November 1, 2013 by jokhinmaung
By Cath Candish
So it’s here. The long awaited Open Government Partnership (OGP) summit has finally arrived, and I am sitting in the lobby of the Queen Elizabeth II conference centre in London. There’s something of the cruise ship about this building.
Its grey angular body juts aggressively into the elegant Westminster landscape. But once inside, smooth lines, space and light make it the ideal place for a conference; not least one that could be about turning a ship around – or a fleet of ships – for that would seem the challenge of the OGP. It’s the challenge of how to engineer the tough turn-around from a default compass setting of ‘information is power and closed government is the way forward’, to instead set sail and make for the fresh winds of public scrutiny, engagement and open government.
‘Transparency is an idea whose time has come’, was Francis Maude’s much quoted phrase today at the OGP, but even though transparency is increasingly protected in law, there is nothing inexorable about its progress. The OGP aims to help governments inspire one another through the tough process of reform. Turning those government ships around is going to take time and commitment.
Now is the time, but is there the commitment, especially as the G20 looms on next year’s horizon?
Britain, the host of this year’s summit, can be seen as Admiral of the fleet. This morning David Cameron announced to us that a central register of company beneficial ownership will be made open and accessible to the public. This is real progress, that if properly implemented, forces shell company beneficiaries out of the shadows. But as the British Government knows well, the work doesn’t end here.
One of the first places to start is the budget. Tearfund would like to see OGP member countries join the fiscal transparency working group, to agree together on how to make year on year progress towards greater fiscal openness. Because, Tearfund has found that once the process of fiscal transparency begins, people develop an expectation that goes beyond budgets. They want to know more information and have more say about more policies, how they are made and implemented.
I care about all this because I have seen with my own eyes that corruption is indeed a deadly disease that breeds poverty: the desperate ingrained kind; conflict: the protracted complex kind; and hopelessness: breeding the ‘if you can’t beat ‘em, join ‘em’ approach. But this disease is preventable: ‘Transparency’, as one Mexican participant famously said, ‘is like a vaccination against corruption’.
What does it say to the rest of the world, that the OGP was started by a handful of countries, including US and UK? Some say they prefer to seek African solutions to African problems. But corruption is not an African problem as much as it is a global one; the globalisation process has deepened, entrenched, and tossed it around into ever more complex international waters.
It will take a global solution, and a host of local ones, to turn these ships around. The question remains as to whether the UK will lead the fleet on to the G20 next year, encouraging other members to follow our example. Will we continue the momentum of progress made this year into the next, or will we cast adrift on a raft of our own complacency? Full steam ahead!
March 20, 2013 by Caroline Maxwell
500 IF Campaigners #SpottheGeorge in Westminster on Tuesday 19 March.
Source: Craig Philbrick, Tearfund.
After the buzz of 500 campaigners in Westminster donning George Osborne masks yesterday (scary but true), and not to mention years of calling for the UK to meet its promises on aid, Budget Day has finally arrived.
As MPs gathered in the Commons to hear the Chancellor’s announcement, aside from the usual political posturing and jeering, there was an air of expectation unlike any other Budget. The atmosphere could even be felt outside the ‘corridors of power’ as campaigners waited with bated breath. For Tearfund it meant huddling around the nearest TV and we were not disappointed on news about international aid.
Today proved to be a momentous occasion to go down in history books as the day when the UK Government finally met its international aid commitment. A day of which the great British public should be proud. Ok, so we won’t get the bunting and flags out as we did for the Olympics or Royal Wedding – nonetheless today is a cause for celebration – we’re the first G8 country to achieve the target.
It was the World Council of Churches who first recommended a target figure for aid, in 1958, a recommendation taken on by the UK in 1970. Since then, Christians across the world and in the UK have been in the vanguard of campaigning for it. After 40 years, we have now reached our pledge of giving 0.7 per cent of our national income to the world’s poorest.
It is not very British to praise the Government, but it should be commended for sticking to its foreign aid manifesto pledge. Whilst aid is a small slice of government spending, any commitment is not to be sniffed at in tough economic times. As the Archbishop of York said today ‘We shouldn’t have to choose between international aid and tackling poverty in the UK. It’s a false choice. Loving our neighbour means showing love and generosity not only to the people down the road, but also to our neighbours wherever they live in the global village. When the poor and vulnerable are left behind then we are all worse off as a society, as a nation and as an international community.’
