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Foreign direct investments influence on local community – a blessing or a curse?

Foreign direct investments influence on local community - a blessing or a curse?

- Focus on Chinese, Indian, and South African investments in the Copperbelt area in Zambia

Author: Kirsten Andersen

External lecturer, Department of Entrepreneurship and Relationship Management, University of Southern Denmark, Sønderborg, Denmark

Contact: kan.andersen@hotmail.com

To cite this article: Kirsten Andersen (2019) Foreign direct investments influence on local community - a blessing or a curse? Focus on Chinese, Indian, and South African investments in the Copperbelt area in Zambia

Abstract

Purpose - This paper aims to investigate a deeper understanding of how FDI influence the local community and businesses.

Design/methodology/approach - The paper takes departure in a constructivist perspective and presents an inductive study based on primary data collection through individual semi structured interviews, participant observations, and secondary data analysis. The findings are discussed and related to existing literature within the research area.

Findings - After examining primary data, existing academic and popular literature it is found that the local community and business are both negatively and positively affected by FDI. The national government plays an important role in securing the conditions for a positive influence of FDI on the local community and businesses through legislation and monitoring.

Research limitations/implications - The primary research focuses on English speaking Zambian sources and literature written in English; access to further Chinese sources will improve the breadth of the study.

Keywords - China, India, South Africa, Zambia, Foreign direct investment (FDI), Local community, Local business, Mining, Retail, Contractors, Agriculture, Tourism, Working conditions

Paper type Original research

Acknowledgements

I want to take this opportunity to thank the BHJ Foundation for awarding me the BHJ Foundation's Teaching Prize 2017*. The award made this paper possible by covering the costs of the study in Zambia in July/August 2018.

*The award is given to the "Teacher of the year" lecturing at educations within in the specific area at University of Southern Denmark / Flensburg in this case social science.

Introduction

Zambia is known for its copper production and is the second largest copper producer in Africa. The copper mining is concentrated mainly in the Copperbelt and now also in the Solwezi area (Mining for Zambia, 2019). After 10 years of an average annual growth of 7.4 % the country achieved middle-income country status by 2011, but unfortunately the growth has slowed down to 3% by 2015 (The World Bank, 2019). Despite the growth very limited impact has been seen on the level of poverty and only a narrow segment of the urban population benefitted from the growth. Zambia still ranks among the countries with highest level of inequality globally and in 2015, 58% of the by then 16.6 million Zambians earn less than $1.90 equal to the international poverty line and 75% of them lived in rural areas.

Zambia is a target for foreign direct investment (FDI) especially in the copper industry. FDI averaged 206.34 USD Million from 1998 until 2018 and peaked in third quarter of 2012 at 1335.70 USD Million (Trading Economics 2019). It is therefore interesting to investigate how the country on a very local level is affected both related to the local community and the local business. If the FDI should benefit the local society it might have an influence how the people involved respond to and see the FDI.

In the current knowledge FDI in Zambia has been investigated mainly from a macro perspective but not from a local community and local business level perspective as viewed by the people directly affected. Therefore, this paper aims to investigate a deeper understanding of how FDI influence the local community and businesses and for this purpose the following research questions has been developed.

How does FDI influence the local community and business?

The research questions are supported by the following sub questions

How does the local community view the influence of the FDI in different industries?
How does the local business owners view the influence of the FDI in different industries?

Delimitations

To limit the study only the FDI related to the copper mining industry, the agricultural sector, the retail industry, the tourism industry, and the local community has been in focus.

