An analysis of savings among rural poor households in Rwanda

The household’s savings are considered the primary source of the investment, which is in turn the driver of economic growth and development. This study attempted to identify the determinants of private savings among the rural poor households in Rwanda. We used the 5th round of the Integrated Household Living Conditions survey data conducted in Rwanda every four years. A simultaneous-equations model was specified and estimated using the 2SLS method to account for endogeneity and simultaneity bias, complemented with t test and correlation analysis. The results from the t test show that savings among rural poor households is significantly positive. The econometric estimates showed farm income is not among the determinants of saving while consumption is among the most significant drivers of saving of the rural poor in Rwanda. We recommend that socioeconomic development programs, projects and/or policy that aim at improving the level of income and thus affecting the savings among rural poor households should be enhanced.