Our aid commitment will boost investment in agriculture and nutrition to tackle the scandal, which sees nearly 900 million people – one in eight of the world’s population go hungry. It means people like Farasi, a 70-year old woman living in a rural village in Zimbabwe, can now not only feed herself and her grandson, she can also send him to school by selling the extra crops she has been able to grow through sustainable farming methods. ‘There is no more hunger because of this way of farming,’ she says. ‘As we get surplus we give to others who are poor and do not have enough food’.
Farasi a grandmother and farmer in Zimbabwe. Source: Clive Mear, Tearfund
While we can celebrate this achievement we know that aid alone cannot end poverty and hunger. Existing revenues from tax and investment also needs to be harnessed. That’s why the ‘Enough Food for Everyone IF‘ campaign will continue to call for issues such as greater transparency in tax revenues, in land deals and in government budgets so that ordinary people can hold their governments to account in how money is spent. It is why Tearfund is also calling for greater transparency in extractive industry revenues so that spending can be targeted where they are most needed.
Tamsin Greig, Tearfund supporter and fan of the IF Campaign.
Source: Clive Mear
As well as ensuring that the poorest people in the world can share in the proceeds of growth, through eradicating corruption, communities also need to be resilient to the risks of climate change. Tearfund is calling on governments to identify new money, outside of aid budgets, to help vulnerable communities adapt to the impacts of climate change, for example through a shipping emissions levy, so that poor families like Farasi can still feed themselves in a changing climate.
So as the frenzy of the Budget dies down and the news agenda moves on the real job continues to ensure that aid is used effectively. Tearfund is actively speaking out on this issue so that every penny spent reaches those who need it. The UK is leading other donor countries, not only in its commitment but also the fact that DFID is one of the most scrutinised government departments. We owe it to the widow who lost her spouse in conflict, the unemployed farmer who lost his livelihood due to climate change, the child suffering from diarrhoea who cannot access safe drinking water – and the millions of others like them so that their stories can be transformed for the better.
February 25, 2013 by Graham Gordon
This week board members of the EITI (Extractives Industry Transparency initiative) will be meeting in Oslo to discuss how to strengthen the initiative so that it meets its aim of increasing transparency, public debate and accountability over the management of oil, gas and mining resources. Key questions will be discussed, such as whether to require extractive industry companies to disclose contracts, project level information the beneficial owners of licences, as well as how to ensure this information is presented in a way that reaches the right audiences in an accessible and understandable way.
In the light of these debates, Revenue Watch Institute, Paz y Esperanza and Tearfund have recently published a report into the use of EITI information in Peru published through its first report.
Women in Vinchos Community, Ayacucho at information meeting by mining company
The EITI is now implemented in 37 countries and EITI reports present information on payments by oil, gas and mining companies, as well as the receipts by governments, and try to reconcile any differences. The subsequent dissemination of the results aims to enhance transparency, public debate and accountability over use of extractive industry revenues.
The research found that there had been little impact in Peru so far. Various reasons were given and are covered in detail in the report, but below I mention just three clear suggestions for change given by the potential users of the information.
1. Provide information that is relevant to people’s lives
The overwhelming response from local communities was the desire to know what impact the revenues from extractive industries were having on their daily lives. Put simply – what money was paid for the mining project in their community, what reached the district and what was it being spent on. The other main demand – more at national level – was to know the terms and conditions of contracts, with concerns that many of these were not negotiated in the interests of the country, but had been the result of underhand political deals. Both are needed to make the EITI relevant.
2. Work with ‘info-mediaries’ to interpret the information
Many of those interviewed complained that the information they received – particularly in long reports – was too complicated and difficult to understand. Others said that they wanted additional information on the full ‘extractive revenue routes’ from contracts through revenue payments to government spending and impacts.
Recommendations were for groups such as NGOs, media organisations and universities to act as ‘info-mediaries’ (information intermediaries) to interpret complex information and present it in a way that is understandable and relevant to different audiences. There is a role here for greater support from EITI national secretariats as well as donor agencies, and it should also be considered as part of the G8’s transparency agenda.
