Country Report Zambia May 2011

The political scene: Chinese managers accused of shooting miners are acquitted

In early April the two Chinese managers who shot and wounded 11 miners at the Collum coal mine in Southern province during a protest over pay (December 2010, The political scene) were acquitted. This followed the state prosecutor's decision to drop the charges against them, reportedly because witnesses could not be found to testify in the case. This was unsurprising: George Chisanga, the lawyer who represented the managers, was cited in the international press as saying that the government had brokered agreements with the wounded miners not to pursue the issue. Furthermore, the owners of the mine reportedly tripled miners' wages after the incident, and there is speculation that the compensation offer of ZK375m (US$79,620) to the victims of the shooting was linked to the condition that managers be exempt from trial.

The acquittal will entrench longstanding concerns that the government is not willing to rise to the task of regulating Chinese investors. This applies to the broader issues of pay, safety standards and working conditions at Chinese-owned mines and factories, which are widely considered to be unsatisfactory. The government's reluctance to enforce higher standards reflects the difficulties of regulating investors with a large financial presence-a phenomenon that extends well beyond Zambia. China is now the largest source of foreign direct investment (FDI) to Zambia and is the only major source of investment to the country other than South Africa. Chinese firms have large stakes in the mining and manufacturing sector, and Zambia's first Multi Facility Economic Zone, Chambishi, has been developed by a Chinese company. Furthermore, China has emerged as a major investor in the power sector: Chinese firms have a 65% stake in the US$1.5bn, 600-mw Kafue Gorge Lower project, which is expected to come on stream in 2017, and China's Exim Bank is financing roughly 70% of the 360-mw Kariba North Bank expansion. Together, these projects are expected to raise Zambia's total power-generation capacity by over 50%.

The acquittal will also have stoked discontent with the ruling Movement for Multiparty Democracy (MMD). However, this will have primarily affected better-informed urban Zambians and residents of Copperbelt province, where most Chinese-owned mines and factories are located. These groups already tend to support the opposition. The acquittal may also have damaged the MMD's popularity in Southern province, but this will have been restricted to the area where the mine is located. Its electoral implications will therefore be limited. Indeed, recent trends suggest that as long as the MMD can keep winning elections on the back of its rural support base-65% of Zambia's population is rural-the electoral impetus for improving standards at Chinese-owned firms will be weak.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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