Overview of research related to FDI in Zambia

Research related to FDI in general in Zambia

There is a positive correlation between the FDI in Zambia and the country's economic growth measured by GDP, therefore Zambia is recommended to attract FDI in general (Seyoum, 2015). Bartels et al (2014) states that it is important for a country to have a certain level of political stability and economic stability in order to attract FDI especially for market and efﬁciency-seeking Multinational Enterprises (MNEs). The Zambian state has since early 1990's liberalised its economy to some degree to become attractive to FDI at the same time the state in some ways neglected to secure domestic production capacities. The country offered economic incentives e.g. repatriating investments, tax incentives, duty free imports of supplies and capital equipment at the same time the Zambian government did not ask the foreign investors to link up with local producers. This has motivated Chinese companies to invest in all sectors of the Zambian economy, and increasingly control some of them e.g. Chinese companies constitute the majority of the most important segments of the Zambian construction sector (Kragelund, 2009b). These investments to a large extent resemble other foreign investments but the sheer size and growth of the investments trigger local reactions (ibid.). From the beginning, Chinese companies did not necessarily choose Zambia per se, but found that there was a lack of local and international competition combined with liberal investment and a supportive institutional set-up (Kragelund, 2009a). Hence, if Zambia is an interesting target for other foreign investors than the Chinese then these will benefit from supporting the Zambian host economy through further FDI and thereby benefit from the current upward trend in Chinese investments (ibid). Besides extensive Chinese investments, Indian FDI stands for a total of US$ 145.3 million from 2008-2017 which makes Zambia the fifth largest recipient of Indian FDI diversified into different sectors including copper mining (Chakrabarty, 2017).

The productivity spill-over effect of FDI varies according to Bwalya (2006). Bwalya's study shows that there is no significant intra-industry (horizontal) spill overs. But there are significant inter-industry (vertical) spill overs from foreign firms in upstream sectors to local firms in downstream sectors e.g. haulage contractors.

"Results indicate that productivity of local firms decreases as foreign presence in the sector increases, which may be an indication of adverse competition effects of inward FDI. The results also indicate that significant knowledge spill overs occur through backward linkages from foreign firms in upstream sectors to local firms in downstream sectors." (Bwalya 2006. P.525)

This is also supported by the study of Fessehaie and Morris (2013) where it is found that in contrast to traditional mining companies, the Chinese firms vertically integrate some non-core functions. This is barring local suppliers from some important supply links.

Research related to FDI in the copper mining sector in Zambia

A very resent study by Chikalipah (2019) motivated by the over-reliance of the Zambian economy on copper mining established a significant correlation between copper price movements and economic growth in Zambia. The over-dependence on copper exports as a principal foreign currency earner will result in lack of capital flow in times of low copper prices.

The research covering FDI in the mining sector in Zambia is extensive and mainly focus on the Chinese and Indian FDI (Chakrabarty, 2017; Haglund, 2008, 2009; Kragelund, 2009a, 2009b, 2012, 2017). According to Kragelund (2009b) and Fessehaie and Morris (2013) contradicting the popular perceptions, Chinese mining companies do not dominate the mining sector but are only a minor player in the production of copper concentrate. This study has later been contradicted by Kragelund and Carmody (2016) who state that Chinese FDI together with Indian FDI dominates the mining industry in Zambia. The FDI in the copper mining industry is characterised by limited linkages and spill overs to local businesses (ibid.).

Research shows that real conflicts deriving from different values and material interests mixed together with misperceptions and cultural differences creates a perception of Chinese people that have become the main image of Chinese people in Zambia (Van Bracht, 2012). This image is partly true and partly an exaggeration of stories and experiences (ibid). Companies globally have been attracted due to the increase in commodity prices. The increasing demand for copper in China, has led to massive Chinese investment in copper related activities, further questioning the description of dual nature of the Zambian economy. According to Crabtree (2008) the Chinese FDI in the copper mining area plays a different role. Despite investments in the mine and employment of miners Chinese FDI prefer to employ Chinese in other functions like management and administration. This leads to Zambian expertise not employed and that these workers consequently seek employment elsewhere sometimes abroad (ibid). Local content policies (LCPs) are aiming at extending the spill over and linkages to local business but according to Kragelund (2017) LCPs have not yet proved success.

Research related to FDI in the agricultural sector in Zambia

To minimize the over-dependence on copper exports it is recommended to extend economic diversification in Zambia and in this regard, agriculture can play a very important role. The country has extensive areas of vacant and fertile land and abundant water resources [over two-third of water bodies in Southern Africa are in Zambia] (Chikalipah, 2019). The government of Zambia strongly support FDI in the agricultural sector and have established a very ambitious program and amongst other initiatives e.g. 847,000 ha of land was allocated for the Farm Block program in the period from program implementation in 2004 and up 2013. The government seem to be convinced that large-scale (FDI) investment is one of the most effective paths to achieve economic development and poverty reduction (German et al., 2013). This study is supported by Busse et la (2016) who found that opposite FDI [unless the host country is setting up regulations] and aid, exports of both natural resources and especially other goods will enhance economic growth.