3. Analyse the context and link to wider social and political processes
The context in Peru is one of rapid development and expansion of oil, gas and mining activity, which has been accompanied by increased social conflicts. In December 2012, the government’s Ombudsman recorded approximately 230 conflicts, more than half of which were related to the exploration and exploitation of minerals. The most high profile case is the ongoing conflict over the Conga mine in Cajamarca, which has paralysed operations for over a year.
The country is largely divided into ‘pro’ and ‘anti’ mining camps and this affects any work by the EITI, with it being seen by some as a government initiative and therefore ‘pro’ mining and not to be trusted.
Although the EITI is not a panacea to resolve all of Peru’s problems, it needs to link closely to the dominant political issues such as environmental protection and local development planning if it is to remain relevant and contribute to better natural resource management and wider reforms. As one respondent from Cajamarca commented:
‘The EITI only plays a role of] informing and disseminating, but many people ask us what use this reconciliation is if it goes no further than making recommendations. A number of people have asked us what point there is in Peru being a compliant country if this has no impact on conflict resolution.’
[A version of this article was first published on the EITI website and reproduced with kind permission]
January 23, 2013 by Graham Gordon
Today the 2012 Open Budget Survey was released; at the same time as the iF campaign to end world hunger is being launched. It may seem like these two have little connection, but read on…
The Open Budget Survey is an independent global measure of budget transparency and accountability around the world.
This year’s findings don’t make particularly happy reading. According to the authors, the International Budget Partnership, “the 2012 Survey reveals that the national budgets of 77 of the 100 countries assessed fail to meet basic standards of budget transparency.” These countries represent half of the world’s population and mean that fewer than half the world’s citizens have access to key documents and information about budget proposals or government spending – they cannot see where the money has come from or where the money is being spent. This lack of transparency gives greater opportunities for corruption and misuse of funds.
The Survey also finds that there governments are guilty of a “widespread failure” to provide sufficient opportunities for citizens and civil society to engage in budget processes.
However, it is not all bad news and the Survey shows that over the past 6 years, most countries involved have made improvements, often simply by putting information into the public domain that is already produced. Change is therefore possible and all countries can quite easily reach high levels of budget transparency and participation.
Farmers in India. Photo: Layton Thompson, Tearfund
Returning to the IF campaign (full name, “Enough food for everyone iF…”), this seeks to mobilise UK and international action to end global hunger. Laura Taylor has given a good summary of the campaign which, among other things, seeks greater transparency so that ordinary people can follow government revenues and spending and make sure it’s spent on tackling poverty and combating hunger.
That’s where the connection comes. Transparency in government budgets enables citizens to see where money is being spent and helps ensure that the best investments are made, whether they be in health care, education or to promote food security and better nutrition.
One example is the Subsidios al Campo campaign in Mexico, which succeeded in getting the government to publish details of the agricultural subsidies to small-scale farmers. The information showed that many of the subsidies went to the wealthiest 10% of farmers, which led to effective pressure to reform the programme and redirect the spending to those most in need.
The iF campaign is therefore calling for the UK and other G8 governments to take a lead in promoting greater transparency across the board – in tax revenues, in land deals and in budgets. Not all of the G8 members fair well in the Open Budget Survey (although the UK is in third place, behind New Zealand and South Africa). Some of their counterparts in the G20 have even further to go.
The UK has two major opportunities to galvanise support for international action around budget transparency in 2013 – as chair of the G8 and co-chair of the Open Government Partnership. The next Open Budget Survey in 2014 – for which the data will be gathered at the end of this year – will show whether they have been successful or not.
To finish, I echo the words of Warren Krafchik, Director of the International Budget Partnership: “Reforms can be accomplished at little to no financial cost and can benefit billions of people. Good budget practices have been identified and standards have been set. Substantial technical assistance is available. The framework to improve exists – all that is typically missing, in many individual governments, is the political will to act. That must change.”
January 3, 2013 by Sarah Hulme – Food Security Policy Advisor
Happy New Year! Enough time off – now back to work. To mark the start of 2013 we’ve made some changes to Just Policy, so that it’s easier for you to follow the items you’re interested in.
If you’d like to receive all blog posts, then please follow us by email (sign up in the box to the right).
