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

•The absence of a vibrant and job-rich non-farm rural economy limits livelihood options, particularly for low-capability households.•Secondary school completion is beyond the reach of most poor rural children, leaving them with few high-return livelihood options.•Land scarcity, low capabilities and the sluggish non-farm economy lock together to form a nexus limiting sustained escapes from poverty in rural Rwanda.•A high-risk environment, coupled with an as yet ineffective enabling environment, constrains diversification and investment in rural enterprise. 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 particula