Linking human capabilities with livelihood strategies to speed poverty reduction: evidence from Rwanda

Acute land scarcity in Rwanda limits poor people’s ability to accumulate and move out of poverty. Options for livelihood diversification are restricted by the absence of a vibrant and job-rich non-farm rural economy, and by high rural-urban inequality which makes the urban economy somewhat inaccessible, particularly given the regulated nature of the urban informal sector, limiting opportunities for migration. Competition for employment is made more challenging by low capabilities, which place high-return jobs beyond reach for many poor people. This paper relies on mixed methods research to explore a land-education-jobs nexus and identify the linked human capital and livelihood determinants of poverty escapes to understand the factors slowing poverty reduction in Rwanda. The quantitative analysis uses three waves of nationally representative panel data between 2010/11 and 2016/17 to investigate correlates of poverty trajectories. The qualitative analysis uses content analysis to explore life histories, focus group discussions and key informant interviews from 14 study sites to explore factors driving change in livelihoods and well-being. Our findings show that the triple challenges of acute land scarcity, low capabilities and a sluggish non-farm economy lock together to form a nexus which limits sustained poverty escapes. In the regression analysis, households headed by primary school graduates are half as likely to be poor as those headed by a primary school dropouts while secondary completion or higher virtually eliminates the risk of poverty. Despite demand, secondary school completion in the fieldwork is beyond the reach of most children from poor households, limiting their later options for livelihood diversification. Near landlessness constrains accumulation and Rwanda’s thin rural non-farm economy provides few jobs or opportunities for self-employment. Rebooting poverty reduction in Rwanda particularly following the Covid-19 pandemic will require finding ways to sustain poverty escapes through fuelling job-rich ‘growth from below’ by generating additional demand in the rural economy, continuing to boost agricultural productivity and including even the poorest peasant farmers in that, creating a more conducive business environment for small enterprises and continuing to stimulate investment in job-rich enterprise. Underpinning these strategies should be strengthened efforts to enhance capabilities, education quality, and progression into secondary education