sharing in governance of extractive industries

The EITI needs to be more ambitious and more realistic

The EITI needs to become more ambitious and more realistic

The Extractive Industries Transparency Initiative is coming up to its tenth birthday and its future may hinge on decisions by the EITI Board between now and the EITI Conference next May. The initiative could grow to fill more of the gap between its Principles and its rather limited results on the ground so far. Or it could end up as a has-been, trudging unnoticed around the periphery of international debate and slowly shedding its support.

An internal debate on the future of the EITI has gathered speed since the delivery in May 2011 of an independent evaluation which found that despite some significant local effects within the extractive sectors of some EITI countries, “little impact at the societal level can be discerned.” This debate is likely to lead to a redesign of the EITI’s rules and structure that builds on its existing base – 36 implementing countries and a large and growing body of reports on revenue flows.

The debate within the Board has recognised that the EITI needs to retain its core of global comparability and hard rules, while encouraging the Multi-Stakeholder Groups of government, company and civil society representatives, which oversee EITI implementation in each country, to extend reporting far beyond this core. As a former Board member, I think three points need to be considered if the EITI is to ensure its relevance in future.

Firstly, MSGs may create many innovations which go beyond the minimum reporting requirements of the EITI. Some will be big and significant innovations, some small and marginal. The EITI needs a way of assessing these various innovations against global benchmarks or it will struggle to say anything meaningful about them, a situation which could dissolve the notion of the EITI as a global standard.

Clearly it would not be straightforward to compare the content of an innovative EITI programme for reporting on (for example) the impacts of mining on local communities with (for example) a programme for reporting on the downstream oil sector. But the quality of each innovation could be measured against common benchmarks: whether the innovation has clear aims, the comprehensiveness of reporting when compared to those aims, the reliability of data reported, the extent of stakeholder participation and so on.

This approach would need careful thought on the part of the evaluator, but it could be done. It would give a good sense of what different innovations mean in practice, which is essential for the idea of incentivisation through example. The EITI cannot expect that Country A will be inspired to copy an innovation in Country B if it’s not clear what Country B is actually doing.

Secondly, there are governments which will be happy to claim kudos for implementing the EITI, but which will not willingly extend reporting into areas that threaten their vested interests. To take a hypothetical example, a government which doles out oil contracts to its cronies at below-market prices, via rigged tenders, won’t choose unprompted to extend EITI reporting to these tenders.  It might even decide on a tame extension of the EITI into a less important area, so as to claim credit as an “innovator”, while leaving the real problems untouched.

So the EITI needs some way of saying whether or not a country’s EITI programme is addressing known and serious problems in its extractive sector and, if not, then some way of recommending that reporting be extended to cover these problems. Otherwise there is no defence against the damaging accusation that by Validating countries based on just one segment of the value chain, the EITI is inadvertently handing buckets of whitewash to some very corrupt governments.

Thirdly, the EITI needs a mechanism to assess the wider effects of EITI reporting on governance and society. An expert panel  could credibly play this role, provided  it has the mandate and resources to look closely at realities on the ground and report frankly on what it finds, without editing by others. If the EITI is not having any meaningful effect in a given country, then it’s better for the EITI’s credibility that this truth be published and studied in order to learn from it.

Overall, the EITI needs to take a view of its own potential which is more realistic than some of its rhetoric but more ambitious than the current reality. The EITI cannot solve the Resource Curse on its own. But with revised rules which strike the right balance between rigour and diversity, it could be effective as a source of emerging norms and good practices. It could also become more useful as what one member of the EITI Secretariat has called a “diagnostic tool”: a way of using disclosure to identify diverse problems in the extractive sector, not just in the flow of revenues, and create some pressure for these problems to be tackled. That would be less than some of us might have hoped for, but more than the EITI can do at the moment.

(A shorter version of this blog has been published at www.eiti.org)

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