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The Future of China in Zambia

Posted on the 30 September 2011 by Center For International Private Enterprise @CIPEglobal

The Future of China in Zambia

(photo: Copper smelter,

On September 20, 2011 Africa saw another successful democratic election take place. After three days of anxious vote counting it was announced on September 23 that opposition candidate Michael Sata had defeated incumbent Rupiah Banda for the Zambian presidency. Despite some instances of rioting and violence the election was deemed free and fair, and for the second time in Zambia’s history the ruling party changed democratically. In his farewell speech Banda courteously stated that, “…now it is time for me to step aside. Now is the time for a new leader. My time is done. It is time for me to say ‘good bye.’”

If ever there was a time to press for private sector development and market-oriented reform in Zambia, it is now. The 2011 Index of Economic Freedomacknowledges Zambia’s progress in certain policy and performance areas such as trade freedom and freedom from corruption, but the report also notes the lethargic state of private sector development in the country, notwithstanding the presence of thriving Chinese businesses.

One of Sata’s stated priorities is job creation, and he is known for his outspoken criticism of the preferential treatment that Banda’s Movement for Multiparty Democracy (MMD) party showed Chinese enterprises. In previous campaigns — this was his fourth time running for president — Sata vehemently opposed Chinese presence in Zambia. While he toned down his rhetoric during this last campaign, Sata and his Patriotic Front (PF) will surely be less accommodating towards China.  

China’s presence in Africa’s largest copper producing nation has increased tremendously over the past decade, and in 2010 China’s investment in Zambia exceeded $1 billion. Trade between the two nations reached $2.8 billion last year. In August of this year, Zambia became the first African country to open aBank of China branch where Chinese businessmen can do their banking exclusively in yuan, the Chinese currency. Of the six Special Economic Zones that China possesses in Africa, two are located in Zambia.

Although China revived Zambia’s ailing copper industry in 2009 after Western investors pulled out due to plummeting copper prices, China’s presence has come at a cost. Investment has not changed the lives of ordinary Zambians for the better, and many workers at Chinese-owned mines have reported poor working conditions and low pay. Complaints of labor law violations and Chinese corruption abound. During protests in 2006 and 2010 Chinese managers became violent against their employees.

For the 60% of Zambia’s 13 million people living below the poverty line, of which 37% live in extreme poverty according to the World Bank, Zambia’s impressive 7.6% growth rate in 2010 has meant little for improving living standards. Given the comments Sata made in his inaugural speech about the need for improved investor relations and his commitment to Zambian economic empowerment, all eyes will be watching to see how Sata and the PF handle the country’s relationship with China.

Building up the private sector creates jobs, and the laws and regulations that govern foreign trade and investment can either help or hinder this process. With Sino-Zambian relations in the limelight, the opportunity to engage in Zambian-driven private sector development and market-oriented reform must be seized. As a country moving in the right direction toward democratic consolidation, this success should be viewed as leverage to help gain the interest and confidence of international investors. Only time can tell what kind of president Sata will become and how effective the changes he institutes will be, but for now hopes are high.

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