If you’d only like to receive blog posts only on a particular topic(s), then please sign up to the relevant RSS feed on the right. [See here for a brilliant explanation of what RSS is, and why it’s useful – h/t Owen Barder.] Our current topics are as follows:
- Aid
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For the most part, our regular authors are also on twitter. If you’re interested in following us, our twitter handles are as follows:
1LauraTaylor, (cross-cutting)
RichardJWeaver, (environment)
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GrahamGordon4, (governance and corruption)
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JKfoodie, (food security)
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And myself, at 1SarahHulme (food security)
You’ll also find mini profiles of each author to the right (click on the photo squares), which will tell you a bit more about who we are. At the top of each blog post you will find who posted that blog, and what their speciality is.
We’re trialling this, so please do comment below with any bugs/kinks you find – and of course any other suggestions you’ve got!
December 18, 2012 by laurataylor
Apart from being the year of the wonderful London Olympics, 2012 has been the year of the doughnut and sustainable development goals; land grabs and tax dodgers; debate about whether we should give aid to India or to Rwanda; and a new focus on inequality – in the international development NGO bubble, at least.
We didn’t get legislation on 0.7%, or any real progress at the UN climate talks in Doha. But we did get a Number 10 High Level Meeting on Hunger and a new focus from David Cameron on the “golden thread” of development – whatever that actually means. We’ve been talking about the scourge of hunger and a need for investment in agriculture overseas, at the same time seeing alarming demand for food banks here in the UK.
Justine Greening MP (picture from DFID website)
We have had a new Secretary of State for International Development here in the UK in the form of Justine Greening, an EU in economic crisis and a re-elected US President who we’re all willing to do something a bit more radical on climate and development – but we’re not holding our breath.
So, it’s that time of year where we look forward to what we might be talking about in 2013. Here’s my best guess, which is obviously bound to look horribly out of date by around April…
1. Transparency
In his Wall Street Journal article, David Cameron set out why he feels transparency has such an important role to play in development. Our partners in Tanzania, carrying out public expenditure projects to ensure that schools and clinics get the funding they need, couldn’t agree more. The UK is chair of the G8 and of the Open Government Partnership in 2013 and is in a strong position to drive forward initiatives that can increase transparency, both in how governments raise money (particularly tax payments and money for natural resources) and how they spend it – with more open budgets. The EU are also in the final stage of debating the expected legislation to make oil, gas and mining companies publish what they pay to governments, which is something Tearfund has been campaigning for and which should really help communities to track how the money is spent.
2013 could be a really good year for transparency. But transparency should not be seen as a panacea. Making financial information public is a great start, but it needs to be in a format which is easily accessed and understood by local communities. Capacity has to be built so that people can digest it and then speak out. And a free press and accountable governance structures are vital. Tearfund will be working with our partners on new research on how best to build on transparency to bring about lasting change over the next year.
2. Planetary Boundaries
The global climate change talks have all but ground to a halt. There is a fundamental disagreement about how to balance the cost of putting development on a more sustainable footing – between developed nations who are responsible for nearly all carbon emissions historically, or the rapidly developing middle income countries whose future carbon emissions could be substantial. And carbon is but one of 9 planetary boundaries which have already been breached or are likely to be soon.
Oxfam have done a brilliant job of bringing life to the science behind this concept and of making it relevant to the international development debate. And Alex Evans has written about the importance of bringing this thinking into the debate on the new framework for development which will succeed the Millennium Development Goals (and should bring in the new sustainable development goals). I’m confident that this issue will continue to rise up the development agenda given it’s urgency and because – as the poorest communities are affected first and most deeply when the environment deteriorates – it is fundamentally about justice. We need to continue to work together to re-frame the climate change debate and to build a public mandate for truly sustainable development across the globe.
3. Predistribution
A bit left-field here, but predistribution is an idea initially put forward by US academic Jacob Hacker but gaining popularity with the centre-Left in the UK and elsewhere. Basically it is the idea that the state should try to prevent inequalities occurring in the first place rather than trying to reduce them through the tax and benefits system. In the UK it is an idea that has become quite strongly linked to the living wage campaign.
But to me, predistribution is the essence of what the development debate should be about. Rather than squabbling about a minimal aid budget, we should be focused on tackling the root causes of inequality – both between and within nations. And of course, that is what many NGO campaigns are about. But we still need to make that idea more popular and palatable – and I suppose wonk words like predistribution may not help that cause! But it could give these ideas more political saliency, at least in some quarters.
So, those are my thoughts, but what do you think? What are the obvious things missing from this list?
