Mine suppliers: Understanding backward linkages in Kitwe, Zambia

Abstract

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 study examines the mining value chain in Kitwe, a key mining hub in Zambia’s Copperbelt. Ten years of official government VAT data on domestic purchases and imports reveals that mine suppliers have a stronger presence in the Kitwe import market compared to other local firms. However, their demand for goods and services, both domestically and internationally, is influenced by fluctuations in the global copper price. In addition, our cross-sectional firm survey indicates that mine suppliers are older, larger, and more likely registered with tax authorities. The majority of surveyed firms express strong interest in entering the mining GVC but report that competition, low demand and lack of network connections constrain them from achieving their desired level of engagement. Policy efforts should focus on fostering stronger, higher value-added linkages and connecting more local firms to the mining sector, while also developing strategies to mitigate the deleterious effects of fluctuating copper prices.