Copper Value Addition, Stakeholder Engagement and Institutional Framework of Zambia’s Mining Sector

Abstract

This study investigated the interrelationship between economic factors, copper value-chain performance, and stakeholder engagement in Zambia’s mining sector. Despite decades of copper led growth, Zambia continues to experience low levels of industrial value addition and persistent governance challenges associated with resource dependence. Grounded in a pragmatic mixed methods paradigm, this study systematically pursues three specific research objectives: (1) to evaluate the macroeconomic determinants of copper value addition in Zambia using an Autoregressive Distributed Lag (ARDL) bounds testing framework, (2) to examine the micro-level institutional factors influencing stakeholder satisfaction with resource governance frameworks using a binary logistic regression model, and (3) to formulate an integrated policy framework that aligns economic strategies with stakeholder legitimacy. The research integrates three complementary analytical phases. The first phase applies an Autoregressive Distributed Lag (ARDL) bounds-testing framework to national time-series data spanning 1980–2021 to evaluate long-run cointegrating relationships and short-run error correction dynamics underlying copper value addition in Zambia. The second phase employs binary logistic regression on stakeholder survey data to assess how engagement frequency, engagement effectiveness and perceived influence relate to governance satisfaction. The third phase uses qualitative thematic analysis to capture stakeholder experiences and contextual mechanisms that may not be observable through numerical models. The empirical estimates reveal that macroeconomic variables exert significant long-run influence on copper value addition. National economic growth has a positive long-run coefficient (β = 0.4312, t = 2.302, p = 0.0290), while mineral rents and trade value margins are also positively associated with value addition. Inflation has a negative long-run effect (β = −0.2784, t = −2.856, p = 0.0073), while higher global copper prices are negatively associated with local value addition (β = −0.3465, t = −3.042, p = 0.0095), consistent with the Resource-Price Paradox. The dynamic model exhibits structural stability and a significant error-correction term (CointEq(−1) = −0.6318, t = −6.606, p < 0.001), indicating adjustment towards long-run equilibrium following short-run shocks. Phase Two analyses 250 stakeholder responses. The binary logistic regression indicates that Engagement Frequency (β = −0.081, p = 0.392), Engagement Effectiveness (β = −0.001, p = 0.995) and Influence on Governance (β = 0.042, p = 0.648) are individually statistically insignificant in the estimated model. The marginal effects similarly indicate small changes in predicted satisfaction probability (−0.020, 0.000 and 0.010 respectively). The model records an AUC of 0.64 and a Hosmer–Lemeshow p-value of 0.562, indicating modest discrimination and no evidence of poor fit. The qualitative findings nevertheless identify concerns about superficial participation, information asymmetry, weak follow-up and limited substantive influence. Taken together, the findings indicate that sustainable copper-based development requires coordinated macroeconomic management, industrial diversification and participatory governance reforms. Based on these findings, the study recommends a coordinated policy package. First, the Ministry of Finance and National Planning should establish a formal mineral-rent reinvestment policy that ring-fences a defined share of mining revenues for targeted tax rebates and concessional domestic credit lines for downstream copper fabricators. Second, monetary and fiscal authorities should strengthen macroeconomic coordination to reduce exchange-rate and inflation volatility and improve the predictability of long-term industrial investment. Third, Zambia should establish a National Copper Value Chain Council to coordinate government, mining companies, domestic manufacturers, labour, communities and other stakeholders, reduce institutional fragmentation and strengthen meaningful participation across the copper value chain. These measures would help align mineral revenues, industrial incentives and stakeholder legitimacy with the objective of deeper domestic value addition. Keywords: ARDL Bounds Test, Copper Value Chain, Economic Factors, Governance, Resource Dependence, Stakeholder Engagement, Value Addition, Zambia