When looking at the market conditions study shows that about 75 % of fresh fruits and vegetables are sold via traditional channels like local markets and smaller family owned retails stores. 25 % are sold from supermarkets like Shoprite. Furthermore, the large supermarkets buy 60 % of the fruits and vegetables from local suppliers in this case mostly large-scale farmers since small-scale farmers supplied less than 5% to the supermarkets. Dairy products are also to a very high degree bought from producers processing milk from local dairy farmers (Emongor and Kirsten, 2006).

It is important not to scrutinize the conditions for small-scale farmers in the process of expanding the agricultural sector in Zambia, though Zambia is regarded as one of the most democratic and stable countries in Africa with high-end level of maintaining customary land rights (Schoneveld, 2017). It is still important to investment governance aiming at expanding the agricultural sector to maintain and establish legal framework to protect the small-scale farmers while taking into account the presence of the dynamics of underlying socio-political systems, the legitimizing of existing power and authority structures (ibid.) This is further emphasized by the cases of powerful individuals gaining from the land distribution on the costs of local land users therefore the government is advised by Nolte (2013) to take a stronger monitoring role.

Research related to FDI in the retail industry in Zambia

The neo-liberal evolution of Zambia brought in the shopping-malls mainly by South African retail multinationals seeking markets with attractive consumer segments like expatriates and Zambian elites (Miller et al, 2008). Mattoo and Payton (2007) found that FDI in the distribution sector e.g. via South African supermarket chains like Shoprite and Spar can lead to efficiency development in retail and result in better quality, more choices, and lower prices for the consumers. It also paves a path for upstream agricultural production if the local producers are able to supply the supermarkets (ibid.). According to Mattoo and Payton (2007) the small-scale producers are only able to benefit from this development through organizational assistance e.g. via farmers' cooperatives provided with technical and educational assistance from donor funded organizations or NGO's. This model has proven its potential effectiveness since groups of small-scale farmers have managed to supply some of these supermarkets (ibid.). Kragelund and Carmody (2016) later found that the South African FDI and Chinese transnational trading are capturing value through the sale of commodities since in some cases the majority of good sold are imported from South Africa and China.

Research related to FDI in the tourism industry in Zambia

Research in the dynamic relationship between FDI in tourism, tourism development, and economic growth is very limited. In Zambia the investments in tourism and especially hotels but also safari lodges are dominated by FDI especially by South African hotel chains or individuals (Kragelund and Carmody, 2016). A study by Odhiambo (2012) establishes the existence of tourism-based growth in Zambia this happens mainly through employment creation, rural and infrastructural development, and foreign currency earnings. Odhiambo's research (2012) therefore, supports the Zambian Government's initiatives aiming at boosting the tourism sector. Also, Makochekanwa (2013) states that tourism is important to economic activities in the SADC region included Zambia, since tourism by a 1% increase in tourism receipt is causing a 0.16% rise in GDP per capita. Furthermore a 1% rise in tourism related investment included FDI is causing a 0.29% increase in GDP per capita. The tourism sector in Zambia is mainly concentrated around the Livingstone area, South Luangwa National Park, and Kafue National Park and has marginally increased though the industry is faced with increasing competition from neighbouring countries Odhiambo (2012). Should the industry succeed in expanding, investments in infrastructure like airports, roads and communication facilities are needed (Chikalipah, 2019). Related to tourism industry, Zambia also has a unique opportunity of developing eco-tourism due to the presence of remote, pristine or unique environments, such as Kafue National Park, Liuwa Plains, Bang- weulu Swamps, Lochinvar National Park, Lake Kariba, Batoka Gorge, and Chimfunshi Wildlife Orphanage (Harlow and Pomfret, 2007; Odhiambo, 2012).

