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Africa using the EITI to its potential

Region faces tricky implementation challenges, but overall there are reasons to be cheerful.

In the past month, I have met with all 24 African EITI implementing countries.  10 Anglophone and Lusophone countries in Lusaka, 13 Francophone countries in Yaoundé, and Tanzania. I have also been to Ghana (with our Chair, Fredrik Reinfeldt), Mozambique and Sierra Leone. Colleagues have been on a Validation mission to Madagascar and pre-Validation mission to Ethiopia. 

There is a common narrative about the extractives sector in Africa over the past decade.  It is often said that the region didn’t make hay whilst the sun shined. It is said that the commodity boom came and went and much of the mismanagement stayed in place.  Wealth funds were not established or if they were, they were soon empty or misdirected. The investments dried up when the prices fell. Few countries invested in downstream businesses like refineries. Many of the production costs – electricity, roads, ports, communications – remain at pre-boom levels. If anything, civil society space has closed and corruption increased. State-owned enterprises (SOEs) became cash cows and channels for patronage for political elites. Opaque ownership of companies became the getaway vehicles. 

Within the EITI, implementation has been fragile. Systematising disclosures within government systems is poorly understood and so reports are still annual standalone and heavy data-collection exercises. The beneficial ownership roadmaps may not be implemented in enough countries with enough urgency. Timeliness is slipping. 

The alternative narrative

However, following this month, I am left with an upbeat feeling.  I often marvel at the thought that a decade ago, if someone had suggested that revenue data would be disaggregated in every country by company, let alone by project, it would have seemed unthinkable. Contract transparency has become an expectation not an aspiration. Allocation of licenses are granted in many cases on a significantly open basis. Most state-owned companies are taking steps towards opening their books in unexpected ways and international traders are responding. And finally, most of us had not even heard of beneficial ownership ten years ago, let alone imagined that it would become a major international area of public debate. We are closer than ever before to being able to track international flows and debate in an informed manner whether government and companies are getting a good deal. Pockets of civil society space have been protected and some brave campaigners have occupied them. The EITI deserves credit for this.

More specifically, I see four major areas of positives: 

1.  I have been heartened by tangible progress in many individual countries.  Madagascar has been producing excellent studies, with a lot of information on artisanal and small-scale mining and local transfers for communities, in isolation and with limited funding. Mauritania’s EITI app is an exciting usable innovation for citizens. Cameroon’s SNH and Nigeria’s NNPC are, unexpectedly perhaps, pioneering attempts at improving commodity trading transparency. Legislation on beneficial ownership has changed in Cameroon, Ghana and Zambia. The Democratic Republic of the Congo has more information on the beneficial owners of mining companies in EITI Reports than any other country the continent. Most African countries now have quite sophisticated online licence registers which cover more and more information.  Countries are increasingly self-funding their EITI processes and other reforms in the sector.

2. Validation has changed the quality and pace of EITI implementation.  The substance of discussions in the sector has transformed. In many cases discussions are no longer about generalities, but focus on tough technical topics like addressing gaps in state-owned companies, license allocation, or subnational transfers. Validation has become a circuit-breaker in countries which had fallen into a “business as usual” mentality.  Tough issues - especially around governance of the process and civic space - are discussed in a meaningful manner. Recommendations and corrective actions increasingly influence the meeting agendas with the politicians, the MSGs, and the secretariats. Implementers speak more eloquently and knowledgeably about the requirements and about the overall value of the EITI. The EITI is involving new and surprising partners especially in SOEs, who knew nothing about us before and champions of reforms have found a tool in the EITI.  Obstructive officials may have to answer to their masters more than before.

3.  Political buy-in.  EITI is taken seriously on the continent. There are high level government officials including Ministers participating in MSG meetings in Cameroon, Chad, the DRC Ethiopia, Madagascar, Mali, Mozambique and Senegal. Their high profile involvement has pulled in the SOEs and made EITI an effective consultation mechanism on government policy. Ghana, Nigeria and Tanzania have quite radical anti-corruption and extractive reforms agendas.  Despite falling revenue in the sector, most places we go, we are met by committed senior ministers.

4. Political change. In the past month, the President of Zimbabwe was removed, there were important personnel changes in the Angolan and Mozambican extractives sectors, and the leadership of the continent’s most influential party, the ANC, was changed. Tanzania is making huge changes to its sector. Time will tell if these changes are positive for Africa, but there is a sense of change. 

A continent in a country: Ghana

Ghana is an example of much of what can be done with the EITI, yet faces suspension for a lack of timely data. This paradox appears typical of the continent.

The impact of GHEITI can be seen across the sector:

  • The Minerals Commission is establishing the online Minerals Cadastre Administration System, funded by the Australians;
  • The Petroleum Commission is developing its online petroleum contract portal funded by DFID’s Ghana Oil and Gas for Inclusive Growth (GOGIG) Programme;
  • The Registrar General is establishing a Beneficial Ownership register funded by DFID’s Strengthening Action Against Corruption (STAAC) programme;
  • GNPC is publishing its data annually, divesting from non-oil/gas sectors and now joining in EITI’s commodity trading work;
  • The company and agency disclosures required by GHEITI are completed online through SAP software funded by GIZ. 

All of these improvements have GHEITI recommendations as their source. And it doesn’t stop there: On the road from the airport, you drive past the mineral testing unit set up as early GHEITI recommendations. In the mine-affected communities, you hear about the community development funds which are now better directed and tracked because of GHETI.  The EITI process in Ghana has effectively been mainstreaming – becoming hardwired into company and government disclosure systems - for longer than the word has been around. 

Ghana is a deserved winner of two EITI Chair Awards and an honourable mention for BO work in Jakarta.  Ghana was ranked the top sub-Saharan African country for oil and gas in the Resource Governance Index.

However, the 2015 EITI data will not be disclosed in time this year. There is no political champion for the process.  Improvements will need to be demonstrated on corrective actions ahead of their second Validaiton in March 2017. More broadly, there is much to be done:

  • The reforms in the small-scale mining sector, including a moratorium on all licences until the systems are cleaned up, are bold and affect millions of livelihoods.
  • There is still a lot of opacity in local content in oil and gas.
  • There is much work to do to clarify the various roles that GNPC took on and to shine a light on the commodity trading business.
  • Parliament did not approve that Politically Exposed Persons be included in the BO register. 

More examples of EITI leading to tangible reforms in Francophone Africa can be found here

Much to do…

There is much to do - not least on governance, state ownership on beneficial ownership and licences. Our systems and processes tend to focus us more on negatives than on impact. And, as Validation is clearly showing us, the picture across the continent is patchy. But let’s make no mistake - the general direction of progress in some of the most challenging countries is positive. The EITI matters in these countries in ways we don’t fully comprehend.