52 VAT has performed especially well. In the first year the

target was RWF 12 billion, which was adjusted to RWF 15billion. In the end RWF 20 billion was received, and RWF 30billion in the following year (RWF 1 billion = € 1.4 million).


24

to pursue its mandate without interference or dis-traction. This in particular allowed the organisationto offer conditions of service and to put in place ahuman resource management system that hasattracted, developed and retained capable and com-mitted personnel. Noteworthy has been the return ofhighly skilled and motivated exiles who have beenable to take advantage of these opportunities and fillkey management positions.

The RRA's agency status also allowed it a new lease oflife, and offered the opportunity to make something ofa clean break with the past, and to cultivate a new cor-porate culture based on values of integrity, accountabil-ity and performance. At the same time the organisa-tion was assured adequate funding to meet operatingcosts, while its management autonomy was respectedso long as it performed. It could, meanwhile, also counton political support and protection if needed.

Getting the organisation right - balancing 'hard' and'soft' elements of capacity Considerable attention has been given to developingvarious capabilities within the RRA, which have con-tributed to its overall capacity to perform. Perfor-mance improvement has been at the forefront of thecapacity development process, which has been drivenby a concern to improve the capacity to collect rev-enues. In so doing, the organisation has broadened itsunderstanding of performance from an initial focuson revenue collection to include concerns for efficien-cy and customer satisfaction. It has also developed abetter appreciation of what capacity is and how it canbe developed, and is now better able to determine itscapacity development needs. For instance, the opera-tional departments have had to hone their capabili-ties to address the specific features of their operatingenvironment. The Large Taxpayers Department needsto be knowledge-based so that it can keep up with itsmore sophisticated clientele. The Internal RevenueDepartment by contrast needs to perform more of anoutreach role as it deals with a less well educated andsometimes less cooperative client base, while theCustoms and Excise Department needs to exhibit ahigh level of responsiveness and vigilance in the faceof pressures to process declarations as swiftly as pos-sible. The Revenue Protection Department requires acapability for intelligence gathering and for maintain-ing the highest standards of integrity. At one levelthis has meant working on the 'hard' elements ofcapacity that contribute to internal efficiency andeffectiveness - including getting the structures, sys-

neighbouring countries. The performance of the RRAis looked at most favourably in comparison to experi-ences elsewhere in East Africa, and there is confi-dence that in the foreseeable future, with continuedefforts, the organisation will be able to raise the levelof revenue collected to 15% of GDP, which is theregional average.

5.2 Success factors

A locally driven transformation processBy all accounts the RRA's transformation has been alocally driven process, underwritten and sustained bystrong ownership, and driven by decisive leadership.These have been present both at a political level,through the active support of the President and thegovernment, and at the organisational level, throughthe efforts of Board members and the senior man-agement team.

Ownership and leadership have not had to be lookedfor or in any way engineered by any external party.They have been omnipresent and have to a largeextent made up for deficiencies in capacity. Mightthis be a reflection of a wider change in Rwandanattitudes toward development, arising from the trau-mas of genocide? The ending of the crisis seems tohave led to a burst of idealism and selfless behaviouraugmented by the return of skilled exiles who genuinely want to work on behalf of the country.

Clear mandate and expectations to performThe RRA was granted a clear and unequivocal man-date and a strategic role to play within government'swider strategy of national reconstruction, povertyreduction and good governance. As the centrepiece ofthe country's domestic revenue generation effort, ithas been expected to play a key role in meeting theaspirations of the Rwandan government and its inter-national partners to the reduce dependency on aidand to shift towards a country-driven transformationprocess. Accordingly, from the outset the RRA enjoyeda high degree of legitimacy and backing from officialcircles - there were equally high expectations placedon the nascent organisation to perform.

An organisational status offering space but also protectionAgency status offered the RRA a significant degree ofmanagement autonomy that enabled it to take deci-sions and manage resources on the basis of busi-ness-like principles (results-based management), and

tems, procedures and technology right and develop-ing appropriate staff competencies - which have beenmore easily supported by external partners. This focuson the 'hard' elements of capacity has been impor-tant in terms of developing the capabilities of boththe operational support departments. A combinationof technical capabilities associated with the particulartasks that different departments, divisions and unitsare required to perform, and management capabili-ties have been addressed. In a certain sense it can beargued that these are all of equal importance con-tributing to a well-rounded and balanced organisa-tion with an overall capacity to perform. Yet in otherrespects, it is clear that certain capabilities haveemerged as being of critical importance - examplesinclude audit as a key service delivery function andhuman resource management as a key support func-tion.

