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The Economic Impact of the Pandemic in Rwanda: An Analysis of Firm-Level VAT Data

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  • Mascagni, Giulia
  • Lees, Adrienne

Abstract

There are substantial differences in the spread of the covid-19 pandemic and policy responses to it between high- and low-income countries. While evidence on the former is growing, there remain more unanswered questions on the latter. This paper addresses this gap by providing insights on the impact of the pandemic in Rwanda, based on firm-level administrative data from Value Added Tax (VAT) returns. We find that VAT sales in 2020 declined by 11.4 % compared to 2019. These losses are particularly associated with a lockdown imposed around April 2020, after which sales quickly rebounded to pre-crisis levels once restrictions were lifted. In absolute terms, the economic cost is concentrated among the largest firms. However, small firms have been most affected in proportional terms. Disaggregating our results further, we show that firms in accommodation and food, transport services, wholesale and retail trade, as well as those registered in the capital, have been particularly affected by the crisis. Overall, the decline in sales translated to a similarly large percentage loss in VAT revenue for the government.

Suggested Citation

  • Mascagni, Giulia & Lees, Adrienne, 2022. "The Economic Impact of the Pandemic in Rwanda: An Analysis of Firm-Level VAT Data," Working Papers 17374, Institute of Development Studies, International Centre for Tax and Development.
    • Handle: RePEc:idq:ictduk:17374
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    File URL: https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/17374
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    Cited by:

    1. Okunogbe,Oyebola Motunrayo & Santoro,Fabrizio, 2022. "Increasing Tax Collection in African Countries : The Role of Information Technology," Policy Research Working Paper Series 10182, The World Bank.
    2. Hoy,Christopher Alexander & Simbeye,Laban & Malik,Muhammad Abdullah Ali & Koivisto,Aliisa & Maboshe,Mashekwa, 2022. "How Have Formal Firms Recovered from the Pandemic ? Insights from Survey and TaxAdministrative Data in Zambia," Policy Research Working Paper Series 10139, The World Bank.
    3. Oyebola Okunogbe & Fabrizio Santoro, 2023. "Increasing Tax Collection in African Countries: The Role of Information Technology," Journal of African Economies, Centre for the Study of African Economies, vol. 32(Supplemen), pages 57-83.
    4. Elías Albagli & Andrés Fernández & Juan Guerra-Salas & Federico Huneeus & Pablo Muñoz, 2023. "Anatomy of Firms’ Margins of Adjustment: Evidence from the COVID Pandemic," Working Papers Central Bank of Chile 981, Central Bank of Chile.

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