How Coffee Sector Reforms Enhanced Academic Performance in Rural Rwanda

Rwanda's coffee sector reforms, which expanded coffee mills and boosted household incomes, significantly improved primary school students' academic performance, particularly in rural areas. This study highlights the transformative potential of agro-industrialization in enhancing both economic and human capital outcomes.

A team of researchers from the Africa Region's Chief Economist's Office at the World Bank examined the socio-economic impact of Rwanda's coffee sector reforms, focusing on the human capital outcomes linked to the expansion of coffee mills. Driven by a national strategy to increase the value of coffee exports, Rwanda’s government implemented reforms that saw the number of coffee mills rise from three in 2000 to 226 by 2013. These mills introduced wet-processing technologies that enhanced coffee quality, increased farmers’ incomes, and created employment opportunities in local communities. The study utilized this agro-industrialization effort as a natural experiment to evaluate its effects on primary school students, specifically their academic performance in national examinations.

How Coffee Mills Shaped Educational Outcomes

The researchers analyzed data from over 1.5 million primary school students who took national exams between 2012 and 2019. They used a difference-in-differences approach to compare students born near operational coffee mills after their establishment with those born either before the mills opened or in areas beyond the mills' catchment zones. The findings showed that early-life exposure to coffee mills positively influenced academic outcomes. Test scores of students exposed to coffee mills increased by 0.09 standard deviations, equivalent to a 4% improvement compared to unexposed students. The benefits were evident across all subject areas, with particularly strong effects in non-STEM subjects such as English and social studies. Importantly, the impact was more pronounced in rural areas, where economic constraints often limit educational opportunities.

Mechanisms of Impact: Income, Health, and Attendance

The study identified key pathways through which coffee mills improved educational outcomes. One critical mechanism was the significant boost to household incomes in communities near coffee mills. Farmers benefited from higher prices for wet-processed coffee, and local employment opportunities expanded, particularly for women who worked in the mills. This income surge translated into better living conditions and investments in children's education. Child health also improved in coffee mill catchment areas, with reduced stunting rates and higher height-for-age scores among children. These health gains, known to influence cognitive development, likely contributed to enhanced academic performance. Additionally, increased household income allowed families to prioritize education, as evidenced by higher school attendance rates among children living near coffee mills.

Robust Methodology Strengthens Findings

To ensure the reliability of their findings, the researchers conducted extensive robustness checks. They tested alternative exposure measures, such as cumulative years of early-life exposure to coffee mills, and found consistent results. Potential confounders were also addressed, including selective migration and simultaneous school infrastructure expansions. Migration patterns were examined to rule out the possibility that wealthier families moved closer to coffee mills, skewing the results. Additionally, the researchers found no significant correlation between coffee mill rollouts and school construction, confirming that the economic impacts of the mills drove the observed effects. The study also considered larger catchment areas, extending the radius from 2.5 kilometers to 5 kilometers, and found that while the effect sizes slightly decreased, the overall conclusions remained robust.

Lessons for Policy and Development

The research underscores the transformative potential of agro-industrialization policies in low-income countries. Rwanda’s coffee sector reforms not only boosted export revenues but also created significant local economic benefits, including higher incomes and improved human capital. The findings highlight the importance of early-life conditions in shaping long-term socio-economic outcomes and suggest that targeted industrial policies can have far-reaching spillover effects. For policymakers in commodity-dependent economies, the Rwandan experience provides a blueprint for leveraging industrialization to address both economic and social challenges.

A Model for Inclusive Growth

The expansion of coffee mills in Rwanda offers a compelling example of how industrial policies can simultaneously enhance economic and social outcomes. By shifting from traditional to value-added coffee processing, Rwanda demonstrated that agro-industrialization can drive inclusive growth. The study’s findings emphasize the importance of linking economic reforms with broader development goals, such as improving education and health outcomes. As countries explore pathways to sustainable development, Rwanda’s experience serves as a valuable model for fostering resilience, equity, and long-term prosperity.