These efforts at capability development have helpedcreate what may be described as 'potential' or 'latent'capacity. But to ensure effective utilisation of thispotential has meant developing another set of 'soft'capabilities that are less tangible yet seem to holdthe key to translating capacity into organisationalperformance. These include a range of attributessuch as visionary leadership and committed manage-ment that have nurtured a distinct corporate identityand value system. These attributes have helpeddefine the informal 'rules of the game', offering a setof non-material incentives53 that are the basis ofmotivation and commitment, and have also giventhe organisation a certain 'energy' and esprit decorps. These elements are not so easy to supply fromoutside, and have emerged very much from withinthe endogenous change process.

The RRA has also developed a 'learning' capabilityand a critical self-awareness that have played aninstrumental part in its rapid development. Thislearning capability has enabled the RRA to thinkstrategically about the relationship between capacityand performance, and to identify opportunities forcontinuous improvement across the organisationwhile at the same time carrying out its core man-date. This capability has also translated into an

emerging ability to manage internal change as wellas the external environment.

Looking in but also out - managing the externalenvironmentThe efforts made to strengthen the internal side ofthe organisation have been complemented by effortsto manage the external environment. Over time theRRA has come to recognise that its capacity to per-form is in part conditioned by external factors overwhich it has some degree of influence.54

Managing the external environment has been espe-cially important in terms of gaining the support ofthe public at large and in the process of raising levelsof organisational legitimacy - notwithstanding theauthority and legitimacy derived from the law andpolitical backing. Gaining legitimacy from its part-ners and citizens has been a key part of the RRA'ssuccess. Initially this involved conducting public rela-tions and mass sensitisation campaigns. Morerecently, it has involved the wholesale orientation ofbusiness processes towards the provision of servicestailored to different customer groups and, in theprocess of increasing transparency and accountabili-ty, to end users. These actions have helped booststaff confidence and self-esteem, and have alsoenabled them to better adapt their services (andcapabilities) to the needs of customers.

Meanwhile, the establishment of cooperative rela-tionships with various external stakeholders hasgiven access to needed resources (technology, infor-mation, support, etc.) and has been important interms of extending the organisation's outreach andeffectiveness. Such relationships have been particu-larly important for the Customs and Excise andRevenue Protection Departments. To perform effec-tively the RRA needs to have the capacity to influ-ence other organisations in the network, and hasgone so far as to invest in the development of itspartners' capacities - helping to organise the nascenttax consultancy profession, on the one hand, anddeveloping the revenue collection capability of localgovernments on the other.

Through these initiatives the RRA has contributed tothe development of revenue collection capacitybeyond the confines of the organisation. One couldargue that the challenge of developing a revenue col-lection capacity within the country extends beyondorganisational development to embrace change at a


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Notes53 The informal reward system refers to how staff members

value (and respond emotionally to) successfulaccomplishment of work, and how much appreciation andsupport there is for their achievement. This raises issuessuch as personal growth and satisfaction in socialrelationships, prestige and recognition associated withworking for an organisation, professional pride, and servicefor community or country. In government organisationsthese informal rewards are often of prime importance.

54 Put another way, the RRA was able to create or at least helpshape its own organisational 'ecosystem'; see Iansiti andLevien (2004).

systems level. Part of the key to the RRA's compara-tive success has been its ability to build these rela-tionships in the form of a broader revenue collectionsystem comprising its various stakeholders - othergovernment departments, different kinds of taxpay-ers, organisational partners, and so on.

Equally, management has taken care to monitor theexternal environment in order to take account of newtrends and challenges and to adapt internal strategiesaccordingly. Examples include the impact of regionaltrade legislation, the emergence of new technologiesand new forms of fraud, and changes in the nationaland regional labour market that have impacted on theRRA's ability to attract and retain high calibre staff. Inthis regard, the organisation has become aware of thepace of change taking place in the external environ-ment, the emergence of new demands and the impor-tance of being able to adapt and respond.

A pragmatic and incremental change processThe RRA has avoided large-scale, comprehensive andpredetermined reform processes, but has adopted apragmatic and incremental approach characterisedby adaptation to emerging needs and priorities andprogression on the basis of short- to medium-termtime frames. Working incrementally has not, how-ever, meant being un-strategic. The process has alsobeen driven by a thirst for learning and recognitionof the need continuously to compare capacity andperformance. This iterative process approach hasenabled managers to learn from experience and toadvance the capacity development process accordingto lessons learned and at a pace appropriate to thecapacity of the organisation to absorb change. It hasalso helped ensure internal ownership and apprecia-tion of the change process and has avoided the riskof proposals being introduced from the outside thatare not relevant to local conditions. In so doing it hasbeen possible to build an internal constituency forchange (ownership) and an ability to identify capaci-ty needs. Overall, management seems to have gotthe sequencing and evolution of capacity and per-formance issues right.

