Rwanda Poverty Panel Report: Insights on Poverty and Economic Growth

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The report by the National Institute of Statistics of Rwanda delves into the evolution of GDP, poverty measurement, poverty dynamics, economic growth impact on poverty, and more. Key topics covered include changes in GDP, poverty rates over time, and correlates of poverty movements.

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National Institute of Statistics of Rwanda Rwanda Poverty Panel Report Policy Dialogue about Poverty and Inequality EPRN and UNDP Marriott Hotel, Kigali May 28, 2019 Presented by: KAMANA Roger Data Analyst September 13, 2024 1 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 2 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 3 National Institute of Statistics of Rwanda

Real GDP growth GDP in constant prices by major sector, 2007-2017 September 13, 2024 4 National Institute of Statistics of Rwanda

1. Poverty update: Nationally Headcount poverty rate (%) over time: EICV1 - EICV5 58.9 56.7 44.9 39.1 38.2 2000/01 2005/06 2010/11 2013/14 2016/17 September 13, 2024 5 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 6 National Institute of Statistics of Rwanda

Measuring poverty: EICV surveys EICV5: data 14,580 households, surveyed 10/2016 10/2017 All districts; stratified multi-stage cluster design Wellbeing Real consumption per adult equivalent per year Spending + auto-consumption + value of durables + actual or imputed house rent + in-kind wages & remittances Deflated to January 2014 prices. Poverty line: RWF 159,375 per adult equivalent per year September 13, 2024 7 National Institute of Statistics of Rwanda

Change in real expenditure/ae/yr EICV3 EICV4 EICV5 % change, 2014-2017 Thousands of RWF per year Area of residence 646 198 607 217 570 216 -6.2 -0.6 Urban Rural Province Kigali City Southern Western Northern Eastern Quintiles Q1: poor Q2 Q3: middle Q4 Q5: rich Total (mean) Total (median) No. of observations 588 218 245 223 239 528 264 246 229 259 597 230 219 230 242 12.2 -13.7 * -11.7 0.4 -6.8 76 123 171 247 710 265 169 85 138 188 270 734 282 187 86 140 192 279 699 279 191 0.6 1.4 * 2.1 * 3.4 * -4.9 -1.2 2.1 14,308 14,419 14,580 September 13, 2024 8 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 9 National Institute of Statistics of Rwanda

Dynamics: Poverty Transitions Poverty transition matrix EICV5: 2016/17 Not poor 13.4 50.2 63.7 Poor 24.6 11.7 36.3 Total 38.1 61.9 100.0 Poor Not poor Total EICV4: 2013/14 Totals may not sum to 100 due to rounding errors. Percentages use base-year (EICV4) sampling weights. Half were not poor in 2013/14 or 2016/17 A quarter were poor in both years A quarter were poor in one year, not both Based on panel dataset (surveyed in both years) September 13, 2024 10 National Institute of Statistics of Rwanda

Movement into/out of poverty 2010/11 to 2013/14 to 2016/17 September 13, 2024 11 National Institute of Statistics of Rwanda

Very poor, poor, not poor poor Extreme poor in 2016/17 Moderate poor in 2016/17 Non poor in 2016/17 Total Poverty Status Extreme poor in 2013/14 Moderately poor in 2013/14 Non poor in 2013/14 Total 8.2 4.0 2.5 14.7 3.2 9.3 9.2 21.7 4.0 9.5 50.2 63.6 15.3 22.8 61.9 100 September 13, 2024 12 National Institute of Statistics of Rwanda

Persistent vs. transitory poverty Dynamics of poverty using permanent approach, 2010/11-2016/17 (three waves), % Chronically poor Transient but not chronic Transient but chronic Never poor Persistent Row % 19.2 15.0 27.8 38.1 Rwanda Urban/rural Urban Rural Provinces City of Kigali Southern Province Western Province Northern Province Eastern Province 9.0 21.9 7.8 17.0 22.4 29.2 60.9 32.0 10.8 20.4 21.0 24.5 15.7 11.1 17.3 14.0 14.3 15.8 15.4 26.7 29.5 33.8 27.4 62.8 35.7 35.5 27.5 41.0 Chronically poor: Poor on average throughout Persistently poor: Poor every year Transient poor: Poor some years but not every year Persistent poverty: needs economic development Transient poverty: needs insurance September 13, 2024 13 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 14 National Institute of Statistics of Rwanda

