China in Zambia: from comrades to capitalists?

Zambians seek work at the NFC African Mining PLC

It was a scorching day in March 2008. Job seeker Glorence Kandeke, 24, waited anxiously outside a Chinese copper mining company in Chambishi, northern Zambia, in a slim hope of obtaining employment at the NFC African Mining PLC (NFCA).

“I have been travelling about 45km everyday over the past three months for a possible job with the NFCA,” said Kandeke. He said his parents had funded his $5 daily fare to come here. The cost amounts to 15% of the minimum monthly wage for Zambians which stands at 268,800 Kwacha, or $77.

“I don’t know when I will get a job from the NFCA, nor how long my family can support me by paying my fare everyday,” sighed Kandeke.

Kandeke is joined by nearly 75 others everyday who vie for a position in the Chinese company.

“The Chinese said they offer 5 new jobs every day, but nothing lucky has happened to me in the past few months,” Kandeke said.

There are thousands of workers like Kandeke who seek employment in the special economic zone in the Copperbelt. But for those who obtain jobs within Chinese companies, there is an increasing concern that their safety is being compromised and they are being financially exploited.

Chinese investment in Zambia is dwarfed by those of US and European countries, and even some Asian countries. However, China is hailed as an increasingly important investor in this southern African country; a nation which has an unemployment rate as high as 70%.

“Chinese investment in the Zambian mining sector is showing very positive trends,” said Mr. Lennard Nkhata, permanent secretary of the Ministry of Mines and Minerals Development.

Instead of responding directly to criticism by the West over China’s negligence of labor laws, poor environmental record and lack of contribution to the communities of Africa, Mr. Nkhata spoke more positively of China’s role in his country.

“Chinese compliance to health and safety regulations has improved tremendously over the years and the environmental performance of the companies is acceptable so far,” he said. However, he mentioned no specific figures.

The Chambishi NFCA mine, which is running on Chinese technology, is the only large-scale underground mine which has not recorded a fatal accident since October 2006. Mr. Nkahat cited this as an example to show the safety record in Chinese facilities.

Zambia has placed the battle against poverty at the top of its agenda and expects to achieve an economic boom through the mining industry. A new tax regime, it believes, will help achieve this. This measure is due to take effect from April 1, with the Loyalty Tax rising to 3% and the company tax up to 30%.

“Thanks to the huge demand for copper in both China and India, Zambia is enjoying a booming mineral industry,” Mr. Nkahat said.

In 2007, Sino-Zambian bilateral trade stood at $595 million, up nearly 60% from 2006. The figure included $397 million of exports to China from Zambia, most of which were copper.

The permanent secretary said that the increased output resulting from Chinese investment had the potential to bring about an economic boom in Zambia.

It has been widely acknowledged that Chinese investment in Zambia is highly protected by the government.

Zambia’s Environmental Council Senior Communication officer Justin Mukosa said: “We do not want to separate Chinese investment from other investment, and we judge overseas investors by performance.”

And he criticized those who talked down China, saying: “singling out Chinese companies is a political issue more than an environmental one. ”

The Citizens for a Better Environment (CBE), Zambia’s largest environmental NGO based in Kitwe, confirmed that there are no more citizen complaints about Chinese mining companies than other investors.

In fact, there have been serious environmental incidents caused by other countries’ mining firms. Earlier this year, the Mopani Copper Mine, partly owned by a Swiss company, was blamed for polluting water supplies in Mufulira town.

The Zambian Development Agency will soon issue a list of industries into which overseas investment is sought, in a bid to boost national development, the agency’s Investment Promotion Manager Jessica Mwiinga Chombo said. Mining and hydro-electric industries are included on the list, but Ms Chombo failed to elaborate further.

“No discrimination exists between local and foreign investors,” she said, but added that “Zambia expects investors to create jobs and transfer technology and skills for the locals.”

The $220 million Chambishi Copper Smelter （CCS）Ltd, which is under construction in Kitwe, stands as a good example to show how China is fulfilling its commitment in assisting local development.

The smelter is scheduled to go into operation by the end of this year, with an output of 150,000 tonnes of crude copper per year.

Copper ore, as it is extracted from the ground, has a very small copper content. After the first industrial processes, concentration copper is produced with a copper content of around 40%. Smelters turn this into crude copper which is 99% pure.

Building smelters not only reduces outsourcing but also helps increase Zambia’s exports of added-value products, so says Deng Yun, vice director of the smelter’s Administration Department. New smelters will also help create new job opportunities.

“All the crude copper from the new Chambishi smelter will be shipped to China,” Deng Yun said. The smelter is expected to boost Zambia’s exports by $450 million.

“The company will also provide over 1,500 jobs for local people,” said Yun, “There are now about 400 working Chinese and 600 Zambians to build the smelter, and after it goes operational, the number of Chinese workers will decrease to 100,” he explained.

