Anja Benshaul-Tolonen and Paula Fernandez Musso
The integration of domestic firms into the mining global value chain (GVC) can bolster local economies, yet the scale and impact of these linkages remain largely unknown. This paper utilizes 10 years of official, monthly VAT and import data to uncover the interactions between the mining industry and firms in Kitwe, a city located in the heart of Zambia’s Copperbelt Province. Firms that have ever supplied Zambian mines exhibit relatively higher import levels compared to those that have never supplied the mining industry. In addition, mine suppliers increase both their domestic and international procurement in response to increased copper prices, in contrast to other local firms. To provide deeper insight, a cross-sectional firm survey was conducted in Kitwe. Mine suppliers are older, larger, and more likely registered with tax authorities. Firms report (i) that mines should increase their procurement of goods and services from Zambian firms, and (ii) a strong desire to join the mining GVC, identifying barriers including lack of connections, low demand, competition, and bribes and corruption. We suggest policy efforts prioritize building a resilient local economy capable of withstanding copper price fluctuations, while simultaneously supporting local firms integration into the mining GVC.
Download Paper as PDF
