If setcap is called inside pseudo context then it errors out.

"
The setcap utility supplied by libcap is used to set capabilities on a
file. Before setting a file's capabilities with cap_set_file() (which uses
setxattr()) it calls cap_set_flag(mycaps, CAP_EFFECTIVE, 1, &capflag,
CAP_SET). cap_set_flag() uses the capset syscall to raise the process'
effective capability. In most cases if the process isn't running as root
this will fail and setcap will exit with an error. Because setxattr is
intercepted by pseudo it's unnecessary for setcap to call capset().
"

https://lists.yoctoproject.org/pipermail/yocto/2016-May/029903.html has a patch.