endowments thanks to higher investments in productivity-enhancing technological and process improvements, diversification away from maize, and ability to tap into global value chains and export markets. Formal agricultural firms’ strong performance also underscores the potential for increased commercialization and adoption of improved technology to drive jobs and economic transformation in Zambia despite the headwinds to overall agricultural productivity growth highlighted in World Bank (2024). Nevertheless, formal agricultural firms account for an as yet marginal portion of the total agricultural labor force (only an estimated 119,000 workers). In general, large-scale commercialized farms—of which the firms in the CIT database are a subset—only farm about 0.7 percent of Zambia total cropped area and represent less than 0.08 percent of all farming entities, highlighting the scale of both the potential opportunity and need to drive increased commercialization (World Bank 2024).

At the same time, the analyses also highlight key climate change-related vulnerabilities faced by formal agricultural firms—as well as farmers in Zambia write large—that drive significant year-on-year volatility. A notable exception to the general upward trend in labor productivity was a sharp drop in 2016 (see Figure 24). This sudden deterioration was driven by an intense drought in 2015-2016, attributable to El Niño and climate change, which translated into steep within-firm productivity declines (Alfani, et al. 2019). Looking forward, climate change is likely to exacerbate the likelihood and intensity of such extreme climactic shocks, highlighting the need to increase resilience of the sector (Thorton and Lipper 2014). Interestingly, although the impact of the 2015-2016 drought is evident in the data, there is no similarly steep drop in productivity in 2019, when Zambia experienced another drought. Formal agricultural firms’ relatively strong performance it attributable to the 2019 drought being relatively less intense and the relative concentration of large commercial farms in the Copperbelt and Easter provinces, which were less affected by drought.

Figure 23. Cumulative change in weighted average log labor productivity, 2014-2021 (agriculture, forestry, and fishing; constant 2010 prices) <!-- Start of picture text --> 1<br>0.8<br>0.6<br>0.4<br>0.2<br>0<br>-0.2<br>-0.4<br>2014 2015 2016 2017 2018 2019 2020 2021<br>Within-firm Between-firm Entry* Exit* Total<br>Log-changes<br><!-- End of picture text --> Note: Averages are weighted by firms’ share of labor. Source: World Bank and ZRA staff calculations based on CIT database <!-- Start of picture text --> Figure 24. Annual change in weighted average log<br>labor productivity, 2014-2021 (agriculture, forestry,<br>and fishing; constant 2010 prices)<br>0.50<br>0.40<br>0.30<br>0.20<br>0.10<br>0.00<br>-0.10<br>-0.20<br>-0.30<br>-0.40<br>-0.50<br>2015 2016 2017 2018 2019 2020 2021<br>Within-firm Between-firm Structural transformation Entry* Exit*<br>Note: Averages are weighted by firms’ share of labor.<br>Source: World Bank and ZRA staff calculations based on CIT<br>database<br>Log-changes<br><!-- End of picture text -->

# 4.3.3. Productivity trends in mining

As with agriculture, forestry, and fishing, the mining and quarrying sector has also avoided the secular labor productivity declines seen in other sectors, but it has been subject to even more extreme year-toyear volatility. Overall average labor productivity levels among formal mining and quarrying firms for 2021 14