Abstract:
Tax incentives are widely researched; however, the findings from the existing literature are
predominantly from the perspectives of developed countries, inferring that tax systems are
inundated with tax incentives which lead to ineffective tax revenue collection. As the tax
systems of developed and developing countries are vastly different, the exploration of tax
incentives as features of the tax systems in developing countries is required. The contribution
of this study lies in the uniqueness of exploring the tax incentive known as a local sourcing
initiative (LSI), which is encapsulated in the excise duty policies applicable to the brewing
industry in Africa. The following research question guides the study:
What are the economic and social impacts of the LSI in the brewing industry in Africa to
determine the relevance of such a tax incentive?
A mixed method, multiple case study research approach was followed to gather supporting
evidence in the pursuit of understanding the relevance of the LSI. Each case constitutes an
individual African country for which a quantitative and a qualitative method was applied. The
economic impact was determined using a quantitative analysis through a Social accounting
matrix multiplier model. The social impact analysis was conducted by means of a qualitative
document analysis. Methodological triangulation was conducted on each case study. The
research was concluded through a synthesis of the findings between the cases. From the research, it was confirmed that the LSI is relevant in the brewing industry in Africa
and that it has resulted in addressing the LSI objectives to some extent. However, challenges
such as poverty and limited economic growth and development persist. A final conclusion is
that tax incentives are relevant in developing countries.