Research related to FDI influence on the local community

According to Figini and Görg (2011) wage inequality increases with FDI inward, but this pattern diminishes as FDI increases. Furthermore, FDI affects differently the wage distribution depending on the country's level of development and educational level of its workforce. A later study by Adams and Klobodu (2017) shows FDI has a moderate positive effect on income inequality but the effect of FDI disadvantages the poor or the economically weak in a society, this seems to be a result of the bid to attract FDI and the implementation of policies that decrease the bargaining power of labour, while enhancing the mobility of the economic elite. When FDI are allowed free access, the impact social and human capital depends on whether or not foreign investors' objectives align with those that will promote human development (Reiter and Steensma, 2010) Therefore, according to Adams and Klobodu (2017) some restrictions on FDI are needed to help protect a country's economy from financial turmoil hence appropriate policies need to be formulated and implemented to reduce the negative effects. It is crucial to maintain financial stability and macro sensible policy. To decrease the inequality of wages Kaulihowa and Adjasi (2018a) recommends investing in human capital to ensure the supply of skilled labour and thereby improve the distributional effects of FDI employing skilled and un-skilled labour. This will, combined with the spill over effect in terms of backward and forward linkages have potential to minimize the inequality of wages.

Environmental impact is another issue influencing the local community and research shows that the environmental impact of FDI into manufacturing affects negatively and increases pollution, as long as the country is poor (Doytch and Uctum, 2016). As the country gets wealthier the negative environmental effect minimized. FDI into agriculture and services have no negative impact on the environment but seem to have a positive effect on the environment (ibid.). According to Rodgers (2016) Zambia aims at embracing green growth and green economy but especially FDI do not operate to ensure reduction in carbon emission. This is partly due to the Zambian government's effort to attracting FDI especially in the mining area through lower tax rates and other incentives, which has resulted in e.g. underdevelopment, land displacement, violation of human rights on the people employed, poverty, environmental degradation, health, and other social problems (ibid.)

Despite what some authors claim (Gill and Reilly 2007, Taylor 2007) Chinese FDI in Zambia are not characterized by having a long-term vision or less constrained by a very high profit returns leading to a higher managerial focus on social and environmental issues (Haglund 2009). Regardless of this, Zambia has the opportunity and seem to be employing the growing economic and political interest in the country to leverage and enabling drafting its own development plans, finance key parts of the plan that previously could not be financed (Kragelund, 2014). International business community represented by FDI in Zambia needs to demonstrate their welfare-enhancing effect by identifying their key societal responsibilities and act accordingly (Kaulihowa and Adjasi, 2018b), this will lead to a better image and acceptance of the FDI especially in the copper-mining sector (Craptree, 2008). In addition, it is interesting that a study shows the restricting FDI and discriminating against foreign investors may reduce the scale and scope of FDI, but the trade-off of less FDI might result in FDI that is strategically more beneficial to human development in the long term (Reiter and Steensma, 2010).

Methods

This study takes departure in a constructivist perspective and presents an inductive study based on primary data collection through individual semi structured interviews, participant observations, and secondary data analysis. The findings are discussed and related to existing literature within the research area.

The primary data was collected during a 3 weeks study in the Copperbelt area in July and August 2018 where urban and rural environment was observed and respondents interviewed. The sampling strategy is a mix of purposive sampling, convenience, and snowball sampling. Informants have been recruited based on their knowledge of and involvement in FDI. Semi structured interviews have been planned and conducted along with unstructured interviews as part of participant observations. The semi structured interviews were tape recorded and transcribed. The observations and related unstructured interviews were documented by field notes.

The primary and secondary data were coded and analysed following a three stages process consisting of open coding, axial coding, and selective coding.

The sample size is very limited; therefore, the research results do not provide basis for generalisation of conclusions. Instead, qualitative analysis is applied, justifying at least hypothesis formulation and recommendations for further research. In this sense, the present research is essentially of exploratory nature.

Results

General perspective on FDI

The results are divided regarding the view on the FDI. According to the informants, FDI seems to generate growth, but the backside is that the FDI has some disadvantages. These are observed as corporate social responsibility (CSR) challenges related to working conditions for labour employed by the FDI companies and environmental impact, increased competition threatening Zambian SME's, and furthermore not accumulating the number of jobs for Zambians as could be expected. It is important for the informants that the FDI are directed towards industries and areas which Zambians cannot manage alone.

"..the Chinese is a powerhouse. They're doing a lot of roads in Zambia and I can see them doing a good job. Not only roads also in manufacturing." Anonymous CEO, The Copperbelt, 3.8.2018.