A mature partnership between the RRA and DfIDA programme of external support has accompaniedthe entire capacity development process. This sup-port has been critical not only in terms of offeringvaluable technical knowledge and financial assis-tance, but also in providing moral support and confi-dence to local stakeholders.55

Over the years, the RRA and DfID have developed amature relationship based on frank exchange, teamspirit and shared accountability for results. This hasallowed external technical and financial assistanceto accompany the local change process, adapting tothe local tempo of change and emerging priorities.This was made possible on the one hand by thestrong level of ownership and commitment ofRwandan stakeholders, and on the other, by DfID'swillingness to work from the background offeringstrategic and policy guidance as well as technical andfinancial support to a range of organisational deve-lopment and training initiatives. It has also beenfacilitated by the strong relationship between the UKand Rwanda and the emergence of DfID as Rwanda'smost important bilateral partner. The nature ofexternal assistance has adapted over time as theorganisational capacity has grown and needs havechanged. RRA management has become more confi-dent, playing a more significant part in identifyingneeds and priority setting, and gradually its depen-dence on DfID has decreased.

5.3 The future: Can the RRA avoid the fate of other revenue authorities?

This report has presented a rather positive and optimistic account of the development of a perfor-ming organisation against all odds. The question iswhether the good news can be sustained. Scepticswho have studied the experiences of other revenueauthorities in the region might well argue that thegood news will be short-lived. They will point to theexperiences of the Uganda Revenue Authority, forexample, where at first the experience was compara-ble to that of Rwanda. But a few years on many ofthe achievements were reversed with evidence offalling levels of revenue collection, increasing inci-dences of corruption and political interference anddeclining confidence amongst the tax-payingpublic. This situation has raised questions regardingthe conditions under which an organisational model can be transferred from one country context toanother.

Will the Rwandan experience be any different? Barelysix years old, is the RRA's organisational culture andcapacity sufficiently robust and rooted to withstandoutside pressures that may divert it from its currentmission? How vulnerable is the organisation tochanging political visions and agendas? To what


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Notes55 At the same time, it has been noted that although DfID has

supported many fledgling revenue authorities in Africathere is no easily available database of good practices orlessons learned from these experiences that the Rwandanscould draw upon. This seems to have been a missedopportunity.

extent can the public at large hold the organisationto account and insist that standards of performanceand integrity are maintained?

The lesson from this case is that the RRA's successmust in large part be attributed to the level of politi-cal commitment and support it has enjoyed. Thiscommitment provided the legitimacy and space forthe organisation to invest in the development of itscapacity and to translate those capacities into per-formance. But it also suggests that if the politicalgoodwill were to disappear then the achievementsgained may be at risk of being overturned. The politi-cal environment is something over which the organi-sation has no control, but for now, the prospects fordemocracy taking root in Rwanda remain promising.That being the case, it can be expected that the RRAwill retain its strategic importance in the widerdevelopment process and can therefore count oncontinued political backing and growing parliamen-tary oversight.

Within the Authority, key safeguards will be neededto ensure that quality leadership is retained and thatthe organisation continues to invest in the profes-sionalisation of its staff. The RRA also has to face anumber of challenges that could to undermine someof the gains made:• The prospect of DfID ending its support has impli-

cations for morale, and the readiness of theorganisation to stand on its own feet and to con-tinue the change process unassisted. It must alsourgently find ways to mobilise resources to coverthe future costs associated with organisationaldevelopment.

• After several years of dynamic transformation andtangible improvements, the organisation is goingto enter a period of less dynamic change, so thatgreater efforts will be required to generate fur-ther performance improvements. It will be criticalto keep the dream and vision alive by continuous-ly setting new targets and maintaining staffmorale.

• The RRA is no longer the employer of choice, andis finding it increasingly difficult to remain com-petitive in the labour market. Once the standardbearer for conditions of service, a growing num-ber of private and quasi-public institutions as wellas international agencies now offer more compet-itive remuneration packages. It is thereforebecoming more difficult to attract and retaingood personnel. Constrained by budget ceilings,

the RRA will have to work at improving efficiencyso that resources can be freed up to offer moreattractive salaries linked to performance.

