Cautiously optimistic: economic liberalization and reconciliation in Rwanda's coffee sector.

I. INTRODUCTION

In some countries, particular industries play especially important roles. In the United States, for example, the automotive industry has provided hundreds of thousands of jobs and helped shape the image of America as the land of the automobile. (1) More recently, the computer industry has helped create a new image of the U.S. as a high-tech, well-connected service economy. (2) These industries have contributed to the development of an "American identity."

Coffee has played a unique role in Rwanda's development. For decades, coffee has been Rwanda's top export and chief source of foreign exchange. (3) Thousands of Rwandans have been involved in coffee's cultivation and sale. In the twenty-first century, the industry continues to provide a livelihood for some 500,000 Rwandan families, (4) many of whom work in cooperatives and grow coffee on small plots on the country's hillsides. (5)

Over the past decade, the coffee sector has been transformed from a highly controlled, politicized industry to one that is liberalized and quickly developing a prized niche product: specialty coffee. Rwandans have successfully built a reputation for quality that buyers in the U.S., Europe, and Asia recognize. These changes are translating into increased income and greater economic empowerment for some Rwandan farmers. (6)

In addition to improving incomes, the liberalized coffee sector increases opportunities for commercial cooperation among Hums and Tutsis. Smallholders are now free to sell their coffee on world markets at prices they negotiate, creating incentives to form cooperatives in order to benefit from economies of scale. (7) Because smallholders retain profits from coffee sales, they also have incentives to work together to improve the quality of their product. And because coffee in Rwanda is grown by smallholders, who make up the vast majority of the population (90%) (8), liberalized coffee policies have the potential to benefit many Rwandans--Hums as well as Tutsis.

Rwanda's coffee liberalization, therefore, is likely different from liberalizations that benefit elites (such as Russian privatizations or Kenya land titling reforms). (9) It is, to date, an inclusive reform with positive distributional effects. Because coffee-sector liberalization has raised income, rather than costs, for the rural poor, this liberalization is less likely to promote conflict than liberalizations where costs are spread widely (such as the removal of subsidies) and benefits are narrowly concentrated (such as many privatizations). (10) We note that this is an issue that requires further research. (11)

Journalistic evidence suggests that commercial cooperation exists among Hum and Tutsi members of coffee cooperatives and that this cooperation may contribute to informal reconciliation. (12) In June 2008, we sponsored and participated in exploratory survey work in Rwanda to investigate this issue. Over ten days, 235 smallholder farmers and employees at coffee washing stations completed surveys regarding their attitudes toward reconciliation, among other issues. (13) Results from these surveys are encouraging, if not dispositive: membership in a coffee cooperative, as well as longer-term association with a coffee washing station, and economic and general life satisfaction are significantly correlated to positive attitudes towards reconciliation. (14) Farmers we surveyed reported an increased willingness to engage in socially inclusive behavior today in comparison to the past. Members of cooperatives were less likely to report high distrust than workers not associated with a cooperative. With respect to material prosperity, farmers are earning more for their coffee beans today than they were in the past and are reporting greater economic satisfaction compared to five years ago. (15)