Mobilizing and Managing Natural Resource Revenue: Role of the EITI

1. Mobilizing and Managing Natural Resource Revenue: Role of the EITI

2. Overview What is EITI? EITI Implementation in Africa General Benefits of EITI EITI and Natural Resource Governance EITI and the APRM Revenue Mobilization through EITI Examples of Achievements and Challenges in Africa

3. EITI Origins and Purpose Abuses of resource wealth in countries rich in oil, gas, and minerals (“resource curse”) Calls to improve transparency and accountability World Summit for Sustainable Development, Johannesburg, October 2002: idea of EITI EITI Principles (2003): pledge to harness resource wealth as engine of growth and development, through proper management EITI Criteria (2005): requirements of successful implementation

4. Key Features of EITI Country ownership: voluntary accession Multi-stakeholder focus Mandatory disclosure of company payments and government receipts Wide dissemination of EITI Report Independent validation of EITI compliance EITI among international standards and codes; endorsed by UN and AU; used by African Peer Review Mechanism (APRM)

6. This slide: Key elements in every implementing country (companies disclose, governments disclose), independently and credibly verified and reconciled Process overseen (by multi-stakeholder group of government, companies, civil society), process published ? thoroughly discussed [Press again] EITI: forum for dialogue and platform for boarder reforms [Press again] – Example: the government along with stakeholders may decide to work for more transparency: in the award of licensing and contracts, and monitoring of the sector [Press again] – Might push for; more transparency (the distribution of government spending) [Press again] – Link up with other elements of governance (reform of the public financial and budgeting system) These additions; entirely up to them. Blue elements: the EITI ‘core’. Power of the multi-stakeholder process; help focus on ‘governance chain’ in the most need of transparency. This slide: Key elements in every implementing country (companies disclose, governments disclose), independently and credibly verified and reconciled Process overseen (by multi-stakeholder group of government, companies, civil society), process published ? thoroughly discussed [Press again] EITI: forum for dialogue and platform for boarder reforms [Press again] – Example: the government along with stakeholders may decide to work for more transparency: in the award of licensing and contracts, and monitoring of the sector [Press again] – Might push for; more transparency (the distribution of government spending) [Press again] – Link up with other elements of governance (reform of the public financial and budgeting system) These additions; entirely up to them. Blue elements: the EITI ‘core’. Power of the multi-stakeholder process; help focus on ‘governance chain’ in the most need of transparency.

7. Liberia EITI Report (2008/09): Summary Table,After Reconciliation,Expanded Sector Coverage

8. EITI Implementation in Africa 21 countries in Africa implementing the EITI 31 EITI Reports published by 18 African countries Five African countries EITI-Compliant: Central African Republic, Ghana, Liberia, Niger, Nigeria Several more countries close to compliant or undergoing validation But also risk of falling behind: two countries delisted Outreach to resource-rich countries around the continent (South Africa, Malawi, Uganda) Exploring interest in North Africa

9. EITI Benefits (1) For implementing countries: Signal of commitment to transparency and good governance Information on all company payments in one accessible report Building trust between government, companies, and communities Improving investment climate Promoting social and economic stability Reducing conflict around natural resources

10. EITI Benefits (2) For companies and investors: Documenting commitment to good business, transparency, and anti-corruption Dialoguing with civil society and communities Making contribution to country’s development transparent For civil society: Gaining seat and voice in Multi-Stakeholder Group Making government/companies more accountable Improving information on government revenue

11. EITI and Natural Resource Governance EITI mandate focused on revenue transparency Pressure to improve broader resource governance radiates from multi-stakeholder engagement: - Investment incentives: level, transparency - Contract negotiations (Legal Support Facility) - Current tax regime for EI - Regulatory environment for EI - Revenue sharing arrangements EITI recognized in APRM Questionnaire: - Economic governance - Corporate governance

12. Revenue Mobilizationthrough EITI EITI not about revenue collection but about transparency and governance EITI highlights actual contribution of sector to government revenue (if MSG directs: including sub-national governments or in-kind/CSR contributions) Transparency leads to questions: - tax/incentive regime or tax compliance? - fairness of contracts? - capacity constraints? Comparative studies and peer learning Technical assistance in tax policy/administration (IMF, bilaterals) Legal support for contract negotiations (AfDB)

13. Achievements and Challenges in Africa: Examples Achievements: - Mali: EITI implementation prompted Parliament to establish special trust account for mining revenue - Niger: EITI stakeholders helped promote constitutional requirement of contract and revenue transparency - Tanzania: EITI Report revealed lower company taxes than workers’ PAYE contributions - Zambia: EITI triggers debate about tax evasion Challenges: - Timely audits (to international standards!) of government accounts, especially of government revenue - Capacity constraints among stakeholders - Operational freedom for civil society in some cases

14. Umaru Musa Yar’AduaPresident of Nigeria “[NEITI] has recorded major achievements in its four years of operations. Among other accomplishments, it commissioned and popularized the first comprehensive audit of the petroleum sector for the period 1999 to 2004; it conducted studies that swelled government’s coffers by over $1 billion; and it catapulted our country into a leading position among countries implementing the EITI”. January, 2008

15. EITI Rules

16. Thank you for your attention!For more information:www.eiti.org EITI International Secretariat secretariat@eiti.org