Fast growth, slow poverty fall GDP Elasticities of Poverty Country and period Rwanda, 2011 2014 Rwanda, 2014 2017 Uganda, 1993 2003 Uganda, 2003 2006 Zambia, 1996 2004 Global experience (Ram 2010) South Asia (Ram 2010) India (Ram 2010) India (Ram 2015), 1990 2005 Income elasticity of poverty -1.01 -0.17 -0.8 -3.1 -0.22 -0.84 -0.22 -0.13 -0.35 If price of food had stayed on trend: Estimated poverty rate of 35.2% (instead of 38.2%) Income elasticity of poverty of -0.77 General point: Link between GDP growth and poverty reduction is not watertight. September 13, 2024 15 National Institute of Statistics of Rwanda

Food price spike Price indexes, January 2010 March 2018 200 Price index: February 2014 = 100 180 CPI: all items, wt=100.0% CPI: food, wt=39.0% CPI: vegetables, wt=18.4% 160 140 120 100 80 60 40 20 0 2010 2011 2012 2013 2014 2015 2016 2017 September 13, 2024 16 National Institute of Statistics of Rwanda

Shocks can hurt Type of shock: High food prices Poor Non-poor Percentage of households who reported shocks 23.4 19.2 41.5 61.0 Farm shock Non-poor Health shock Non-poor Poor All All Poor All Households responded to shock by: Selling assets Buying less food Using savings, and/or borrowing Migrating Begging or doing demeaning work Other % reporting shock 21.2 40.2 24.8 42.3 15.0 77.3 16.5 71.5 32.7 25.7 37.1 23.2 35.4 24.2 20.3 28.0 25.1 26.8 24.8 25.5 38.6 47.4 44.1 3.6 2.0 2.6 4.5 1.9 2.8 1.6 1.4 1.5 10.4 6.3 7.9 7.3 3.6 4.9 7.2 5.1 5.9 7.1 4.6 5.3 23.6 16.7 18.7 29.6 21.8 24.1 30.2 22.6 25.0 8.7 7.5 7.9 8.7 6.7 7.3 September 13, 2024 17 National Institute of Statistics of Rwanda

Analysis: Inequality Decomposition of inequality (expenditure per adult equivalent) by area, 2014-2017 2014 2017 Change Gini coefficient Estimate 95% confidence interval Theil s T [= GE(1)] All Rwanda Urban Rural Decomposition: within inequality between inequality Memo: between inequality as % of total inequality 0.447 0.429 -0.018 0.436-0.459 0.420-0.438 0.442 0.533 0.225 0.374 0.417 0.198 -0.068 -0.116 -0.027 0.335 0.107 0.277 0.097 -0.058 -0.010 24% 26% Inequality fell between 2013/14 and 2016/17 Rural inequality is low A quarter of inequality is due to urban/rural divide Why? Mainly because reported expend./ae of rich fell September 13, 2024 18 National Institute of Statistics of Rwanda

Analysis: Shift-share Urban-Rural Contributions to Poverty Reduction 2014-2017 Total poverty Absolute change -0.90 Percentage change 100.00 Change in headcount poverty of which Intra-sectoral effect Population-shift effect Interaction effect Intra-sectoral effects Urban Rural -0.60 -0.30 0.01 66.9 33.9 -0.8 -0.01 -0.59 0.7 66.2 A third of poverty reduction was due to movement from poorer rural to richer urban areas September 13, 2024 19 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 20 National Institute of Statistics of Rwanda

Geographic pattern Poverty Headcount Rates by Province Total Poverty 2017 (EICV5) percentages 2014 (EICV4) Change % points Nationally Rwanda Standard error Area of Residence Urban Rural Province City of Kigali Southern Province Western Province Northern Province Eastern Province 39.1 0.62 38.2 0.61 -0.9 0.87 15.9 43.7 15.8 43.1 0.0 -0.7 20.9 38.4 45.2 45.9 38.0 13.9 41.4 47.1 42.3 37.4 -6.9 * 3.1 1.9 -3.6 -0.6 Only the change (reduction) in Kigali City is statistically significant September 13, 2024 21 National Institute of Statistics of Rwanda

