Labour Productivity Performance of Small Agro-Processing Firms in Mbeya and Morogoro, Tanzania

Abstract

This paper examines human capital factors affecting labour productivity in small agro-processing firms. Labour productivity is a measure of a firm’s efficiency that is affected by different factors, among them includes human capital factors represented by education, experience, and training. A survey of 107 agro-processing firms was conducted in Mbeya and Morogoro Regions, Tanzania. Descriptive statistics and regression analysis was employed in estimating the effect of factors on labour productivity. Results show that the trend of labour productivity among different types of small agro-processing firms varies.  Animal feed, cooking oil and milling firms tend to have higher labour productivity than bakeries and milk processing firms. Moreover, the experience of workers, education of managers and female managers has a positive effect on labour productivity in small agro-processing firms. Contrary to expectations, the number of workers with education above standard seven has a negative effect on labour productivity. Through these findings the study recommends investment in physical and human capital factors for the growth of labour productivity and employment creation.

Key words: Labour productivity, Small Agro-processing firms, Tanzania