Political processes were exploited at the expense of the public interest

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Kondwani Happy Ngoma, Doctor in Economic History at the School of Business, Economics and Law, University of Gothenburg has studied the complex relationship between states and firms in Southern Africa. States and firms are the principal actors in advancing economic development and broader institutional change and the results provide new insights. The project takes a business history focus to ensure that we can see this change in a long-term perspective, and places emphasis on understanding the African context.  

“Africa is a relatively under-researched region and society learns a great deal by looking back. My extensive use of previously restricted archives has enriched our understanding of economic and political processes in 20th-century Southern Africa.”

Insufficient control over regulations led to disadvantages for the public interest

One of the key findings is how firms can take advantage of political processes at the expense of the public interest. Foreign firms were able to acquire and hold on to the property rights of land and minerals in Southern Africa because the British government fell prey to regulatory capture - for at least five decades. The British government legitimised the ownership of property rights that they privately acknowledged had no legal basis in the treaties.

Kondwani Happy Ngoma also shows how this relationship with the British government became a liability in the long run for foreign firm. He shows how the anticipation of an incoming African regime posed a challenge to the ownership of the property rights to minerals in present day Zambia.

“The challenge was so pronounced - because of the fear of expropriation – that a settlement was reached before the regime change. This was for a fraction of the cost that the company placed on the mineral rights to the whole territory of the Zambia.”

Unlike previous studies that are dominated by target and sender country focused examinations, the study also shows the responses of a third country to political risks of economic sanctions. The focus is on the decolonisation period and show how responses are shaped by the interaction with firms and other states in a geopolitical setting.

Important to protect public interests and comply with legal certainty

Public interests can be subjugated based on the relationship between states and firms. Kondwani Happy Ngoma points out that we have to be mindful of political distortions in how the relationship between the two develops. Distortions can lead to not only monopolistic tendencies and outcomes and exacerbate inequality. 

He also shows why it is important to follow the rule of law because the failure to do so poses a challenge to the legitimacy and long-term interests of firms in the markets they operate. For instance, the symbolic compliance with the rule of law, which had worked for decades, became a liability when new regime was on the horizon. 

Through third country responses to economic sanctions, we can see that a country can constrain the effect of sanctions, not because it is looking to benefit from trade with the sanctioned state or to break sanctions (as a sanctions buster) but because of the damage that sanctions can cause it. Thus, for sanctions to be effective, their design ought to take stock of not only principal and sender country interests, but those of third countries.

Continued research in Sweden

Kondwani Happy Ngoma successfully defended his doctoral thesis on 31 May 2024. He will start his new position as Postdoc at the Stockholm School of Economics (SSE) in September 2024. He will continue studying state and business relations.

“My focus this time will be combining history and diplomacy to show how tools of statecraft are influenced by the interaction between states and firms. I will be examining this through the lens of economic sanctions.”