By David Himbara
General Paul Kagame and his regime often boast that they have sharply reduced donor dependence for Rwanda’s budgetary needs to less than 20 percent. This claim needs to be qualified. We must distinguish between Kagame’s recurrent budget and his capital expenditure.
Recurrent expenditure is understood to include all payments other than for capital assets. Recurrent budget, in other words, includes primarily goods and services, salaries, employer contributions, interest payments on loans, and so on. Capital expenditure is about payments for acquisition of fixed capital assets. Examples of government capital expenditure include building schools, hospitals, and infrastructures such as roads and electricity. Kagame’s dependence on donors on capital investments is still sky high.
Kagame’s Rwanda still relies heavily on donors for capital expenditures
According to Rwanda’s Budget Framework Paper 2018/2019–2020/2021, FRW897.1 Billion is allocated to capital expenditure for 2018/9. This is equivalent to US$1 Billion. The portions of the capital expenditures financed domestically and externally are as follows:
- FRW510.2 Billion will come from domestic sources — equivalent to US$586 Million.
- FRW386.9 Billion is the foreign financed portion — equivalent to US$445 Million.
In reality, therefore, Kagame’s Rwanda is heavily dependent on donors. Domestic resources can only finance 58 percent of Rwanda’s capital expenditures. The remaining 42 percent is externally financed. Let us also recall that Rwanda is among the highest receivers of aid on per capita basis. Aid per capita in Rwanda is $96 versus Burundi at US$71; Somalia with US$82; Ethiopia at US$40; Kenya, US$45; Tanzania, US$42; and Uganda with US$42. The next time Kagame boasts that he is almost free from aid, someone should show him these figures.