"I also want to be happy to see that certain manufacturing jobs that can be done by Zambians .. our government should step in and not allow Chinese to do those jobs that should be done by Zambians. There is simple investments jobs like block making that should be done by Zambians. Chinese should bring in huge investments that Zambians can´t afford" Anonymous social worker, The Copperbelt, 7.8.2018.

Perspective on FDI in the mining sector

The main focus for the local community when asked about the FDI in the mining sector are the working conditions for Zambian employees, the spill over effect for local SME's, and the environmental challenges. FDI are observed as being very present in the mining sector and amongst the informants mainly the Chinese and Indian FDI into the mining industry are mentioned.

The commonality expressed on Chinese and Indian FDI is characterized by lack of trust and discontent. There is a shared negative view of the working conditions offered by especially the Chinese companies both related to the remuneration in cash and the occupational safety. The Chinese investors within the mining industry have a history of negative media coverage related to working conditions (BBC News, 2010; The Guardian, 2011). The common definition of the working conditions is "Slavery-like". Examples are given of lack of job-site safety causing death of employees. This is backed up by cases reported by news media (BBC News 2010, Zambia Reports 2014, 2018).

"They've got really bad safety reports. Just in the last one month I think we have lost two blasting engineers. .... And to get away from some of their liabilities they have actually stopped employing employees on pensionable contracts. So, they decided to outsource. So, what that means is that the employees are now getting lower salaries compared to what they used to get" Anonymous mayor, The Copperbelt, 5.8.2018

Besides, informants express dissatisfaction with the way sub-contractors and suppliers are being paid. There is a common understanding that Zambian sub-contractors and suppliers experiencing an extensive delay of payments contrary to the Chinese and Indian sub-contractors and suppliers which are being paid upfront. This causes Zambian SME's to go bankrupt. This issue is also supported by news media articles (The Diplomate, 2018).

Another shared concern is the lack of jobs being created for Zambian citizens. This issue is expressed in discontent about observations of blue-collar labour insourced from e.g. China. Furthermore, observations show white-collar jobs being occupied by Indian citizens and in this case, nepotism is observed as part of the problem. Apparently, some of the expatriates from India are relatives to managers and end up performing simple jobs since they are not qualified for the tasks, they are brought in to manage.

"They see a lot of jobs which easily could be taken care of by Zambians. And actually, either Chinese or Indians are brought in like you know plumbers or bricklayers. Yeah. I mean even boilermakers, at times we even had truckdrivers" Anonymous mayor, The Copperbelt, 5.8.2018

"I saw the Indian manager's cousin sweeping the floor, cause he is not qualified for his highly paid job" Anonymous retired farm manager 1, The Copperbelt, 29.7.2018

Contrary to Chinese and Indian FDI the views on South African FDI especially as subcontractors in the mining industry are positive on the way the FDI are managed and the working conditions offered to Zambian. Some informants express concern of job losses caused by signs of some South African contractors withdrawing from business in the mining area due to difficulties in securing the companies' cash flow caused by delayed payment by Chinese and Indian mining companies. Since these subcontractors, like Zambian subcontractors and suppliers are discriminated when it comes to being paid on time.

Environmental impact caused by lack of corporate social responsibility (CSR) was another concern expressed by the informants. Observations were shared of pollution of the aquatic environment with the consequences for the local community both health wise and for the agriculture in the area. This issue is supported by the ongoing case related to the Mushishima stream nearby Chingola (The Guardian 2015; 2019a; 2019b).

The commonality expressed showed an understand that the Zambia Government demonstrate a willingness to monitor the consequences of FDI in the mining sector, but at the same time urging the government to take further initiatives. This was especially expressed related to the foreign investors lack of CSR initiatives related to the working conditions and the environment.

Perspectives on FDI in the agricultural sector

There is a common understanding of agriculture as being crucial for Zambia's future growth.

"I think the only industry that can save this country now is agriculture and agro-processing industries." Anonymous mayor, The Copperbelt, 5.8.2018.

The informants were generally positive regarding FDI in the agricultural sector and viewed FDI as necessary for the farming industry to grow and meet the market demand. At the same time FDI in the agricultural sector was expected to attract expatriates who would share their knowledge for the benefit of the Zambian farmers. Areas excepted from this positive attitude were production of farm products for which Zambian farmers could supply the market demand.

