Published: Wed, Feb 13, 2013
Type: Case study

Investment from multinational companies, their tax contributions and the broader economic value that they generate is important for economies in developing countries – to create jobs, provide funding for infrastructure improvements and support a wide range of businesses up and down the value chain.

In order to better understand their impact, SABMiller commissioned an independent academic report by Professor Ethan Kapstein of INSEAD. He looked at the role that SABMiller’s businesses play in sub-Saharan Africa (excluding South Africa).

The objective of this study was to quantify the company’s socio-economic impacts in order to enable management, government and other stakeholders to:

  • Analyze the broader socio-economic impact of the company’s decisions;
  • Engage in dialogue about corporate and government policies based on facts derived from corporate data and official statistics.

An economic model that makes use of input-output analysis was therefore developed. Input-Output analysis considers inter-industry relations in an economy, depicting how the output of one industry flows toward another industry where it serves as an input. By examining a country’s input-output table, analysts gain a clearer idea of what resources are being used for what purposes, and how much value added is generated through the production of goods and services.

The Social Accounting Matrix (or SAM) that is related to the Input-Output tables, in turn, examines the national accounts in a more disaggregated fashion to determine how incomes and employment are distributed among different industries, regions, social groups, and households. The SAM represents flows of all economic transactions that take place within the economy studied. It is a statistical and static representation of the economic and social structure.

Some of the key findings include:

  • In Ghana, SABMiller directly employs 850 people, supporting 17,600 jobs and generates US$117 million of added value for the economy.
  • In Mozambique SABMiller contributes $106.4 million of economy-wide tax income and supports at least 73,100 jobs throughout the economy.
  • In Uganda, where they source extensively from local farmers, each SABMiller job supports over 200 local jobs. The company’s subsidiary Niles Breweries contributes substantially to the tax income of Uganda with US$ 78.8 million economy-wide tax income, equal to 4.2% of total Ugandan tax income.

Based on this work, SABMiller created a 2 minute animation, illustrating the role they play in sub-Saharan Africa.

Writing for the company’s blog, Hloni Matsela, Corporate Affairs Director SABMiller Africa, and Operations Director Botswana, Lesotho and Swaziland, argues that “these numbers are important – by understanding where and how we impact on communities and economies, we can ensure that our investments and supply chains maximise the wider potential advantages. This enables us to ensure that the success of our business benefits as many people as possible.”

Investment from multinational companies, their tax contributions and the broader economic value that they generate is important for economies in developing countries – to create jobs, provide funding for infrastructure improvements and support a wide range of businesses up and down the value chain.

In order to better understand their impact, SABMiller commissioned an independent academic report by Professor Ethan Kapstein of INSEAD. He looked at the role that SABMiller’s businesses play in sub-Saharan Africa (excluding South Africa).

The objective of this study was to quantify the company’s socio-economic impacts in order to enable management, government and other stakeholders to:

  • Analyze the broader socio-economic impact of the company’s decisions;
  • Engage in dialogue about corporate and government policies based on facts derived from corporate data and official statistics.

An economic model that makes use of input-output analysis was therefore developed. Input-Output analysis considers inter-industry relations in an economy, depicting how the output of one industry flows toward another industry where it serves as an input. By examining a country’s input-output table, analysts gain a clearer idea of what resources are being used for what purposes, and how much value added is generated through the production of goods and services.

The Social Accounting Matrix (or SAM) that is related to the Input-Output tables, in turn, examines the national accounts in a more disaggregated fashion to determine how incomes and employment are distributed among different industries, regions, social groups, and households. The SAM represents flows of all economic transactions that take place within the economy studied. It is a statistical and static representation of the economic and social structure.

Some of the key findings include:

  • In Ghana, SABMiller directly employs 850 people, supporting 17,600 jobs and generates US$117 million of added value for the economy.
  • In Mozambique SABMiller contributes $106.4 million of economy-wide tax income and supports at least 73,100 jobs throughout the economy.
  • In Uganda, where they source extensively from local farmers, each SABMiller job supports over 200 local jobs. The company’s subsidiary Niles Breweries contributes substantially to the tax income of Uganda with US$ 78.8 million economy-wide tax income, equal to 4.2% of total Ugandan tax income.