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Sata wins, changes for China

Long-time opposition leader Michael Sata, was elected President of Zambia last week after elections generally judged to have been free and fair. While the focus has been on the implications for relations with China, it is important to first note that this was only the second incidence of a democratic transition of power in Africa. It is a great achievement for Zambia and a positive sign for democracy on the continent. It is also worth noting that Africa’s two newest middle income countries -Zambia and Ghana – are also the two to have enjoyed democratic transition.

Sata was made famous by his anti-Chinese campaign in the lead up to the 2006 elections, and therefore people seem to have focused upon this as the basis for the 2011 campaign (the UK’s Daily Telegraph newspaper had the headline, ‘Zambian election a referendum on China’). However Sata’s stance on China has been less extreme in this campaign, focusing instead on redistribution of wealth. Sata has been adept at finding the message that chimes best with the people, and this time round he did not stress the anti-China stance. And since winning the election he has played down his distaste for Beijing. Chinese Ambassador to Zambia Zhou Yuxiao was the first diplomat to meet President Sata, on his first day in office at State House. It will be interesting to see how Ambassador Zhou deals with Sata’s ties to Taiwan, which Sata looks unlikely to give up.

The changeover from the free market orientated former president Rupiah Banda has been met with suspicion by the markets. Zambia’s kwacha fell to a 12-month low of 5030 against the dollar on Friday. The Zambian economy has been growing impressively, 7.6% in 2010 on the back of a strong mining sector. Sata is unlikely to make any move which would jeopardise his chief source of income, in which Chinese companies are key players. While some commentators expect a hard line on Chinese interests, since his election Sata has made reasonable demands of employment and local benefits, while also making it clear that he is pro-business and investment from China.

Unrest among Zambians has been growing due to the poor labour practices employed by Chinese enterprises and the increasing numbers of Chinese immigrants taking up low paid jobs in all sectors of the economy. The rise of Sata over the past six years has caused large Chinese companies to take note, with Non-Ferrous Metal Industries Corporation subsidiary NFCA- owner of the Chambishi mine- launching a Corporate Social Responsibility Plan in 2007. In contrast the shooting this year at the Collum coal mine was perpetrated by a foreman at a small family run Chinese firm, with little interest in working conditions or the communities they are a part of.

NFCA is a large state owned Chinese firm and therefore has both the awareness and the capacity to deliver programs to repair roads, donate stationery to Chambishi school children, support the women’s empowerment plan, and participate in Malaria and HIV/AIDS campaigns, much like a western multinational. These mature corporate practices will likely protect them from Sata’s attacks. However smaller operators and petty traders are likely to find themselves under pressure now Sata is in power. While some operators will not be missed it is important that Sata’s party, the Patriotic Front, find some way to create a smooth transition. Many Chinese SMEs fill important gaps in the market, and expulsion could create gaps in supply as well as ugly scenes of forced eviction.

As I’ve argued before on this blog the majority of the complaints against China’s role in Africa have been directed at cowboy operators, rather than big state owned enterprises. These small scale operators have existed in an almost unregulated space, evading local regulations through corruption, and not being held to account by Beijing. In the past Beijing has ignored the transgressions of these unconnected players, but the association of these players with China as a whole (the perception of a China Inc.) has been shown to create a serious risk for Chinese strategic interests. One possible outcome of this election will be that Beijing takes a greater interest in the lower reaches of China Inc., helping African countries to better regulate Chinese immigration and poor practices. For Beijing, resource security comes first. The election of Sata will demonstrate to Chinese policy makers that regulating the small players matters.

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