"The Chinese chicken farms are hard on the prices, since they produce so cheap. It is a threat for Zambian broiler farmers. But then the price of local chicken goes up" Anonymous retired farm co-manager, The Copperbelt, 29.7.2018

The commercial farms seem not be seen a threat to small-scale farmers at present, since the consumer market is growing. Furthermore, the two segments supply different market segments where big-scale commercial farmers supply wholesalers and the food processing industry whereas small-scale farmers supply local markets, restaurants, and smaller retailers.

"The small-scale farm is probably selling on the open market. We as the commercial farmers got to have a commission or a wholesale supplier to supply to the wholesale market." Anonymous commercial farmer, The Copperbelt, 2.8.2018.

The Zambian Government is supporting the growth in the agricultural sectors and encouraging FDI by offering land and favourable import and exports regulations together with a low taxation. This is known by especially the commercial farmers who also encourage expatriates to come and share their knowledge to be able to improve the yield.

"If they could come and join us to teach us to grow better hay to, so the cow will give more milk, that would be good" Anonymous farm manager, The Copperbelt, 31.7.2018

The informants were as in the case of the FDI in the mining sector very concerned about working conditions and regulations.

"So, if they have brought in that kind of money in Zambia and they have met the regulation you know, I do not see the reason why they should not be, be with us to compete. So, we the locals need to compete with them. But of course, the department that grants work permits, entry permits should ensure they regulate who qualify to be a farmer. Do they have the equipment and are they also paying the workers the right wages? That is very, very important." Anonymous commercial farmer, The Copperbelt, 2.8.2018.

Perspectives on FDI in the retail industry

The common understanding of the retail industry is that the retail market has changed, and this change has brought supermarket chains from especially South Africa into the country. The informants are divided regarded FDI in the sector. On the one hand the market for consumer goods are growing and creating opportunities on the other hand the informants also want to protect the Zambian owned retail stores.

"..we need to support the locally owned shop, the big foreign owned supermarkets get enough business" Anonymous retired farm manager 1, The Copperbelt, 29.7.2018

"Yeah I think there are certain jobs which we need to protect in the retail industry. For example, because I think that's the easiest industry that locals can go into.." Anonymous mayor, The Copperbelt, 5.8.2018.

The informants mention that the FDI in retail generate jobs for shop assistants and business opportunities for Zambian contractors building shopping malls for renting out.

"...but then in the end it's been more beneficial to the locals because the big shops have created job opportunities ... the locals here have invested the malls. The have built the infrastructure and subletted to these organizations.." Anonymous CEO, The Copperbelt, 3.8.2018.

It is acknowledged that the FDI in form of big supermarket chains is a challenge for the locally owned shops. The observations showed that the price level and variety of consumer goods were higher in the FDI owned supermarkets compared to the retail stores owned by Zambian citizens. The view of the informants is that the consumers choose the FDI owned supermarkets for high end quality and luxury goods and the locally owned shop and markets for basic consumer goods.

Perspectives on FDI's influence on the tourism industry

Perspectives on FDI in the tourism sector were limited in this study. The Copperbelt area is characterized by business tourism and only very limited vacation tourism. One of the few major tourist attractions in the area is the Chimfunshi Wildlife Orphanage. It is acknowledged by the informants that the tourism industry also the business tourism creates growth in forms of jobs and income from tourists coming to the Copperbelt area and the understanding is that it is mainly dominated by FDI in other areas of Zambia.

"Here in our area I have not seen any [safari lodge bought by foreigners] but in the tourist area like the Luangwa park, National Park, the Lower Zambezi, yes, and in the Southern province most of the private lodges are owned by private people." Anonymous hotel owner, The Copperbelt, 29.7.2018.

Perspectives on FDI's influence on the community

The local community benefit from FDI to a different extend depending on the industry. The common understanding is that the communities do not benefit from FDI in the mining sector as much as could be expected.

"Because when this town was under ZCC[ZCCM] they used to repair the roads even donate equipment or even ambulances to the government. We are not seeing these issues or people are actually up in arms with these current investors. Most of the time I think they are in newspapers with negative publicity things. Anonymous mayor, The Copperbelt, 5.8.2018.

