Effects of household participation in the rental market in Rwanda

Juvenal Paul Pierre

Abstract

Land market developments and household access to land through land rental markets are important, especially at the stage where land reform is taking place in Rwanda. Determinants of land rental markets in rural Rwanda, assessed according to household and land market characteristics as well as transaction costs constraints, were studied based on a survey of 251 household farms from the Southern Province during 2006 to 2007. Around 22% of the households surveyed did not participate in the rental markets, while 43% rented in land and 35% rented out land. Results from a Tobit regression analysis indicated that, households often combine buying and renting of land to adjust their land holding to the optimal farm size. Land rental markets reallocate land between households with different management abilities and allow a consolidation of land use, as land ownership in Rwanda is very fragmented. Land specific issues such as transaction costs, rural credit and labor constraints impeding access of households to land were evident in the data. Policies should be implemented to improve the functioning of other rural markets, in order to allow the rental markets to contribute to further efficiency improvements and poverty reduction in rural areas.