How far can Rwanda go in expanding tax bracket?

Until last year, Jean Nepomuscene Ndahimana, a street hawker in the Nyamirambo area of Kigali in Rwanda, was able to go about his business selling socks without being hassled by the police.

He bought a small house in the town’s poor suburb of Rwampara for his family and was able to make a respectable, if simple, living.

But last year the government began to enforce a trade law prohibiting street hawkers.

The police began a campaign to get hawkers off the streets and Mr Ndahimana found himself in a dilemma: unable to afford a trading licence to sell his wares legally, but not prepared to give up his livelihood.

So he continued to sell his socks while trying to dodge the police. He has evaded them many times.

But the 30-year-old says he has also been arrested, even temporarily locked up, and had his goods confiscated innumerable times.

He ended up in debt, was forced to sell his house and to send his wife and two children back to his home village while he continues to try to eke out a living while staying one step ahead of the police.

Create jobs

“President Kagame said that every Rwandan should create a job and this is the job I created for myself, why should I be denied (the right) to do it?” he asks while carefully setting out the various socks that he sells.

A banner banning street hawking hangs close by.

Mr Ndahimana’s predicament is becoming a common story in Kigali, where the government is currently trying to bring the informal sector into the tax bracket.

President Paul Kagame has said he wants his government to raise enough money through taxes so that Rwanda no longer depends on foreign aid from countries such as Britain.

At the country’s eighth National Tax Day recently, where awards such as “most compliant and exemplary taxpayer” are handed out, Mr Kagame called upon all Rwandans to stop looking at tax as a burden but rather a means of facilitating the country’s progress and economic growth.

But there are many hurdles, not least the high cost of buying the necessary licences.

Small-time traders like Mr Ndahimana say they cannot afford to pay.