Where is the money? Audit flags holes in Mgt of State projects
There has been accumulation of taxes not paid to the taxman estimated at Rwf550.6 billion ($493.5 million) and decentralized taxes filed not yet paid of Rwf2.5 billion ($2.2 million). The sum include fines, penalties, and other levies on goods and services collected by entities of behalf of Rwanda Revenue Authority (RRA). This denies the treasury access to the much-needed cash flows for important development activities.
Mismanagement of government contracts, project delays and unused asset cost taxpayers billions, a new audit report has revealed.
The latest report by Auditor General Alexis Kamuhire for the year ended 30 June 2022 identified 55 cases of delayed contracts worth Rwf644.1 billion ($577.3 million), a rise from Rwf201 billion ($180.1 million) in 2021.
The contracts, which include 41 identified during the year under audit and 14 contracts from previous audits, have suffered delays ranging between 30 days and 4 years, and this had a bearing on lives of citizens who expected improved infrastructure and services from the projects.
Besides, auditors identified 116 idle assets worth Rwf124.1 billion ($111.2 million) in 66 public institutions, a rise from Rwf37.2 billion ($33.3 million) the previous year. The cases comprised of 94 new cases worth Rwf99.6 billion ($89.2 million).
The latest audit report summarises findings from audit reports of public entities and projects for audits conducted between May 2022 and April 2023.
Details of the reports show unlawful expenditures increased by 87 per cent in value to Rwf6.5 billion ($5.8 million) as compared to the previous year. These comprise of wasteful expenditure (Rwf2.4 billion), overpayment (Rwf3.1 billion) while fraud claimed Rwf169 million from Rwf45 million the previous year.
Besides, public entities had not recovered a huge chunk of Rwf2.4 billion ($2.1 million) lost to fraud -- stolen assets, funds used for personal gain/diverted -- highlighted in previous audits.
“The audit noted long outstanding debtors amounting to Rwf20.2 billion ($18.1 million) that has been outstanding up to 15 years and had not been recovered at the time of my audit in April 2023,” Mr. Kamuhire said in his report sent to parliament, adding that the recoverability of the long outstanding debts remains doubtful.
While the report doesn’t say who owes how much to government, its findings point to debts granted to public entities to finance development projects that are not repaid.
For instance, State agencies had not recovered any amount from loan beneficiaries in three projects worth Rwf54.5 billion ($48.8 million) whose expected period of the first repayments have elapsed.
Management of the Ministry of Finance and Economic Planning (MINECOFIN) did not provide evidence of any action taken to enforce recovery of the amounts due from the on-lending beneficiaries.
Meanwhile, there has been accumulation of taxes not paid to the taxman estimated at Rwf550.6 billion ($493.5 million) and decentralized taxes filed not yet paid of Rwf2.5 billion ($2.2 million). The sum include fines, penalties, and other levies on goods and services collected by entities on behalf of Rwanda Revenue Authority (RRA).
Outstanding recoverable taxes have increased by 23 per cent from 2021 due to interests and penalties accrued, and this denies the treasury access to the much-needed cash flows for important development activities.
“There is need to devise measures to assess the reason why filed taxes were not paid on time and quickly recover tax arrears before they last too long to become difficult to recover or uncollectable at all,” Auditor General noted.
Loss-making State enterprises
Review of most recent quarterly performance report of state-owned enterprises (SOEs) for September 2022 done by Ministry of Finance and Economic Planning (MINECOFIN) in analysis of key financial performance revealed that 22 SOEs face financial hardship in terms of liquidity, profitability and solvency ratios.
In addition, nine of the companies did not have complete board of directors to facilitate them in their strategic direction and decision making. This hinders the overall operations of the company as decisions may be taken without any oversight body.
Irrigation data overstated
The Government had spent Rw181.2 billion ($162.4 million) on irrigation program over a period of four years (2018-2022). Its target was to increase the irrigation area from 48,508 ha (2017) to 102,284 ha by 2024, but the irrigated area remained almost unchanged between 2018 and 2022.
The annual report of agriculture sector of 2022 indicated that the total area of irrigated land in Rwanda is 68,126 ha from hillside (8,780ha), Marshland (37,273 ha) and small scale irrigation technology (22,073 ha).
However, auditors noted that the irrigated area of 68,126 hectares reported in the Irrigation Scheme report for 2021-2022 was not reliable.
The irrigated area was overstated, and a huge chunk of the area is not irrigated due to issues ranging from non-existing irrigation schemes (undeveloped), deviation from the purpose of the scheme, and damaged irrigation infrastructure.
This led to the low production, and the reported data misled in decision making.
The Rwanda Utilities Regulator (RURA) did not conduct regular and comprehensive transport needs assessments to establish existing market demand and supply of public bus services. As a result, it was not able to make informed decisions that respond to passengers’ needs.
There has been reduction in the number of bus seats available between the year 2015 and 2022 by 2,277 seats (2015: 22,238 seats and 2022: 19,961 seats) in the City of Kigali as a result of a reduction in the number of buses. This resulted in long queues at bus parks and stops.
Audit noted that Rwanda Housing Authority management had signed five contracts amounting to Rwf11.6 billion ($10.3 million) to implement different construction projects without hiring independent supervising firms.
This contravenes legal provisions that require hiring an independent supervising firm for all works that are above Rwf50 million ($44,808).
The Energy Utility Corporation Limited (EUCL) made a loss of Rwf52.5 billion ($47 million) during the financial year ended 30 June 2022 compared to a profit of Rwf2 billion ($1.7 million) in the previous year. This is despite the company receiving Rwf39.3 billion ($35.2 million) from the treasury to subsidize electricity tariff.
The audit noted that EUCL is purchasing power from expensive suppliers which was leading to poor financial performance.
Poor returns on RSSB investments
The audit noted that 11, of 35 companies where RSSB (Rwanda Social Security Board) pension scheme had invested a total of Rwf438.3 billion ($392.7 million) in equities, had lost 80 per cent in fair value (accumulated losses of Rwf102 billion [$91.4 million]).
“RSSB should discuss with MINECOFIN to come up with a strategy so as to avoid further losses,” auditors noted.
Threats to wildlife
Lack of specific law governing national parks management and protection has been partly blamed for the decline in animal numbers in national parks.
According to the audit, there was a reduction in the number of animals which had not been investigated. For example, Zebra and Topi population had reduced by 609 (or 31 per cent) and 192 (or 28 per cent) respectively between 2019 and 2021.