Regulating Foreign Direct Investments in Resource-Dependent African Countries: The case of Chinese Investments in Zambia’s Copper Mining Sector

Abstract

Several studies have examined the diverse social, economic and political impacts of Chinese investments on African countries. While some studies argue that Chinese investments has positively impacted on these countries, others claim that it has led to the weakening of local regulations and local industries. Throughout many aspects of this debate, scholars and commentators tend to consider African actors and agents as passive objects shaped by Chinese investments, often neglecting the subtle ways in which local actors and institutions interact with Chinese investments to both resist and shape various outcomes. This thesis addresses this oversight in the specific context of safety and environmental regulations of Chinese investments in Zambia’s copper mining sector.

The thesis adopts a political economy approach, which contends that host country actors and institutions both resist and cooperate with foreign companies to shape investments practices. In particular, some local actors have responded to Foreign Direct investments (FDI) by re-vamping domestic institutions to counter more effectively the negative impact of FDI. I use this approach to examine how local actors have responded to events and practices involving two Chinese mining companies operating in Zambia. My analysis and findings draw on over six month’s field work in Zambia during which time I conducted 69 interviews, and extensive desk-based research. The thesis demonstrates that, at least partly due to pressure from local actors—unions, bureaucrats and elected government officials – both Chinese mining companies improved their regulatory standards: one being pressured to adopt substantial improvements in its safety regulations and practices, and the second compensating victims of pollution and installing emissions monitoring devices. In addition, the Zambian government increased funding to regulatory agencies and re-structured safety and environmental regulations in the mining sector. It also introduced new laws and measures that increased the power of mining regulatory officials and enabled local community members to take legal action against mining companies for compensation due to damages caused by the mines. While most analyses of the impact of FDI on Zambia focuses on State-Business relations, I look beyond this dyadic relationship to argue that diverse actors and factors have shaped and influenced regulatory processes and outcomes in subtle ways. Any comprehensive analysis of the impact of Chinese FDI on Zambia needs to factor in the roles played by these diverse actors.