THE CONTRIBUTION OF OFF-FARM AND ON-FARM INVESTMENT ON THE WEALTH STATUS OF THE ENTREPRENEURS: EVIDENCE FROM MBEYA DISTRICT, TANZANIA

Abstract

The level of investment and the ultimate contribution to wealth enhancement at the individual level vary
according to the type of investment. This paper analyzes the contribution of off-farm and on-farm investment on the
overall wealth status of the entrepreneurs with the aim of finding out the contribution of the two categories of enterprises
on income generation and employment creation. Variables such as enterprise returns, education level, household size,
experience in business, age and sex of the respondent were included in the analysis. Quantitative evidences were obtained
via the Ordinary Least Square (OLS) regression method. The findings reveal that off-farm operators have more wealth
than the on-farm operatorsat P<0.001 level of significance; the difference is attributed to the fact that off-farm
investments entail goods that have relatively inelastic demand where an increase in price may not affect their
consumption. The study concurs with the micro economic theories of demand and supply that support the fact that goods
with inelastic demand respond slowly to price elasticity compared to those with elastic demand. The study recommends
allocation of resources into the construction of proper means of transport to create market opportunities for on-farm and
off-farm enterprises and to allow investments currently dominating in urban localities to find their way into rural areas.