The links between groundwater and welfare are highly contested, unclear and confounded by political, environmental and economic factors. The lack of understanding of these links has wider implication on policies and strategies aimed at accelerating the sustainable development goals of safely-managed drinking water services and eradicating poverty. This study provides empirical evidence of the existing links between groundwater and poverty using welfare metrics versus productive uses of water, groundwater table depth, drinking water services and groundwater dependency with data obtained from a household socio-economic survey (n = 3349), a water audit of water infrastructure (n = 570) and volumetric usage from water data transmitters (n = 300). Results show that the bottom welfare households are characterized by greater dependency on shallow groundwater, less acceptable drinking water services by taste, reliability, affordability or accessibility but not quantity. Productive use of groundwater for livestock accrues to the middle welfare quintiles with the bottom and top welfare quintiles by choice or exclusion having little engagement. Groundwater productive uses, services and characteristics explain at least 17% of the variation in a households' welfare with productive uses particularly benefiting female headed households. These findings suggest that ancillary investments to improve affordability and reliability of rural water services will be needed to enhance welfare of the poor who depend on groundwater systems. Further, such knowledge of the relationships between water and welfare can support the formulation of policies and strategies aimed at poverty reduction, inclusive growth and access to safe water for all.