Analyzing the Effects of Trade Incentives on the Cost Structure and Employment Levels in Manufacturing Firms in Kabwe, Zambia

This study analysed the effects of trade incentives on the cost structure and employment levels of manufacturing firms in Kabwe. Despite the government being generous with trade incentives, there seems to be slower-than-expected growth of the manufacturing sector. A mixed-methods approach was used, involving surveys, interviews, and desk reviews; cluster sampling was used with a sample size of 32 firms. The results showed that 56% of firms responded that trade incentives had a positive effect on cost structure, while 44% responded that they had no effect. This led to the conclusion that trade incentives had an effect on cost structure, although the impact varied with the size of firms; larger firms benefited more from trade incentives than smaller firms (ANOVA: F = 9.16, p = 0.0050). Regression showed a significant positive effect on cost structure for firms that received trade incentives (coefficient = 0.5000, p = 0.0050, R2 = 0.234). On the other hand, results on the relationship between trade incentives and employment levels showed that 59% of firms indicated that trade incentives had a positive effect on employment levels, while 41% indicated that they had no effect. Trade incentives had an impact on employment levels (ANOVA: F = 11.53, p = 0.0019). Regression showed a significant positive effect on firms’ employment levels that received trade incentives (coefficient = 0.4983, p = 0.0019, R2 = 0.278). The study concluded that while these trade incentives help manufacturing firms perform, there is a challenge arising from policy inefficiencies. The study recommends that the Government should expand, simplify, and streamline the process of accessing and utilizing these incentives