Mobility by area and province Short term mobility 2013/14-2016/17, by location and Provinces, % Stayed poor Became poor Exited poverty Never poor Total across % population within group Nationally Rwanda Area of Residence, 2017 Urban Rural Province City of Kigali Southern Province Western Province Northern Province Eastern Province 24.6 11.7 13.4 50.2 100.0 100.0 12.6 28.0 5.0 13.6 11.3 14.0 71.1 44.4 100.0 100.0 21.8 78.2 14.5 26.9 27.9 29.9 19.9 1.9 14.1 15.7 8.2 11.9 12.5 9.4 12.1 15.9 17.3 71.2 49.6 44.3 46.0 51.0 100.0 100.0 100.0 100.0 100.0 10.0 24.0 24.0 16.8 25.2 High persistent poverty in Southern, Western, Northern Mobility high, even in Kigali City September 13, 2024 22 National Institute of Statistics of Rwanda

Outline Background: Evolution of GDP and poverty How poverty is measured Poverty dynamics: Moving into and out of poverty Moving up and down the income distribution Linking economic growth to changes in poverty Who has gained from economic growth? Correlates of movements into and out of poverty 1. 2. 3. a) b) 4. 5. 6. September 13, 2024 23 National Institute of Statistics of Rwanda

Correlates of changes in poverty poor in 2017 only non-poor in 2017 only always non-poor Always poor Rwanda Sex of head in 2011 Male Female change in household size increased unchanged decreased Change in number of elderly increased unchanged decreased Change in number of children increased unchanged decreased Change in number of working age persons increased unchanged decreased Row% column % 100 19.2 17.0 25.8 38.1 100 100 100 100 18.6 21.3 17.5 15.3 25.0 28.4 38.9 34.9 76.6 23.4 81.1 18.9 76.8 23.2 80.8 19.3 79.0 21.0 20.8 20.0 16.7 13.0 17.0 16.1 25.2 26.2 31.9 41.1 36.8 35.4 44.3 25.7 30.0 35.3 27.9 36.9 37.1 23.2 39.7 44.2 23.8 32.1 40.9 24.6 34.5 If household size or number of elderly or children, falls, household is more likely to get out of poverty. 15.1 19.8 11.2 10.2 15.5 12.3 34.7 27.0 32.9 40.0 37.7 43.6 5.9 92.3 1.8 5.1 92.4 2.5 9.4 87.0 3.6 7.9 88.6 3.5 7.5 89.5 3.0 17.7 17.2 21.1 12.6 13.7 17.3 25.6 28.9 28.7 44.1 40.1 33.0 28.9 20.1 51.1 26.1 20.3 53.6 28.7 23.2 48.1 36.2 23.5 40.3 31.2 22.3 46.5 24.3 18.6 12.3 15.6 16.0 13.0 25.2 27.3 32.2 35.0 38.1 42.6 49.8 33.3 16.9 40.7 36.6 22.7 35.6 33.9 30.5 36.1 34.5 29.4 39.3 34.4 26.3 September 13, 2024 24 National Institute of Statistics of Rwanda

Correlates (2) poor in 2017 only non-poor in 2017 only always non-poor Always poor Row% column % remain in farm activity change farm activity remain in farm activity change non-farm activity change non-farm activity remain in non-farm activity 13.6 20.2 12.3 15.5 22.8 28.6 51.3 35.7 10.8 89.2 12.5 87.5 12.6 87.4 20.7 79.3 15.3 84.7 33.9 2 66.0 8 30.9 1 69.0 9 33.8 9 66.1 1 19.18 17.1 29.01 34.71 38.54 35.43 19.15 13.98 27.1 39.76 61.46 64.57 Difficult to see clear patterns. Farmers are poorer, and farm income is less stable: they are more likely to move into or out of poverty than non-farmers. September 13, 2024 25 National Institute of Statistics of Rwanda