Agrifood System Transformation in Rwanda: Development Impacts

Between 2000 and 2019, Rwanda’s economy grew by over 7 percent annually. This rapid and significant expansion was driven in part by transformation in the country’s agrifood sector. A recent project note by IFPRI’s Rwanda Strategy Support Program examines that transformation, particularly how the growth of different agrifood value chains has impacted poverty reduction, hunger and nutrition, economic growth, and employment in the country.

Using a computable general equilibrium (CGE) model and data from 14 agricultural value chains, the study simulated an increase in on-farm productivity in each chain and analyzed the resulting development outcomes. Use of the economy-wide model also allowed researchers to examine the spillover effects on each value chain’s off-farm nodes and on Rwanda’s overall economic growth. The studied value chains were:

• Other cereals (wheat and sorghum)
• Rice
• Maize
• Vegetables
• Groundnuts
• Soybeans
• Beans
• Other roots
• Cattle & dairy
• Irish potatoes
• Other livestock
• Fish
• Fruits
• Coffee & tea

Results show that increased productivity in each of the value chains impacts development outcomes in different ways and to different extents. While the wheat and sorghum value chain (“other cereals”) has a strong positive impact on poverty and hunger reduction, it does not increase employment opportunities. Similarly, the rice value chain does not create jobs, but it has a significant impact on economic growth and hunger reduction. The coffee and tea value chain has a significant impact on job creation but almost no impact on poverty reduction or enhanced nutrition.

Given these heterogeneous impacts, the study concludes that investing in and promoting the growth of multiple agricultural value chains can help policymakers and development practitioners achieve a range of desired development outcomes at the same time.