This research presents an improved design and modelling of the backhoe arm of the backhoe loader. It entails finite element analysis (FEA) and material based optimization of the backhoe arm, aimed at improving the loading capacity of the bucket of the backhoe arm while decreasing its digging forces. The stress analysis of the boom, arm and bucket of the backhoe were done by the use of ANSYS after which the backhoe arm was modelled with the use of SOLIDWORKS, a CAD software. The results obtained showed a breaking force of the bucket as 30.34 kN and a curling force of the arm as 29.34 KN, both about 43% reduction compared to the values of 71.00 KN and 64 KN respectively, obtained by the conventional backhoe loader. The results further showed an improved bucket volume capacity leading to an increase in the number of teeth of the backhoe as opposed to the number used in conventional backhoe loaders. It was thus recommended that the number of the backhoe bucket teeth should be increased with a reduced diameter to minimise friction losses during digging while the backhoe arm should be re-designed to absorb and reduce to the bearest minimum, the vibrations produced during its working cycle.