Regulating Foreign Direct Investments in Resource-Dependent African Countries: The case of Chinese Investments in Zambia’s Copper Mining Sector Beyongo Mukete Dynamic A thesis submitted for the degree of Doctor of Philosophy of The Australian National University. June 2018 © Copyright by Beyongo Mukete Dynamic 2018 All Rights Reserved 0 1 Acknowledgement I owe sincere gratitude to several people, without whom, I would never have completed this thesis. I would like to thank my supervisor, Associate Professor Jane Golley, for her time as well as the inspiration and motivation she gave me throughout this project. Jane always pushed me to do something better in the next version of my Chapters. She read all my draft Chapters thoroughly and made extensive comments. This has not only improved my research ability, but her comments have taught me to go more deeply into topics and focus on my written expression. She was immensely supportive and opened my eyes to countless essential details. I also want to thank other members of my supervisory panel who read and commented on this work, most notably Margaret O’Callaghan, Dr Graeme Smith and 2 Dr Jolyon Ford. Margaret helped me to meet several people in Zambia, and these contacts made my fieldwork a success. She also commented extensively on my Chapters and helped me to know more about Zambia. I deeply appreciate Graeme’s and Joylon’s feedback and support during the later stages of completing the thesis. I am grateful to the Australian Centre on China in the World for their support to the study. My appreciation goes to the professional and administrative staff at the Centre, especially to Jasmine Lin and Merrilyn Fitzpatrick. Caroline Stevenson helped read the thesis, provided suggestions and made extensive comments, which have helped to make the thesis more concise. I also benefited from the several discussions and seminars held at Centre. The study also benefitted from discussion and exchanges with other PhD students and scholars at the across the Australian National University. My most beautiful experience as a PhD student came during my fieldwork in Zambia. Meeting and speaking with Zambians, combing through files at Mines Safety Department in Kitwe and ZCCM’s Archive in Ndola, made me to develop deep love for Zambia, passion for my topic, and value of mining to most Zambians. I would like to thank Dr Besa Bunda and his colleagues at the University of Zambia for hosting me, helping me to access sources at the mines, and connecting me with important informants in public agencies. I am deeply indebted to many people in Lusaka, Kitwe, Ndola, Chambishi, Kalulushi who took their time to support this project. Special thanks to Marja Hinfelaar, Rodrick Chabala, and dozens of interviewees who created time in their busy schedules to share their diverse views and experiences in the mines with me. I want to thank my close friends in Canberra, Princwill Mengot, Kpudzeka Maxime and Nyingmah Moses. Our weekend meetings helped me withstand the challenges of doing a PhD 15,000 kilometres from home. Most importantly, my deepest gratitude goes to my best friend and partner, Modeste Bongyi, who kept encouraging me in many ways and supported me throughout this project. During this time, Modeste 3 gave birth to our beautiful daughter, Berinyuy Beyongo. I also want to thank Mr Aunt, Martha Biongo for her tenderness and advice throughout the project. Special thanks to my wonderful mother, who inspired me to take this journey. She told me at an earlier age that I will make a good professor. I shared that dream, and years later took on this challenging and beautiful task. 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. 4 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. 5 Table of contents Declaration .......................................................... Error! Bookmark not defined. Acknowledgement................................................................................................. 2 Abstract ................................................................................................................. 4 Table of contents ................................................................................................... 6 Introduction ........................................................................................................... 8 Chapter 1. Zambia and the rise of Chinese investments .................................. 17 I. Introduction .......................................................................................................... 17 II. The Rise of Chinese investments in Copper-rich Zambia .................................. 17 III. Introducing the diverse players involved in the monitoring and enforcement of Safety and Environmental Regulations in Zambia. ..................................................... 29 Chapter 2. Debates on the Impact of Foreign Direct Invetsment on Regulatory Outcomes in Africa: The case of Chinese investments in Zambia ................................ 33 I. Introduction .......................................................................................................... 33 II. State-Business Relations and Regulatory Processes ............................................ 36 b. “The Capture” theory and the “Race to the Bottom” hypothesis ......................... 37 c. Chinese investors in “neopatrimonial states”: A boon to weak regulations? ...... 42 6 III. A Political Economy Approach to the study of Regulations ............................ 47 a) Bureaucrats and bureacuraies ........................................................................... 48 b) Democratic reforms, elections and decentralisation ......................................... 52 c) CSOs: Partners in the monitoring and enforcement of regulation ................... 55 d) Crises and Regulations: Do crises make any difference? ................................. 59 IV. Conclusion ........................................................................................................ 62 Chapter 3: Research Methods and Sources - the Zambian Experience .............. 66 I. Introduction .......................................................................................................... 66 II. Qualitative Case Study Method ........................................................................... 68 a. The Case Study Method ................................................................................... 68 b. Sample Selection .............................................................................................. 71 III. Data Collection ................................................................................................. 73 a. Interviews ......................................................................................................... 73 b. Documents ........................................................................................................ 75 IV. Data analysis ..................................................................................................... 76 a. From