November 16, 2012 by Graham Gordon
Exports of African oil and minerals totalled around $333 billion in 2010, nearly 7 times the $48 billion of international aid given to the continent.[1] However, such wealth often provides little benefit to the people living in these countries due to opaque systems that facilitate corruption.
In a world where there aren’t endless pots of money available, we need to ensure that resources – whether from tax, investment or aid – are used to tackle poverty and are not lost along the way.
Increased transparency is one part of the solution.
Tearfund has over a decade of experience working to make government, society, and economy work well, and especially for the poorest. When we ask our partners what they want, the request to support them in fighting corruption comes back time and again. So we help them hold their governments to account. And it works. By pushing budget transparency, partners in Tanzania have seen schools being built and health centres stocked with medicines.
Local budget tracking committee in Tanzania
The UK government recognises that transparency is critical for effective government, engaged citizens and efficient public services. It has set itself the ambitious aim of becoming the ‘most open and transparent government in the world’. This does not stop at our borders: David Cameron is clear that transparency and fighting corruption are part of the ‘golden thread of conditions that enable open economies and open societies to thrive’.
This has borne fruit domestically. DFID came top in the recent rankings for aid transparency and the UK government came third in the Open Budget Index for transparency in budgeting. But if open government is to make a real difference to the world’s poorest people, the UK government must grasp the opportunities of 2013.
As co-chair of the Open Government Partnership (OGP) and chair of the G8, the UK has a unique opportunity to coordinate governments, the private sector and citizens to ensure that resources are used to tackle poverty.
Specifically, we are looking for international action on transparency in government budgets, tax payments, and natural resource revenues.
Transparency in government budgets
Beyond the red box photo calls, budgets can seem dry and boring. But cash is king, and budgets are the heart of government activity. They show where money comes from, and where it goes. As “pasty-gate” reminded us, no budget decision can go unnoticed in the UK.
UK Chancellor George Osborne presenting the budget
But many governments do not have transparent budgets or allow citizen participation. A lot of money can go missing as a result. The good news, as shown by the Open Budget Index, is that improvements in this area are possible reasonably quickly through concrete government action.
The UK should work with other governments – both in the global north and south – to reach the highest standards on budget transparency and citizen participation. The OGP provides a real opportunity for this.
Transparency in tax payments
Research by Christian Aid has estimated that tax dodging costs poor countries US$160bn a year, again money that could be used by developing country governments to invest in vital services and meet the Millennium Development Goals.
Global action is needed to develop and implement rules which prevent companies avoiding their responsibilities to pay taxes, including the automatic exchange of information between revenue authorities, country-by-country reporting of revenues for all sectors and tackling tax havens.
The UK needs to be ambitious in pushing for concrete action through the G8 and G20.
Transparency in natural resource revenues
As mentioned above, revenues from natural resources often fail to deliver the promised benefits.
The UK government has shown strong leadership in this area, pushing for effective EU transparency legislation for companies to publish what they pay to host governments, in line with comparable US rules.
To have the greatest impact, other countries such as Canada, Australia, China and South Africa need similar legislation. Here the UK government can bring together leaders of resource-rich countries to develop global standards of natural resource governance.
On a final note, the government must lead by example by joining the Extractive Industries Transparency Initiative (EITI), and encouraging other G8 and G20 countries to join. With the EITI providing a forum for business, civil society to improve participation, transparency and accountability of natural resource management, surely the most transparency government in the world would want to part of it?
Graham Gordon
Senior Policy officer – Governance and Corruption
Tearfund
[1] OECD, (2011), Development At A Glance. ODA to Africa, p2 and WTO, (2011), International Trade Statistics, Merchandise trade by product, Table II.23
September 18, 2012 by Graham Gordon
Bishop Munga speaking at the European Parliament
By Bishop Stephen Munga
I came to the European Parliament in March this year as part of Tearfund’s Unearth the Truth campaign to ask MEPs to pass strong transparency legislation.
Today they sent a very clear message in the vote on the Accounting and Transparency Directives. The Legal Affairs Committee, under leadership of MEPs Klaus-Heiner Lehne and Arlene McCarthy, has insisted that project level reporting by extractive industry companies is the only way to produce meaningful information. Their proposed payment threshold of 80,000 euros is also welcome, as is the removal of all possible exemptions. This means that Europe is matching the US and we are moving towards a global standard. We are entering a new season as the benefits of transparency are now recognised at a global level.