The disappointment is due to lack of proper working conditions and creations of jobs mentioned in previous sections. Informants also share the observations that the foreign investors in the mining industry prefer subcontractors from the home country over Zambian subcontractors. This takes away business opportunities from Zambian subcontractors.

"..it's almost ghost town now, because most of these small companies have always been getting business with cash here. But at the moment they have no opportunities of getting business from these copper mines which has resulted in a lot of unemployment.." Anonymous mayor, The Copperbelt, 5.8.2018.

Furthermore, the opinion about Chinese and Indian employers is affected by the working conditions these companies offer to the workers.

"They have to work 10 hours a day for seven days a week for 1000 kwacha per month, that is slavery.." Anonymous retired farm manager 1, The Copperbelt, 29.7.2018.

To secure a proper integration of FDI the government is expected to secure the balance between attracting the FDI and protecting the local business. The opinion is that the government has been to gentle on the FDI and should be more selective regarding attracting FDI to certain industries.

"Government is actively doing something to revise regulations. So that will be able to save these jobs to be done by locals. We even had a cotton factory located here in Kabwe. Yeah but because of lack of protection cheap material use to come in and eventually that industry was closed. We are also trying to revamp that industry. We also had Kapiri Glass which was making these glass cases and bottles for most of the companies in Central Africa. But it is also closed. Yeah. Because we have actually opened this country I think too much. So, we need to protect certain industries." Anonymous commercial farmer, The Copperbelt, 2.8.2018.

Perspectives on FDI in the tourism sector were limited in this study. The Copperbelt area is characterized by business tourism and only very limited vacation tourism.

Discussion and conclusion

The general perspective on FDI correlates with the existing research where FDI only generates growth when the host country monitors the FDI through proper legislation and control. According to this study Zambia is nowhere near achieving optimal growth from the FDI. Therefore, the Zambian government is requested by the local community and businesses to step in and review the legislation and the conditions for FDI in the country.

As stated in the existing literature Zambia could gain much more from the FDI in the copper mining sector and again this is a result of the lack of spill over and linkages to local business as also noted by the informants. The FDI in the copper mining area is also affected by the both merited and unmerited image of the Indian and Chinese involved in the industry. There is a long way ahead for the companies and authorities involved to improve this image in order to improve CSR performance which again will improve performance in general. At the moment the FDI in copper mining industries are criticked and in some cases rather exploiting the community and not allowing the local business to benefit from business opportunities in the area.

FDI in the agricultural sector is mainly reviewed positive by the literature and the informants. It is also noted that the government supports the extension of FDI in this sector and are willing to invest in order to execute the strategies within this field e.g. by investing in the Ndola International Airport which will provide cargo service to among other industries the agriculture related industries once finalized by expected 2020. It is noted from the literature and the local community that should small-scale farmers benefit to a higher degree support is needed e.g. in form of organizational and educational support.

The results related to the retail industry is closely related to the results in agricultural sector which is also supported by some existing studies. The FDI in this industry as created a market for the commercial farmers and to a limited extend also for the small-scale farmers. The community is aware of this, but the small-scale farmers have not yet utilized this market where they could enter with high-end niche products. The backside of the FDI in the retail industry is the influence on locally owned shops which might suffer from price and scope competition.

The tourism industry only plays a very limited role in the Copperbelt at present. Its major role is to serve the businesses in the area and so far, FDI in this industry is very limited and mainly related to hotels serving the business travellers in the area. The local community is aware of the role tourism will play for economic growth in Zambia and the challenges potential brought by FDI. It is interesting that some literature points in the direction of eco-tourism which also aligns with the presence of the unique chimpanzee project in the Copperbelt area.

The community focusses very much on the environmental threat, the lack of health care improvements, the lack of job creation, and challenges related to working conditions. This is further supported by the literature focusing on wage inequality and lack of green growth.

This paper has highlighted the perspective on FDI by the local community and local business owners. It has divided this perspective into the view of the FDI in respectively the mining sector, the agricultural sector, the retail industry, and the tourism sector.

The research question in focus was "How does FDI influence the local community and business?" supported by the following sub questions "How does the local community view the influence of the FDI in different industries?" and "How does the local business owners view the influence of the FDI in different industries?"

