Impact of China-Africa Investment Relations: The Case of Zambia
Impact of China-Africa Investment Relations: The Case of Zambia
Paper No. CCS 16, By Jolly Kamwanga and Grayson Koyi, November 2009
Abstract:
Chinese investments in Zambia are primarily resource seeking and have been concentrated in the mining sector. There are investments in construction, trading manufacturing sectors too. The growth of these investments has been steady over the year and indications are that they are likely to remain that way. Most of the Chinese firms operating in Zambia are state owned and/or are strongly supported by the Chinese state, which advantages them over other competitors. In Zambia, this has been buttressed by the opening of a Chinese bank to serve their firms. The Chinese businesses do not operate like conventional profit maximizing firms, often willing to provide concessions in order to gain access to markets. Some the practices include bidding at very low prices, settling for low profit margins, sourcing cheap inputs from China, and using fairly skilled Chinese workers. To the extent that the Chinese investigators are doing business in Zambia, they are contributing to the development of the country through the direct creation of employment opportunities for the whole population. However, others have contended that the type of jobs created are of low quality. The Chinese FDI contributions to Zambia notwithstanding, there has also been marked with widespread criticism. Commentators have observed noted the lax workplace practices in Chinese firms. The reported accidents in Chinese owned mines and strikes render credence to this observation. That one Chinese owned mine was actually closed amid safety concerns bears testimony to gravity of the situation. The discontent of workers employed in Chinese firms has had political ramifications, with the major opposition leader using this in his political campaigns during the 2001 general and 2008 presidential elections, which the incumbent political party almost lost. These ramifications have highlighted pitfalls of Chinese firm practices, and drawn attention to similar experiences in other African countries. In the light of these findings, recommendations are suggested with regard to: checking the risks to economic diversification; monitoring the working conditions in Chinese firm, managing the political ramification of investments, maximizing linkages with local suppliers, and protecting indigenous small scale businesses.
The entire article is available at the following link:
http://www.aercafrica.org/documents/china-africa-country-cases/Zambiainvestmentrelations.pdf
Source: African Economic Research Consortium http://www.aercafrica.orgImpact of China-Africa Aid Relations: A Case Study of Uganda An assessment of the Impact of China’s Investments in Sudan
Comments are currently closed.