Now the only stumbling block to effective legislation being passed in Europe is resistance by the Council and the Commission – under pressure from businesses who still want to keep certain payments hidden from us. This must not be allowed to happen. Commission and Council proposals still exclude project level payments and have payment thresholds at 500,000 euros that would produce meaningless information. Incredibly, they still entertain the idea of exemptions, allowing corruption in through the back door. Over the next few months as they come to a final position, they have the chance to change this and show they are serious about leading the way on transparency.
The information that is produced by extractive companies reporting their payments at project level will enable the communities I work with to know what money is being paid for the resources extracted from their land, and to be able to hold the district and national governments accountable for their use.
In the rural areas, Tanzanian citizens already have experience of monitoring government expenditure on issues such as health and education and we have seen a reduction in funds that have been diverted, and even some stolen funds that have been recovered. This means that more resources are available for vital development projects.
I call on European leaders to pass legislation that will support our efforts to empower citizens and not to miss this golden opportunity to work with us to combat corruption.
TrustLaw interviewed Bishop Munga in March about his campaign to increase resource transparency in Tanzania and the rest of the world. Click here for the full interview.
Bishop Stephen Munga is a member of the working group of the Tanzania Extractive Industries Transparency Initiative and chair of the Interfaith Standing Committee of Tanzania. He travelled to the EU with Tearfund as part of the Unearth the Truth campaign.
Originally posted on Reuters Trust Law, http://www.trust.org/trustlaw/blogs/anti-corruption-views/european-leaders-must-take-this-golden-opportunity-to-tackle-corruption
August 23, 2012 by Graham Gordon
New transparency rules published by the US Securities and Exchange Commission (SEC) yesterday are a significant step forward in the fight against corruption and will benefit many communities where Tearfund works. We welcome this move, although we all need more time to plough through the 232 page document.
The Dodd Frank Act (Section 1504) will mean that communities will have information in their hands about payments by companies to their governments for oil, gas and minerals that have been taken out of their ground. This will help them to seek greater accountability and to make sure that it is used for the most pressing needs such as education and health services.
In Tanzania, where vast reserves of gas have recently been discovered, and could potentially bring in billions of pounds of government revenue, these rules will enable ordinary citizens to know how much US-listed companies are paying to their government. Furthermore, with similar legislation proposed by the EU and pressure for countries such as Canada and Australia to follow suit, most extractive industry companies in Tanzania will soon need to provide such information.
On the ground, work by Tearfund partner CCT has shown that when villagers have the right information about projects that directly impact on their lives, they will mobilise and make sure the money ends up where it should. This is positive both for greater citizen participation and strengthening of democracy as well as for combating corruption and using vital resources for development.
Big step forward, but what’s in a project?
Although delayed by two years, these rules are a historic move towards greater transparency in both industry and government.
They require companies to report on payments on a country-by-country and project-by-project basis and include a wide range of payments such as taxes, royalties, production entitlements and bonuses. They also require companies to report on all payments above $100,000 and have resisted company pressure to include any exemptions (p162). This will make a significant difference.
Although we are concerned by the lack of clear definition of ‘project’ – something that could cause confusion at the time of reporting – the rules nevertheless provide clear guidance that equates ‘project’ with contracts, arguing that “contract generally defines the basis for determining the payments… that would be associated with a particular ‘project’” (p86). This point should not be overlooked, especially as in its reasoning the SEC flatly rejects company arguments that projects are defined as countries, geographical basins or simply internal reporting units.
The EU must match the US and go further
The EU has the chance to match the US regulations and to go further, particularly by defining project more clearly and by providing a lower level of materiality that will provide more meaningful information to communities.
EU Transparency and Accounting Directives are on track to be agreed by the end of the year and could pave the way for a global transparency standard and show EU leadership and commitment to development and responsible business.
The priority is for the EU legislation to define project as based on lease, licence, agreement or other form of contract that gives rise to payments to governments. This will show where the money has come from and where it has gone to.
There should be no exemptions (as there currently are in the Commission proposal) and the EU should consider a materiality threshold of £10,000, so that all relevant payments are reported.
The UK government has taken a lead in Europe and must continue to do so. MEPs are on the whole in favour of strong legislation, but there has been pressure from companies and from some other governments to water it down. This must not be allowed to happen or communities will continue to see increased natural resource extraction with few benefits.