The study found that the community's perspective related to the FDI into the different industries was influenced by the extend of job creation, working conditions offered, and the level of CSR demonstrated by the FDI. The businesses 'perspective was influenced by the level of business generated and the industrial rivalry.

This is a very limited study and calls for further research. Despite the limitations the results call for the authorities to review the regulations for FDI in some sectors. The findings might lead to some considerations related to further regulations and monitoring of these in order to secure environment, the health and working conditions for labour employed by FDI companies, and the linkages and spill over to benefit the local businesses. Furthermore, it might be beneficial for Zambian authorities to emphasize the importance of CSR activities.

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News media references

BBC News, 2010, Chinese bosses charged over Zambian mine shooting, Available at https://www.bbc.com/news/world-africa-11568485 retrieved 14.5.2019

Mining for Zambia, 2019, A concentrated mining sector, Available at https://miningforzambia.com/a-concentrated-mining-sector/ retrieved 14.5.2019

The Diplomate, 2018, Mines, Money, Mandarin: China in Zambia, Available at https://thediplomat.com/2018/10/mines-money-mandarin-china-in-zambia/ retrieved 14.5.2019

The Guardian, 2011, Chinese mining firms in Zambia under fire for mistreating workers Available at https://www.theguardian.com/global-development/2011/nov/03/chinese-mining-zambia-mistreating-workers retrieved 15.5.2019

The Guardian, 2019, The world's most toxic town: the terrible legacy of Zambia's lead mines, Available at https://www.theguardian.com/environment/2017/may/28/the-worlds-most-toxic-town-the-terrible-legacy-of-zambias-lead-mines retrieved 15.5.2019

The Guardian, 2015, 'I drank the water and ate the fish. We all did. The acid has damaged me permanently', Available at https://www.theguardian.com/global-development/2015/aug/01/zambia-vedanta-pollution-village-copper-mine retrieved 15.5.2019

The Guardian, 2019a, Zambians can pursue mining pollution claim in English courts, Available at https://www.theguardian.com/law/2019/apr/10/zambians-can-pursue-mining-pollution-claim-in-english-courts retrieved 15.5.2019

The Guardian, 2019b, Zambian villagers await outcome of UK mining firm's pollution case appeal, Available at https://www.theguardian.com/global-development/2019/jan/18/zambia-villagers-await-outcome-uk-mining-firm-pollution-case-appeal-vedanta-resources retrieved 15.5.2019

The Mast, 2018, We're not interesting in meaningless meeting, KCM contractors, suppliers tell minister, Available at https://www.themastonline.com/2018/08/20/were-not-interesting-in-meaningless-meeting-kcm-contractors-supliers-tell-minister/ retrieved 14.5.2019

Zambia Reports, 2014, 7 Injured, One in ICU in KCM Accident, Available at https://zambiareports.com/2014/02/21/7-injured-one-icu-kcm-accident/ retrieved 14.5.2019

Zambia Reports, 2018, KCM Miner Blasts Accidentally Himself to Death, Available at https://zambiareports.com/2018/06/16/kcm-miner-blasts-accidentally-death/ retrieved 14.5.2019

Interviews conducted in Zambia

Anonymous agricultural officer, Chingola, 7.8.2018.

Anonymous bus driver, Chingola, 27.7.2018.

Anonymous CEO, The Copperbelt, 3.8.2018.

Anonymous commercial farmer, The Copperbelt, 2.8.2018.

Anonymous farm manager, The Copperbelt, 31.7.2018.

Anonymous hotel owner, The Copperbelt, 29.7.2018.

Anonymous mayor, The Copperbelt, 5.8.2018.

Anonymous retired farm co-manager, The Copperbelt, 29.7.2018.

Anonymous retired farm manager 1, The Copperbelt, 29.7.2018.

Anonymous retired farm manager 2, The Copperbelt, 7.8.2018.

Anonymous social worker, The Copperbelt, 7.8.2018.

Secondary data sources

The World Bank 2019, The World Bank in Zambia, Available at https://www.worldbank.org/en/country/zambia/overview retrieved 15.5.2019

Trading Economics 2019, Zambia Foreign Direct Investment, Available at https://tradingeconomics.com/zambia/foreign-direct-investment retrieved 15.5.2019