GOXI

sharing in governance of extractive industries

Has increased transparency led to better development outcomes?


A GOXI forum. January 31 – February 7, 2012

 

INTRODUCTION

                   

The last decade has seen a surge in calls for greater disclosure in the oil, gas and mining industries. The plethora of campaigns, organizations and initiatives fostering this agenda include such prominent global efforts as the Extractive Industries Transparency Initiative (EITI) and Publish What You Pay (PWYP) Coalition, and the Transparency & Accountability Initiative.

Section 1504 of America’s Dodd-Frank Act of July 2010 introduced requirements for listed companies to report payments made to governments for oil, gas and mining development, country-by-country and project-by-project. A draft Accounting and Transparency Directive of the European Commission takes the U.S. law a step further by requiring disclosure of payments to governments by both listed and large unlisted companies.

The broad underlying theory of change is that greater transparency and citizen participation will lead to greater accountability and, in turn, better development outcomes from petroleum and mining activities.

However, many of the sectoral transparency provisions are relatively new and assessing their impact can be difficult. A recent New York Times article laments that transparency is sometimes treated as an end in itself. And recent independent evaluations, including of EITI, point to encouraging uptake and endorsements, but have raised question marks as to discernible societal impacts and whether greater transparency is translating into greater accountability.

So has the drive for greater transparency in the extractives sector of the last decade led to better development outcomes?

Have your say…

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NB: These submissions are those of the discussants only, and should not be attributed to the policies or opinions of their employers.

DISCUSSANTS


Elison Karahunga

State Attorney, Government of Uganda

Transparency is only part of the story

 


Susan Ariel Aaronson

Associate Research Professor of International Affairs, George Washington University

Transparency is supply side governance

  

Eva T. Thorne

Principal, Corporate Governance Solutions

Transparency is necessary yet insufficient

 

Join the conversation by posting a comment under this post or on the relevant discussant's blog.

Views: 1045

Tags: Dodd-Frank, EITI, development, discussion, outcomes, transparency

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Comment by Evelyn Parra on February 10, 2012 at 15:42

Susan, I commend your sincere opinion towards EITI achievements though I believe their initial strategy and approach was somewhat correct. After a decade of experimenting on EITI implementation and following the many expressions of discontent from societies worldwide due to government resource mismanagement, there is a pressing need to move towards a bolder accountable response from governments.

At this point in time, wouldn’t it be evident that once a government announce its commitment to join the EITI, it would take immediate legal measures to encourage participation from industry and civil society like Nigeria did?

In Peru, the public is pushing for improvement in effective fair distribution of wealth and the industry is vigilant to new mandatory rules hoping they do not drastically change their status quo, attitude that is been reproduced in many countries as in the case of the US with the Dodd-Frank Act...

Comment by virginia arnecchi on February 9, 2012 at 1:57

 I share the views expressed in all comments below. In particular, I share blogger Elisabeth Rosenthal's views as reported by Jared Miller from the RWI. Transparency is certainly one of the enabling factors that may contribute to “better  development outcomes” but it should not be seen as an end in itself as Honorable Clare Short, President of EITI Board pointed out last year during a roundtable in Canada. There are many other factors  conducive of   "better development" outcomes without which transparency is a sterile exercise. Information generated and made available thanks to transparency may not be understood  and therefore not used by all stakeholders to inform decision- making process. A good starting point is to look for a Vision.  Do resources-  rich developing countries have a Vision, a long- term social and economic  planning or strategy that clarifies the contribution that extractive industries is expected to do to overall development of the country? Is that sustainable?  And for how long? How “inclusive” are stakeholders engagement and consultation? How strong are oversight mechanisms? The whole point of Transparency is to improve Accountability that is ...having people with knowledge that can hold their governments to account so that they can ensure EI revenues are spent according to the kind of socio-economic development conveyed by, hopefully, a shared  “Vision” for the future of the  country.  Transparency is one crucial step, but alone can not lead to “better development outcomes”. There is much work to do in strengthening democratic  governance and empowering stakeholders to hold their governments accountable...in developing countries and developed ones as well.
Thanks José for providing the link the WEF Responsible Mineral Development Initiative, I appreciated reading  Building Block 4 and also chapter 4 on the Use of Mineral Developments Agreements..the pro and cons are many..;-).

