Paper short abstract:

The paper considers potential spillover effects of Chinese FDI in Zambia. We verify the hypothesis whether the Zambian governments succeeded in creating adequate political and institutional environment to enable local companies to utilise benefits from the Chinese FDI.

Paper long abstract:

In 2018 Zambia was announced the first Chinese colony in Africa. Chinese policy towards Zambia was described as a "debt trap diplomacy", aimed rather at gaining control over the country's critical infrastructure than supporting Zambia's development. As for today there are over 500 Chinse companies operating in Zambia and according to Xinhua Chinese investments in Zambia reached $4 billion. In 2011, when Patriotic Front came to power, partly on the wave of anti-Chinese sentiments, Michael Sata was repeatedly saying that the previous governments had not made clear what obligations Chinese FDI should meet. In most cases, the FDI bring positive and negative (both direct and indirect) effects for the hosting economy. The magnitude of positive results depends strongly on the polices introduced by the local government to reap the benefits of the inflowing FDI.

This article has two major objectives. Firstly, we provide an updated profile of the Chinese FDI in Zambia. Secondly, we present preliminary findings from the desk research and field study in Zambia and verify the hypothesis whether the Zambian governments succeeded in creating adequate political and institutional environment to enable local companies to utilise benefits from the Chinese FDI.