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Research Article

Effects of Corporate Tax Incentives on the Growth and Sustainability of Local Industries in Zambia: A Case Study of the Lusaka Multi-Facility Economic Zone (MFEZ)

Authors

  • Stallone Mudaala School of Humanities and Business, Information and Communications University, Lusaka, Zambia
  • Peter Silwimba Risk Department, National Savings and Credit Bank and School of Humanities and Business, Information and Communications University, Lusaka, Zambia https://orcid.org/0000-0001-6663-1866

    silwimbap47@gmail.com

Abstract

This study examined how corporate tax incentives impact local industry growth and sustainability, particularly through the Lusaka MFEZ. The study was motivated by the fact that despite Zambia being generous on tax incentives, there seem to be a slower than expected traction of investors in the formed economic zone. Therefore, the study sought to examine the effects of incentives on financial performance, growth, and technical investment among the investors in Zambia and those from outside including neighboring countries like Zimbabwe. The results showed that 88% of the firms established as investors there took advantage of incentives, but with delays (40%), bureaucracy, lack of information, and uncertain eligibility (20%) as the drawbacks to foster growth of investment. The incentives were of impact though but they also varied with the type of firms where it was revealed that technology-investing firms received more incentives than other types (F(1,50) = 4.12, p = 0.048). The run on regression showed slight but significant positive effects on revenue growth for the firms that received tax incentives (coefficient = 0.198, p = 0.016, R2 = 0.11). Increased growth after incentives was correlated with previous growth, indicating significant improvements measured at both t and Z tests. (t = -3.96, p = 0.0002; z =110, p = 0.000). Organizations focused on profitability (33.846%) and diversification (30.77%) for growth, and 84.62% invested in technology and focused on innovation incentives. The study concluded that while these tax incentives help investors performance and development, there is a challenge arising from limited administrative inefficiencies. The study recommends that performance-based incentives should be designed for high growth industries such as manufacturing, ICT, and renewable energy, at bench-marking level. Digital platforms, one-stop centers, and eligibility updates could modernize tax administration to combat bureaucratic delays. The government should improve on procedure efficiencies and should publicize the offers available to the local and foreign investors. 

Keywords:

Business Growth Corporate Tax Incentive Investment in Technology Machinery Revenue Growth

Article information

Journal

Journal of Economics, Business, and Commerce

Volume (Issue)

2(2), (2025)

Pages

350-360

Published

15-12-2025

How to Cite

Mudaala, S., & Silwimba, P. (2025). Effects of Corporate Tax Incentives on the Growth and Sustainability of Local Industries in Zambia: A Case Study of the Lusaka Multi-Facility Economic Zone (MFEZ). Journal of Economics, Business, and Commerce, 2(2), 350-360. https://doi.org/10.69739/jebc.v2i2.1121

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