How can the EITI become more relevant to people’s lives?

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

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]

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2013 – will the UK deliver transparency?

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