By Rev. David Ugolor, National Coordinator, PWYP Nigeria
Background
Many countries that depend on the extractive sector (oil, gas, and mining) for the majority of its revenues often experience poverty, conflict and corruption, commonly referred to as "resource curse". (1)
The Extractive Industries Transparency Initiative (EITI) was launched by the Prime Minister of the United Kingdom, Tony Blair, at the World Summit on Sustainable Development (Earth Summit), held in Johannesburg, September 2002 as a way to address the resource curse phenomenon, globally. The Department for International Development (DFID) since then has led the development of the initiative. The initiative encourages governments, extractive companies, international agencies, NGOs and others with interest in the extractive sector to work together to develop a framework to promote transparency of payments and revenues from the sector.
This initiative has as its major objective, increased transparency over payments and revenues in the extractive sector in countries heavily dependent on these resources.
The wider objective of the initiative is to improve public financial management and accountability, reduce corruption and promote good governance.
EITI is grounded on the conviction that prudent exploitation of natural resource wealth should provide the basis for sustainable socio-economic growth that adds to the achievement of sustainable development.
Since its launch in September 2002, the Initiative has been developed by a multi-stakeholder group, including governments, oil, gas and mining companies, industry bodies, international institutions, investors and NGOs.
The initiative took-off following a High-Level Multi-Stakeholder Conference, in London, on 17 June 2003. The initiative has 12 principles and 6 criteria guiding its operations. (2)
Nigeria was the first country to adopt this initiative and it was launched by the President of the Federal Republic of Nigeria on February 19, 2004. The Nigerian version of the EITI is called Nigerian Extractive Industries Transparency Initiatives (NEITI) which is overseen by the National Stakeholders Working Group (NSWG), made up of 28 people representing the government, extractive industry, NGOs, the media and others.
The EITI is currently being implemented in about 22 countries:
- Africa: Cameroon
In June 2005, a World Bank mission visited Cameroon to identify potential EITI stakeholders. Following this, the government set up a multi-stakeholder Committee to implement the EITI. Action Plan to implement EITI was adopted and published in major local newspapers. Government has started to publish past audits of the national oil company, and the EITI Committee hired the auditing firm Mazars Associates and petroleum experts, Hart Engineering, to reconcile payments from the oil industry and revenues received by the government. Templates for the reports were approved and a training programme for improving Committee members' capacity to understand the financial accounts was carried out during September 2006. The government in December 2006, published its first audit report.
Nigeria has advanced more than a lot of countries in its implementation of the initiative. Other countries in Africa implementing the EITI include: Chad, Democratic Republic of Congo, Republic of Congo, Equatorial Guinea, Gabon, Ghana, Guinea, Mali, Mauritania, Niger, Nigeria, Sao Tome and Principe and Sierra Leone.
Other EITI Implementing Members
EITI has an International Secretariat presently based in Oslo, Norway that works very closely with the World Bank and the IMF. EITI is also supported by donors, by oil and mining companies, investors; and by civil society groups many of which work under the umbrella of the Publish What You Pay Coalition and the Revenue Watch Institute.
Key Challenges Facing EITI
- It is not an institutionalized framework as it relies on volunteerism
- Not all countries involved in the extractive sector are represented
- Political will to implement the EITI is lacking
- It does not mandate dis-aggregation of report
- Weak capacity of EITI implementing countries
Key Problems
- Does not have mandatory measures to achieve objectives
- Key leading countries in the world like the U.S. seem not to have totally committed to it
- Companies and governments still not implementing fully the principles
- The weak enforcement of OECD anti-bribery Convention and Guidelines
- Role of Western Financial Systems which encourages keeping looted assets
Role of the G8
The G8 countries – Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States have issued a statement in support of the EITI as follows:
As a critical tool in the fight against corruption, we will also take forward efforts to make management of public revenues from energy exports more transparent, including in the context of the Extractive Industries Transparency Initiative (EITI) and the IMF Guide on Resource Revenue Transparency (GRRT). (3)
How China and Other Emerging Economies can Join EITI
Through:
- International and Regional Treaties
- Negotiation with the implementing countries and
- The involvement of its CSOs
notes
(1) Examples of this are readily available in Nigeria, Cameroon, Angola, etc.
(2) See EITI Source book, A Publication of the EITI Secretariat, UK pages 8-9
(3) for more information go to the EITI website