August 10, 2012 by Graham Gordon
Tanzanian runner Samson Ramadhani is aiming for gold in the men’s marathon on Sunday, but the 2006 Commonwealth Champion is up against stiff competition in a discipline that East Africans have dominated since Abebe Bikila of Ethiopia won barefoot in 1960 – then repeated the feat (with shoes) four years later. Kenya are current champions when Samuel Wansiru smashed the Olympic record in Beijing.
Samson Ramadhani, Commonwealth Champion 2006
However (tenuous link from Olympics to mining), it may be better for Tanzania that they don’t bring gold home as the promised benefits have not always come to bear from this precious metal.
Gold mining has been intensive since the start of the 1980s and global companies such as African Barrick Gold (Canada), Ashanti Gold (South Africa) and Resolute mining (Australia’s third largest gold producer) own or have significant shares in the mines. According to the latest EITI report, gold accounts for almost two thirds of mineral production and exports earned these companies $1.076 bullion in 2009.
But in the same year Tanzania only earned $57 million from mining royalties.
What can be done?
This is something that is currently being addressed and there are some encouraging developments.
A new Mining Act was passed in 2010, which increases gold royalties from 3-4% and calculates payments based on gross as opposed to net revenues. This could double annual royalties to the Tanzanian government. However (in what is known as a grandfathering clause), the royalties only apply to new contacts, so the challenge is to get companies with existing contracts to move to this new regime. This is not just a pipe dream as one company has already done so. Others must now follow suit.
Secondly, the latest EITI report from May this year (pp20-21) includes vital information such as production volumes, which will enable the Tanzanian Revenue Authority to verify that companies are paying the right amount of royalties on the amount of minerals extracted. The report also includes details of direct payments to local governments as well as payments according to specific projects, which will allow local communities to track payments and ensure that the money ends up where it should and contributes towards development.
Many challenges still remain, as Bishop Munga, member of the EITI Multistakeholder Group told me:
“We still need increased transparency in contracts and licences, information broken down according to all projects and the material presented in a way that local communities can understand and engage with.”
These will need to be addressed in subsequent reports and should be covered in a new EITI law that is planned for next autumn. Tearfund, as part of the Publish What You Pay Coalition, is calling for proposed changes to EU Transparency legislation to address these issues and make sure that the information about payments is relevant and useful to local communities.
However, by far the biggest challenge – and opportunity – comes from elsewhere.
Gas boom
Vast reserves of off-shore gas have recently been discovered, with estimates at 28.7 trillion cubic feet of gas reserves, which, according to the UK government, is more than known UK reserves.
This is predicted to lead to a rapid growth in this sector over the next ten years, potentially bringing in revenues of billions of dollars.
Various licences have already been granted for gas and oil exploration, including to the UK’s BG Group, Ophir Energy, Royal Dutch Shell, Irish exploration firm Aminex Plc and Brazil’s Petrobras.
One government official I spoke to sounded a warning bell about the future:
“Everybody understands that we made a mistake when we entered into agreements with the mining companies in that we provided incentives that were too generous. For oil and gas we need to negotiate a better deal for Tanzania.”
There is the chance to get a better deal for Tanzania, but the window of opportunity is small – maybe only a few weeks.
Tanzania has no current gas laws in place. There are plans to produce a new framework policy in September this year. At the same time the government is also keen to press ahead as quickly as possible with exploration and exploitation, as next month they also plan to launch a new licensing round in Houston, Texas.
Energy and Minerals Minister Sospeter Muhongo has gone on record to say that the new law would increase royalties on gas production from 12.5 percent to an unspecified level and the new signing fee would be introduced. These developments are to be welcomed, but are not enough.
Civil society groups that I met on my trip last month highlighted key issues such as the need for contract transparency on all new licences, including a debate in parliament before approval. In this way ordinary Tanzanians can see if they are getting a good deal for the oil and gas that is extracted.
There also needs to be more attention paid to how the oil, gas and mining industries can bring greater economic benefits to local communities – not only though the direct revenue payments but through supporting Tanzanian businesses as service providers – local economic linkages.
Tanzania may not be bringing any gold medals home, but they still have a chance to win a medal for their gas industry. Will they do it? In four years time at the Olympic Games in Rio, we will have an answer, but the hard work needs to start now.