1. Dark Spots in the International Commodity Value Chain: The Case of Copper in Zambia
- Author:
- Dale Mudenda and Léonce Ndikumana
- Publication Date:
- 01-2024
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- This paper investigates mineral export misinvoicing in Zambia as a channel of capital flight, with a focus on copper, gold, and gemstones. The analysis reveals major discrepancies between Zambia’s recorded exports and imports as recorded by its trading partners. In the case of copper, a large share of exports recorded in Zambia as headed to Switzerland does not appear in Swiss imports. The ‘missing copper’ cannot be traced through analysis of trade between Switzerland and its major partners either. Gaps in the opposite direction are observed in Zambia-China trade, suggesting export underinvoicing, a common mechanism of capital flight. These do not offset the gaps observed in mirror trade statistics between Zambia and Switzerland, which remain a mystery. Similarly, whereas the primary destination recorded for Zambian gold exports is South Africa, these do not appear in gold imports recorded by South Africa. The gemstones sector is characterized by high informality that enables smuggling and export underinvoicing. Zambia must implement measures to curb misinvoicing of mineral exports and address structural opacity in the trade value chain if it hopes to maximize the gains from the exploitation of its mineral resources.
- Topic:
- Political Economy, Commodities, Exports, Global Value Chains, and Minerals
- Political Geography:
- Africa and Zambia