Population Growth and Land Scarcity in Rwanda: The other side of the Coin

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1 Population Growth and Land Scarcity in Rwanda: The other side of the Coin Alfred R. BIZOZA (PhD) Agricultural Economist,University of Rwanda 2014 Conference on Land Policy in Africa, Addis Ababa, Ethiopia 11-15th November

2 Outline of the presentation 1. Background Conceptual Framework Trends of Population and Land Use in Rwanda Agriculture and Land use management Empirical analysis of population Growth and land Scarcity 6. Conclusions and Policy Implications 2

3 Background Rwanda is currently ranked among the fast growing economies within EAC (World Bank, 2013). For example, poverty rate has decreased from 58.9 % in 2000/2001 to 44.9% in 2010/2011 (NISR, 2012), Increased population and land scarcity have been subject of an extensive debate as being the major constraints of Economic Development in Rwanda. Less attention was paid to the side of the Coin which needs just as much attention for the future development of Rwanda - people s livelihoods can and must be created outside agriculture. 3

4 Background (Cont d) This paper attempts to argue that population growth in its current pace in Rwanda may not be a problem till 2050s rather needs to be viewed as an enabler for the overall economic development. The assumption made in this paper: the inability to create more economic opportunities along the agriculture value chains, in the services and manufacturing to uphold population increment is rather a problem than population growth and land scarcity per se 4

5 Conceptual Framework The intent of this study is to assess the possibility of the nonfarm sector leading the economy and to address the deficiencies of the arguments that link population growth, land scarcity and lower economic development. We share the view that if resources such as land are getting scarcer, humankind will adapt to these new challenges, and that land scarcity may work as a catalyst to trigger technological innovations. 5

6 Conceptual Framework (cont d) The reason why population growth leads to land scarcity is the lower capacity of other development sectors, such as in industry and services, to absorb even the qualified segment of an increased population. This limitation in uptake capacity can be explained, among other reasons, by the small number of employment opportunities created by these sectors, compared to the agriculture sector. More job creation is needed if pressure on land, poverty, food insecurity and social conflicts are not to increase. 6

7 Conceptual framework (Cont d) Populatio n growth Land use and Management Land Scarcity Active and non-active population Development options Turning to Markets Employment Uptake by the farm and nonfarm sectors People's livelihood Options 7

8 Trends on Population growth and Land Use in Rwanda 1. Population Growth and Density Some Population Statistics ( ) Province Kigali City Southern Western Northern Eastern Rwanda % Population Average Change Annual Growth Rate Population Density Farm employment Non-farm employment Number of Establishments 1, Source: NISR (2014)-The 2012 RPHC4 (Population and Housing Census) 8

9 2. Farm and non-farm Employment Industry of Work for people with Farm and non-farm employment 16 years Old Sector/ Year Mining & Quarrying Manufacturing Gas, Water & Electricity Supply Construction Wholesale & Retail Trade Transport & Communications Banking Financial & Business Services Government, Admin & Social Services Recreation & Tourism Domestic Services Inadequately Described Agriculture, hunting and forestry Total Source: NISR (2006, 2012) 9

10 Projections of farm, non-farm employment and population growth The trends in Figure bellow suggest that the percentage of people leaving the farming sector is similar to those joining the non-farm sector. This will require policies and strategies that are aggressive to continue unlocking opportunities for small and medium enterprises as well as large labour intensive firms. Rwanda can continue to capitalize on its population growth to create a pool of skills that are needed to enter into the non-farm sector, and reduce dependence on farming activities for both economic growth and employment. 10

11 Projections of farm, non-farm employment and population growth The non-farm sector will take the lead in creating more employment for the young and active population. 11

12 Trends of agriculture and land use Estimates show that about 57.8 to 55.9% of the total agricultural land area remains potentially uncultivated. Non-agricultural Land 12

13 Cultivated Area per household Cultivated Area (EICV 3) Average total Less than 0.3 to 0.9 to More Total area cultivated 0.3Ha 0.9 3Ha than 3 per HH Ha Ha Total HHs cultivate for crop production (000s) All Rwanda ,095 Kigali city Southern Western Northern Eastern Urban Rural Source: EICV3- NISR (2012) 13

14 Crop Yield Vis-à-vis Potential Crop yields are increasing due to on-going Crop Intensification Program but there is yet room to improve these and get more food than currently. Productivity trends of major food crops in Rwanda 14

15 Land use and Management Land irrigated, protected against soil erosion, land consolidated EICV 3 Irrigated Protected against soil erosion Consolidated Cultivated (in 000 ha) All Rwanda Kigali city Southern province Western province Northern province Eastern province Urban Rural Source: Rwanda EICV3 report,

