17 October 2013

Burundi: Kieran Holmes - the Toughest Taxman in Africa

analysis

Kieran Holmes exudes an understated confidence when discussing his job as head of the Office Burundais des Recettes (OBR). And well he might, having just rolled out wide-ranging reforms in a country that in 2008 he says had "close to zero capacity for tax collection".

In the last five years the OBR has increased government revenue from 300 to 560 billion Burundian francs. Holmes asserts that they should be able to double this again in the next 5 years.

Before he came to Burundi Holmes spent 8 years reforming the tax system in Rwanda. And whilst the 2 countries have less in common than their geographical proximity might suggest, Holmes states that the process has been pretty much the same in Burundi as in its neighbour.

"In every country you do this reform in you get a steep projection of revenue" says Holmes - well illustrated by that fact that when it was carried out in Lesotho revenue improved by 2000 percent in 6 and a half years.

So what is the secret to this success?

A detailed description can be found in the Africa Research Institute's new report For state and citizen: Reforming revenue administration in Burundi, but Holmes tells me that it follows "a clearly defined, logical pattern" - you redraft legislation, broaden the tax base (keeping the rates as low as possible), bring in key advisers in income tax and customs, update or install computer systems and reform the human resources side of things.

In Burundi Holmes wants to make tax much more easily payable by anyone, no matter their income, or where they live in the country. Currently this is only possible in the capital, Bujumbura, so innovations, like paying via mobile phone (similar to the 'mobile banking' invented in Kenya,) would be revolutionary.

Some of Holmes' more unconventional reforms, such as ripping out the internal walls in the OBR, to demonstrate openness and knowledge sharing, show how far he is prepared to go to institute a culture where paying tax is thought of as a necessary compact with the state.

The OBR is funded both by donor agencies (primarily DFID via Trademark East Africa) and the Burundian government, which provides the continuing year-by-year budget, 75 percent of which goes on salaries.

Holmes generally portrays his relationship with government as being good with "great support from the President and VPs". He also stresses how essential it is "to have a political champion", stating that "politics takes up to 80 percent of my time in this job."

Ultimately, however, Holmes and the OBR's control over revenue extends only to its collection. What happens afterwards, when it has become part of the national budget, is another matter. And in this regard the OBR may, in its reforming zeal and apparent excellence, be something of a 'lonely' institution in the country.

Says Holmes: "we don't have control over how the money is spent, but at least we have control over how much we have collected". And to highlight this, the OBR publishes revenue collection figures every month in the national newspapers so anyone can find out what the government should have at its disposal.

Whilst the OBR has clearly been a success, Holmes alludes to continuing resistance from the business community who, over 30 years of not paying tax, had got quite used to the situation. "Ending old ways of doing business has been difficult" - in effect this means making people pay tax as opposed to bribes.

It has clearly not been in everyone's interest that the revenue authority should do its job well and Holmes has commented in the past on the existence of 'credible' threats to his life. He retains a strong security delegation whenever he travels around the capital.

But whilst this old culture may persist, it seems that with continuing political support from the top, Kieran Holmes - the toughest taxman in Africa - isn't going anywhere.

Magnus Taylor is Editor of African Arguments.

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