Expat taxman gets the cash flowing into Burundi's coffers

The Irishman overhauling a corrupt tax system is gradually smashing down the obstacles to Burundi's self-sufficiency

When Kieran Holmes was appointed to overhaul Burundi's corrupt tax system, he set exams for more than 2,000 job applicants and his team marked the papers in his basement: he was determined the process would be squeaky clean.

The 59-year-old Irishman then "smashed every wall in sight" at the tax headquarters in Burundi's capital Bujumbura. He wanted to remove the walls dividing offices so employees could see and be seen, part of his effort to encourage a culture of openness.

He installed new software, simplified filing procedures, cracked down on tax avoiders, and set about changing mindsets in a country still coming to terms with the rule of law after the civil war finally petered out in 2008.

The semi-autonomous Office Burundais des Recettes (OBR) was created in 2009 with funding from Britain's Department for International Development (DfID) and TradeMark East Africa (TMEA), a donor-funded group helping East African Community (EAC) states integrate their economic infrastructures.

Holmes, who spent eight years in Rwanda as a tax adviser, was appointed commissioner general in 2010. Tax revenue was 300bn Burundi francs ($201m) in 2009, and is projected to grow to 545bn francs this year. The OBR plans to double revenues again to 1.2 trillion francs by 2017. This is one indicator cited by officials in Burundi as proof that one of the world's poorest countries is moving slowly towards greater economic self-sufficiency – even if its human rights record remains tainted.

"It's breaking new ground," Holmes said, sitting on his terrace in Kiriri, Bujumbura's breezy hillside diplomatic quarter. "The powers that be … have shown great vision and courage by deciding to have a revenue authority and having an expatriate heading it up."

Burundi's second vice-president, Gervais Rufyikiri, says higher tax revenues have allowed Burundi to build its first hospital using its own funds, and plan the construction of a 10-megawatt hydroelectric dam.

The government has been able to increase agriculture's share of the national budget to 11.8% from 7% last year. The priority is to improve food security for the 90% of people who live off subsistence farming. A 3,000 hectare (7,400 acres) irrigation project is also planned.

This year, Burundi rose 13 places to 159 out of 185 in the World Bank's 2013 Doing Business report, which assesses business regulations and their enforcement. As the figures suggest, there is a long way to go.

Officials say private-sector investors are showing more interest in Burundi, which boasts untapped nickel reserves, but there are questions over human rights and warnings of a drift towards a one-party state since the fragmented opposition boycotted the 2010 election. In May, Human Rights Watch said scores of people had been killed by state agents, members of the ruling party and opposition groups since the end of 2010.

Holmes says the government is trying to address abuses, and the donor community, which provides around half the national budget, seems willing to give the administration the benefit of the doubt – it pledged more than $2bn (£1.2bn) for the country's development strategy at the end of October.

Rufyikiri says donors consider the advances made in security, human rights and social programmes to be "spectacular" in a post-conflict country. "It is a good time to come and invest in Burundi … [it] is still virgin territory … and now with stability, it is the right time to explore its potential in agribusiness, tourism, transport, telecommunications and all sectors," he says.

Burundi still lags behind on infrastructure, particularly in energy generation. Rufyikiri says some projects, such as the 10MW dam and another dam to be financed through credit from India, should ease the bottlenecks. "With all these efforts, combined with efforts towards renewable energy like geothermal or solar, we hope this energy crisis will be resolved in three to four years," he adds.

Jean Michel, a café owner in Bujumbura, says the lack of electricity imposes a heavy cost on businesses. He does not want to give his last name for fear someone in the government might read his comments. "The power cuts are a headache because we have to use generators. It's a big cost. It's not just the fuel. It's the maintenance," he says, adding that labour is also underqualified and purchasing power low, with inflation running at around 15%.

Christian Nkengurutse, the secretary general of the chamber of commerce, says the energy deficit and lack of financing hinder investment but he hopes regional integration, mainly through the EAC, will offer a solution. "We firmly believe that regional integration is a solution to our economic problems. For a country of just 8 million people, to open on to a territory of 120 million people is a big deal," he says.

Holmes believes economic integration can also promote stability. "As we build better infrastructure, as we make it easier to get across borders and trade across borders … the isolation factor is falling away. The ignorance factor, with better communications and better education … is also falling away."

He acknowledges it takes time to change a culture traumatised by war. He should know: he has a bulletproof car and armed bodyguards because threats have been made against him. "When you have a post-conflict state, people do business in a different way," he says. "They don't pay their taxes because the money they pay in [bribes] is what they see as a tax … Then the government decides it wants a proper taxation system … so these guys are now caught … they don't like it."

Despite the OBR's achievements, not everyone believes all the corrupt ties between business and politics have been severed. Adrien Sindayigaya, owner of a boutique hotel in Bujumbura, says businesspeople still fear their investments are not secure. "Even if in theory you have the policies, it's the arbitrary way they are applied," he says. "Just apply [them] responsibly."

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