THE INTERPLAY OF STATE AND FIRM IN ZAMBIA: PATH DEPENDENCY IN THE MINING SECTOR

Zambia is a mineral-dependent state with a history inextricably tied to the mining of copper. The relationship between state and firm in Zambia has been contentious since independence from Britain in 1964. Since then attempts to nationalise or curb the power of the mining firms have failed owing to the path dependence of the sector. Path dependence has led to an uneasy equilibrium in the modern day, whereby the optimal economic choice is foreign firm control over the mining sector. This optimal choice comes at the expense of the social and environmental well-being of the state. This choice is constrained and is a result of the historic development of the sector, the legacy of debt and the limited domestic capacity for large-scale mining projects in the modern day. This consequence of constrained choices has resulted in the further entrenching of imbalance between firm and state over time. This path dependence was codified through one-sided investor-state agreements through the use of stabilisation clauses and consequently, mining firms have committed environmental violations and tax evasion with impunity. Path dependence and mineral dependence are connected, and this has led to options missed through disincentive. Such as diversification and as a consequence of that, the development of international investment law and regional integration. This research utilises the critical juncture framework to determine the genesis of path dependence in the Zambian mining sector, that of the split between mines and state. In 1924 the British South African Company retained the nation’s mineral rights after the establishment of the British Protectorate. The company only ceded the administrative rights of the territory which created a clear barrier between the precursor of the Zambian state and the mining sector. The mining sector continued and developed on the basis of being as attractive as possible for external firms. In plain terms, Zambia’s mining sector was born out of a split between the functions of the mines and the functions of the state. Over time this has developed a sector that operates outside of the state, whilst simultaneously exercising influence over it. This reality has rendered nationalisation and legislation relatively futile.