• The RRA will have to face up to the challenge ofsuccession and building up the 'missing middle'.It is only a matter of time before the most capa-ble managers that have been at the centre of theorganisation's remarkable achievements move on.Already a number of key managers have beenpoached for top government positions, while keytechnical staff are being poached by other organi-sations that value the training and organisationalexperience that the RRA has provided. The organi-sation therefore has to begin to groom a newcadre of middle-level managers who can eventu-ally take over. This will require investment indeveloping their capabilities, exposing them togreater responsibility as well as providing appro-priate incentives for performance and accounta-bility.


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Annex: Individuals consultedDfIDMirtha Castellon IT adviser, ASYCUDA++Elisabeth Gresty Audit adviserKieran Holmes Project managerHarriet Wanjohi Governance adviserTesfaye Wondim Income tax adviser

BoardClaver Gatete Secretary General, Ministry of Finance and Economic Planning Ephraim Turahirwa Chairperson

RRAMary Baine Commissioner, Customs and ExciseImmaculee Bamarange Senior auditor, Internal Revenue DeptLouis Benimana Commissioner, Internal Revenue Ben Kagarama Director, FinanceAdrien Kinyunguti Head, Service Delivery, Large Taxpayers DeptNdivito Makima Fidele Director, Human Resources and Administration DivisionJ. Mbawishirana Head, Revenue Audit, Internal Revenue DeptClaver Kayumba Director, Revenue Protection DeptZephanie Muhigi Senior manager, Customs and Excise DeptEugeneTorero Mugenyi Director, Planning and Research DeptFauzi Musheija Senior business analyst, Large Taxpayers DeptHenry Gaperi Kanyesiime Commissioner, Large Taxpayers DeptMonique Mukaruliza Commissioner, Quality AssuranceJames Musoni Commissioner, GeneralEmmanuel Nsengimana Head, Personnel Administration DivisionJackson Serudodo Senior customs manager, Customs and Excise.Sam Toyota Director, Information Systems & TechnologyTheodora Ujamuliza Acting Head, Training and Development Division

Stakeholders and other individuals interviewedAbdikarim Farah Resident representative, IMFBart Gasana Executive secretary, Rwanda Private Sector FederationBarnabe Sebagabo National coordinator, Renforcement des Capacites et Reforme de la

Fonction Publique


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ReferencesDocuments obtained from the RRA• Draft Corporate Plan RRA 2004• Law No. 15/97 of 8.11.1997 Establishing a Rwanda Revenue Authority

Documents obtained from DfID• Final Interim Report Phase III• Project Memorandum Phase IV• Project Memorandum Phase V• First Quarterly Steering Committee Report Phase V• Second Quarterly Steering Committee Report Phase V• DfID Country Assistance Plan 2003-2006• Summary SWOT analysis

Other documentsBoesen, N. and Therkildsen, O. 2004. Beyond Naivety and Cynicism: A Pragmatic Approach to Donor Support for

Public Sector Capacity Development (DANIDA).Government of Rwanda, 2002. Poverty Reduction Strategy Paper.Iansiti, M. and Levien, R. 2004. 'Strategy as ecology', Harvard Business Review, March.Fjeldstad, O.-H., Kolstad, I. and Lange, S. (2003) Autonomy, Incentives and Patronage: A Study of Corruption in

the Tanzania and Uganda Revenue Authorities (Chr. Michelsen Institute).Taylor, J., 2003. Organisations and Development: Towards Building a Practice (Community Development

Resource Association, CRDA).

The European Centre for Development Policy Management (ECDPM) aims to improve internationalcooperation between Europe and countries in Africa, the Caribbean, and the Pacific.

Created in 1986 as an independent foundation, the Centre’s objectives are:• to enhance the capacity of public and private actors in ACP and other low-income

countries; and • to improve cooperation between development partners in Europe and the ACP Region.

The Centre focuses on four interconnected themes:

• Actors of Partnerships• ACP-EU Trade Relations• Political Dimensions of Partnerships• Internal Donor Reform

The Centre collaborates with other organisations and has a network of contributors in the European and theACP countries. Knowledge, insight and experience gained from process facilitation, dialogue, networking,infield research and consultations are widely shared with targeted ACP and EU audiences throughinternational conferences, focussed briefing sessions, electronic media and key publications.

This study was undertaken by ECDPM in the context of the OECD/DAC study on Capacity, Change andPerformance and financed by the UK Department for International Development (DfID).

The results of the study, interim reports and an elaborated methodology can be consulted at www.capacity.orgor www.ecdpm.org. For further information, please contact Ms Heather Baser ([email protected]).

ISSN 1571-7577

The European Centre forDevelopment Policy ManagementOnze Lieve Vrouweplein 21NL-6211 HE Maastricht, The Netherlands Tel.: +31 (0)43 350 29 00Fax.: +31 (0)43 350 29 [email protected] www.ecdpm.org