However, Chinese investors are expected to contribute more to Zambia’s society and meet ever higher expectations of Zambians.

John Lungu, economics professor at the Copperbelt University in Kitwe, has called for increased local partnership of Chinese businesses in Zambia to ensure a fairer deal. He also argued that the Sino-Zambian Economic Zone, where both the NFCA and CCS are located, should create not only jobs, but also well-paid jobs.

Professor Lungu’s view is echoed by that of union leaders and miners who often complain about unethical treatment and low wages in Chinese mining companies.

Chilufya Mukuka, head of the Safety Department of the India-funded Chambishi Metals Plc, said that miners working for Chinese companies receive about $70 per month. This is much less than an average of $400 paid by companies from other countries, said Mr Mukuka, who also represents a mine community in Chambishi.

However, Jingtao Liang, an engineer with the NFCA, dismissed the allegation, saying that pay for Zambians averages at $400, with the highest exceeding $3,000.

Though miners’ union leaders fail to give satisfactory explanation of this conflicting information, it is generally agreed that pay varies amongst different categories of jobs.

Standing outside the NFCA, job seeker Kandeke said: “Though the Chinese company pays less, it is better than nothing.”

Kandeke and his countrymen prefer to be employed by the NFCA rather than other foreign companies. They say they would rather work the 8 hours demanded of them by the NFCA than the 12 hours which is commonplace in other foreign companies.

Commenting on the low wages paid out by Chinese companies, Professor Lunga concludes that Chinese investors have transformed from “comrades” to “capitalists” in less than half a century.

His opinion forms a striking contrast to the position of his government which calls China a “genuine and all-weather friend” who is ready to help without preconditions.

Zambia established a diplomatic relationship with China within a week after its independence in 1964, becoming the first country in southern Africa to do so.

The Sino-Zambian friendship culminated in the building of the Tazara Railway which links landlocked Zambia with neighboring Tanzania in the 1970s. It had been the largest foreign-aid project ever undertaken by China. Since then, China has gradually increased its investment within the country. By 2007, China’s direct investment in Zambia had reached nearly $290 million.

However, China represents only a small portion of overseas investment, which Zambia relies on to transform its economy.

Zambia faces the challenge of balancing the interests of foreign investors with the welfare of its people. And solving the problems relating to Chinese companies are only the beginning, as Zambia tests its ability to achieve a balance.

Whilst trying to build up its economy, Zambia needs to introduce effective measures to help protect the well-being of its people and the environment.

Read other China-Africa articles:

Africa pivoted to setting its own agenda

China in Africa: a catalyst for change

Copyright World News Review 2008

For reproduction of the articles, please email: wdy21century@gmail.com

China in Africa: a catalyst for change

Chinese working at Chambishi Copper Smelter in Northern Zambia

Rich natural resources and huge markets have turned Africa into a magnet for global investors. Which policies should the continent adopt in order to maintain its attractiveness as a lucrative investment spot whilst achieving sustainable development? Dongying Wang investigates.

As globalization deepens and the interaction among economies increases, Africa has become a focus for the world. Africa's natural resources and opening up of new markets are attracting interest from global companies.

China, a latecomer to Africa, has joined other countries in exploration of the continent to fuel its economy. China's involvement in Africa covers a wide range, including agriculture, manufacturing, construction, telecommunication, resource extraction, energy and social welfare. However, China's increased engagement in Africa has caused concerns and even fear from other competitors. It has also drawn criticism from the West over its lack of business and political ethics whilst investing in Africa.

China has become one of Africa´s important partners for trade and economic cooperation over the past few years, although Africa still accounts for only 3% of China´s outward foreign direct investment (FDI). During the first half of 2008, China's direct investment in Africa stood at 305 million dollars, less than 480 million dollars recorded during the first half of 2007.

China still remains a small investor in Africa compared to some Asian countries, not to mention those from the West like the UK, the US and France, according to a 2007 UN report (pdf).

The Sino-African bilateral trade amounted to 53.1 billion dollars during the first half of 2008, as against the 73.3 billion US dollars for the whole year of 2007, according to a seminar on investment in Africa, held recently in Xiamen southeast China. Bilateral trade has seen more than a 30% rise annually since 2000. China has become Africa's 3rd largest trade partner after the EU and the US.

Xinhua, China's state news agency, has reported that Sino-African trade has contributed 20% to economic growth of Africa. Chinese officials have also said that Sino-African businesses, based on mutual benefits, have become an impetus to economic development in Africa.

There is no doubt that China has a long list of achievements in Africa. These include the training of tens of thousands of Africans, relieving debts, offering of medical assistance, and the building of hydro-electric power plants in some 50 African states. In addition they have helped build thousands of kilometers of roads and railways throughout many parts of the continent.

All these achievements have been reported repeatedly by Chinese media. The mantra being promoted is one of mutual benefits and profitable gains. This differs from the past when the message was one of just developing bilateral ties.