16 Use of Chemical and Organic fertilizers % of population using chemical and organic fertilizers Area Chemical fertilizer Organic fertilizer EICV2 (2005) EICV3 EICV2 (2005) EICV3 (2012) 11.0 (2012) 28.9 All Rwanda Kigali city Southern province Western province Northern province Eastern province Urban Rural

17 Effectiveness of Population and Land Policies Turning to Land markets Land-renting options are scarce due to limited liquidity, credit constraints, and support institutions. Fewer by land for investment in rural areas. About 12% of the rural people participate in land markets to pay debt and 45% sell their lands to maintain their consumption when faced with unexpected shocks. Province % of HHs with perceived right to sell or use lands as collateral HHs who have used land as collateral EICV 2 EICV 3 EICV 2 EICV3 All Rwanda Kigali city Southern Western Northern Eastern Urban Rural

18 Effectiveness of Population and Land Policies Family planning and Policies and Strategies The period after 2005 has heralded massive family planning campaigns, training for different groups, increased budget allocated to the health sector, strengthening health facilities; and the provision of more affordable and available contraceptives. The contraceptive prevalence rate (CPR), the unmet need, and the TFR have significantly improved (see Table 11). Indicator Rwanda Uganda Tanzania Kenya Year / /09 CPR (%) Unmet need (%) TFR Source: Muhoza et al. (2013). 18

19 Effectiveness of Population and Land Policies Despite the decrease in mortality and in fertility, the Rwanda s population will continue to grow and is expected to be doubled in 2050 or so. Therefore, maintaining the unidirectional view of linking population growth to land scarcity will remain problematic. Rather, there should be a focus on development options and priorities that respond to the population s increment for both food and labour. 19

20 Empirical Analysis of the Population growth and Land scarcity The Empirical Model aims to: Provide empirical linkages between population growth and land scarcity in the short and long run. Enable us to test for the presence of empirical and significant relationships between land scarcity and change in population growth. Assess the extent to which the pace in population growth and land scarcity can be adjusted by the change in non-farm sector employment resulting from the industry and services. Pop t f [( Pop t Pop t 1 ) / Pop t 1 ), FEmp, NFEmp, Genocide, landreform s ] Land t Yt 0 X t (1 )[ erro ]t 1 t (Eq.2) (Eq.3) 20

21 Empirical Results OLS robust estimates of farm and non-farm labour on land scarcity Variables Land Scarcity Population Growth Change Explanatory Variables Robust Coefficient t-value Robust Coefficien 3SLS Land scarcity 3SLS Population Growth Change t-value Coefficient t-value Coef. t- value Physical population density *** *** Population Growth Change ( Squared) 1.67e *** Lagged Population Change * Farm Labour *** Non-Farm Labour *** Farm labour Squared -0.65e *** Non-Farm Labour Squared -5.14e *** Ln Farm-Labour *** *** Ln Non-Farm Labour *** *** *** ** Genocide- Dummy ** * *** Land Reforms- Dummy ** ** *** Constant *** ** *** ** (n) R Fisher Statistic (6,60) *** 21

22 Empirical analysis (Cont d) Long- run effect of the non-farm employment on population growth change Dependent Variable: First Difference of Population Growth Change Robust Coefficient ( t Value) Robust Deviation First Difference Non-Farm Employment 4.08 (13.15)*** Lagged Residuals (-11.17)*** Constant (10.04)*** (N) 69 R Adjusted R Fisher Statistic (2,66) 98.77*** Std. 22

23 Empirical analysis (Cont d) The above tables shows the short-run and long effects of the non-farm employment on population growth change and Land Scarcity In the long-run, the variation in land scarcity is likely to be better explained by non-farm employment. The speed of adjustment determined by the coefficient of adjustment (1- estimated at and is closer to 1 (e.g ); this implies a faster speed of adjustment of population growth change to non-farm sector employment. 23

24 Conclusions and Policy Implications Our analysis has focused on population growth and land scarcity in Rwanda. Evidences from population projections in this paper suggests that the population in Rwanda will continue to grow, despite efforts being made in family planning. These results seem to imply that the other side of the coin is to continue developing the non-farm sector, to enable it to uptake new and active entrants to the labour market. 24

25 Conclusions and Policy Implications More job opportunities will come from the non-farm sector from 2025 onwards if the current pace of economic growth is maintained or improved upon. Stronger education supporting self-employment and the creation of businesses seems one of the areas to strengthen the development of the non-farm sector. 25

26 Conclusions and Policy Implications The on-going free education programs by the government should go beyond ensuring equitable distribution of education opportunities, to empower graduates with the technical and vocational skills needed for self-employment and the creation of more businesses. To a larger extent, the government in partnership with the private sector should continue to take seriously the issue of unemployment, especially focussing on youth and women as they constitute a major part of the active population 26

27 Thank You for your attention! 27