Comment by José M García on February 8, 2012 at 17:09

 

Hi all. The World Economic Forum has recently launched a report on its Responsible Mineral Development Initiative. Transparency appears as one of the key blocks of actions that countries and companies may undertake to make the mining business more responsible. The report mention a number of transparency initiatives, including some of the ones mentioned below (EITI, The Access Initiative) as well as cases study on a country –Liberia- and a company –Rio Tinto- publishing tax and royalty payments. I suggest that you check out chapter 4 of the report. http://www3.weforum.org/docs/WEF_MM_Report_2011.pdf

Comment by RODOLPH DE GUZMAN on February 8, 2012 at 6:30

what happens to the revenue generated from this exercise ? ... the whole cycle of transparency applies again and accountability begins ...if AOP is based on projected development agenda then AIP should be based on revenue generation agenda...thus the center of these is ensuring that, the people benefit from it directly or indirectly ... these are the cultural communities, the barangay, the municipalities and the provincial government shares its revenue ... on the demand side the companies, they provide jobs and economic activity at the same time take their profit after tax,  of course if the local government units demands corporate social responsibilities be assume by these companies ...the cycle of transparency is most effective.

Comment by RODOLPH DE GUZMAN on February 8, 2012 at 0:48

having said those ideas ealier, we have made a Local Ordinance of Mining Only as a sole guide for the stakeholders ... thus making it so transparent that everyone knows what the other is doing ...did it help governance stop corruption i say it did by creating a one stop shop to process papers with clear time line when it should be finished, we made our fees expensive so only those responsible companies can affords it because we believed that ONLY THOSE RESPONSIBLE COMPANIES IMPLEMENT RESPONSIBLE MINING PROCESS AND THE PARTICIPATION OF CIVIL SOCIETY GROUPS TO MONITOR THESE CONCERNS INSURES THE PROTECTION OF ITS ENVIRONMENT AND ONLY THOSE GOVERNMENT WHO ADVOCATE TRANSPARENCY IN ITS GOVERNANCE SUSTAINS ITS INITIATIVES

Comment by Johnny West on February 8, 2012 at 0:46

I broadly share the views expressed in the other comments -- and would add that i think there is evidence that of corruption becoming more subtle in response to the global drive towards governance. EITI for example seems like a full-on deterrent to suitcases of cash handed over by an IOC to the president's son. But that's rarely how it's played these days. It's morely likely to be in 5% stakes on bidding consortia, cost recovery statements on billion dollar investments, service and procurement contracts. As in many areas, the regulatory environment moves slower than the criminals. I personally also feel that not enough attention has been paid to attempting to interest another key group of stakeholders in transparency - shareholders in the private sectors of producing countries.

Comment by Susan Ariel Aaronson on February 8, 2012 at 0:26

thank you for these thoughtful comments.  We should focus more on making information useful and training people to use information..especially vis a vis EITI. but I've been saying this for years! 

Comment by RODOLPH DE GUZMAN on February 8, 2012 at 0:21

Transparency is necessary if accountability is a must ....then sustainability can be attained.  Developing Country just like ours need Local Initiatives like Ordinances on Extractive Industry be made to inable the stakeholders understand their role, responsibilty and accountability to Governance, Company and Society in general...these means governance advocacy on responsible mining is in place, taxes and tariff are clear too...the civil society groups monitors the industry on issues raised base on protection of the environment and the implementation of its mitigating policies which governance advocated,,,the companies conduct their business with clear understanding of Laws, Ordinances and its Accountabilities...Thus making it Sustainable

 

 

 

 

Comment by Robert Hunja on February 2, 2012 at 22:37

Some have argued that transparency is good in and of itself. That "sunshine" is the best disinfectant. However, there is increasing demand for some empiricism to support these assertions.

Comment by Susan Ariel Aaronson on February 2, 2012 at 3:21

Information has to be actionable, and the more I study corruption, the more I wish I understood trust, which also seems to play a role in how people use information to hold governments and firms to account. In this regard I recommend the work of bo Rotstein at the Quality of Governance Institute in Sweden.

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