Nowdays, Chinese investors have transformed from “comrades” to “capitalists” in less than half a century, says John Lungu, economics professor at the Copperbelt University in Kitwe, Zambia.

Professor Lungu’s view is echoed by Parkie Mbozi, regional director of Panos Southern African based in Lusaka, Zambia. Panos is an NGO promoting the participation of poor and marginalised people in national and international development debates.

"China, like all others, is now in Africa for business. It wants to present itself as a country that will give aid without strings attached, yet in essence it wants business. Unfortunately, state capitalism can be worse than individual capitalism," said Mr. Mbozi.

It is arguable that there is nothing wrong for Chinese people to make profits by investing in Africa. However, criticism is laid upon China's lack of consideration to environmental concerns and labour welfare. Chinese companies are reportedly developing oil fields, mines and dams in areas that are geographically remote, politically unstable and ecologically fragile, often ignoring the environmental and human rights impacts of their investments.

In a phone interview, Uwe Wissenbach, coordinator for relations with Asian countries in Directorate General Development of the European Commission, says that most negative reports on China's involvement in Africa were initially conveyed by media, which sometimes exaggerate these negatives. More recently reporting provides a much more nuanced picture. Rather than giving his opinion on China's presence in Africa, Mr. Wissenbach looks at the issues from a different perspective.

Mr. Wissenbach agrees with the argument that China should not be singled out for these problems. He says that some western companies maybe doing more harm to Africa than Chinese companies. However, he is dismissive of China's excuses that its status of being a developing country justifies its failures in protecting the environment and improving standards of business.

In the West, companies face pressure from media, civil society and other pressure groups to behave themselves abroad, but Chinese companies do not have similar organizations to keep their overseas operation in check, he says.

Mr. Wissenbach also points out that apparently China's private companies fare much better in Africa as opposed to state-owned companies in efforts to help improve the lives of Africans, as they are more efficient and fit well into African communities. On the contrary, state-owned companies, which enjoy favourable policies and government projects, often fail to fit into the reality of Africa and thus contribute less to local society.

According to the Export-Import Bank of China, of more than 800 Chinese companies investing in Africa, some 100 are state-owned.

Refering to Zambia, which sees China as a "genuine and all-weather" friend, Panos regional head Mr. Mbozi says that he can see the possible transformation of the Zambian economy by Chinese investment through jobs offered by Chinese investors, and permanent infrastructure.

However, Mr. Mbozi holds reservations about the quality of jobs offered by Chinese companies, saying that "Unfortunately, so far Chinese investment has been seen in a bad light due to poor working conditions for workers and low investment in essential services in areas their companies operate. China has fared badly in comparison to companies owned by western investors."

"We hope that the economic zone announced by Chinese President Hu Jintao, when he visited the country in 2007, will be modeled along the lines of Western investment, namely good jobs, investment in social services, including roads, hospitals and schools, that benefit the local people. So far this hasn't happened save for a few cases," he says. The Zambia-China Economic and Trade Cooperation Zone was the first of its kind ever launched by China in Africa.

This African quest for higher standards and quality is possibly part of the reasons why Mr. Wissenbach does not think that Europe faces competition from China in Africa except in aid and infrastructure projects.

However, he acknowledges that as Africa has more business options on the table than before, the EU development policy in the continent does not work as it did previously. Therefore the EU has had to change its African strategy and "its patronizing way of looking at Africa."

"China is the catalyst and one of the factors among others to urge the EU to change their policies in Africa," he says. "Most importantly, changes are needed from Africa itself to formulate a policy and set their own agenda in the face of globalization."

However, Africa cannot do so without help. This is why Africa, the EU and China should cooperate through better understanding and information exchange to help the continent develop sustainably. Mr. Wissenbach and his colleagues face the challenge of building trust and cooperation between the three parties.

"Ideally, our tasks are to cooperate between African governments, the EU and China to set up standards, socially and environmentally, for investment and development in Africa", Mr. Wissenbach adds.

Asked about how overseas investors should help Africa, Mr. Mbozi says that "genuine support and investment" is what Africa needs.

"They should teach Africa how to fish but not give it fish, transfer technology to Africa, help Africa build its capacity to do its own business, support manufacturing of goods in Africa as opposed to treating Africa as a net exporter of raw materials," he elaborates.

"Overall, they should respect Africa's priorities, and African solutions to African problems, " says Mr. Mbozi.

Flooding overseas investment offers a golden opportunity for Africa to fight its poverty and climb upon the economic ladder. However, African states must learn to set the ground rules so they can develop without over exploitation of both their resources and people.

Read other China-Africa articles:

Africa pivoted to setting its own agenda

China in Zambia: from comrades to capitalists?

Copyright World News Review 2008

For reproduction of the articles, please email: wdy21century@gmail.com