Challenge two

EITI reports are much more comprehensive than they used to be and therefore include information that makes them more relevant to national debates about better management of the extractive sector. It is also important that they now often contain recommendations for reform. Publishing reports is not a goal in itself. We must do better in recommending necessary reform and trying to ensure that the reforms are implemented. Transparency is not an end in itself. 

EITI reporting continues to improve. The reporting is better quality, with more timely information.12 countries have already published reports covering 2014 data. But that is still two years old and not much help to parliaments when they are considering the national budget. Recommendations in EITI Reports increasingly discuss improvements needed to extractive sector management. The EITI reporting process can make an important contribution to policy reform and change. The extent to which the recommendations are followed up is crucial to the impact of the EITI. The EITI Standard recognises this - EITI Requirement 7.1 requires that the MSG considers the recommendations resulting from EITI Reports. Another requirement (5.3 f) gives the Independent Administrator a mandate to make recommendations based on the issues and findings identified in EITI reporting.  Obviously these should reflect discussion in the MSG. The Independent Administrator is also asked to review progress in implementing recommendations from previous EITI Reports.

Some countries have started to act on their recommendations.  In Ghana for example, EITI Reports revealed that extractive sector revenues earmarked for sharing between national, local government, traditional land-owning authorities and communities affected by mining, did not reach the intended beneficiaries. This was possible because of a lack of proper accounting for the use of these resources, and irregular transfers. The EITI Report made recommendations which have been implemented and resulted in increased accountability at subnational levels and dedicated accounts set up for local governments.

As the Nigerian National Coordinator, Orji Orji, said:

Many of the present reforms in the Nigerian oil sector – including the discontinuation of the oil swap arrangements, the review of fuel subsidies, the restructuring of the national oil company, the review of contracts and the management of the joint ventures – are recommendations from the NEITI reports.  As well as the recovery of USD 2.4bn of unpaid taxes and royalties, NEITI’s operations are on course to save Nigerians tens of billions of dollars through better management of the oil and gas sector.

Another example comes from the Philippines where the Mining Industry Coordinating Council, which is tasked to implement reforms in the mining sector, has directed government agencies to develop concrete action plans based on EITI recommendations. The recommendations include giving local government units a clearer picture of how much they receive from extractive companies and eliminating delays in transfers.

Gay Ordenes, National Coordinator of Philippines EITI, described their aim: “The goal should be transparency that translates to accountability and drives reform: the starting point towards that goal is to address gaps in existing systems that the report has identified.”

Despite these good examples, not many countries are following up the recommendations in EITI Reports and addressing shortcomings identified in government systems.  A review undertaken by the International Secretariat last year showed that only 8.5% of recommendations in the sample - 300 recommendations from ten countries over the past three years - have actually been implemented.  There are several reasons for this. In some cases the firm tasked with producing the EITI Report may not have adequate knowledge or understanding of the local circumstances. Indeed, Ghana and the Philippines are examples where the multi-stakeholder group worked with the author of the EITI Report to propose recommendations.  These were then put to the government for consideration and implementation. Of course the multi-stakeholder group cannot always ensure that the government acts on its recommendations but it can always try.

The EITI in the past has not placed adequate emphasis on the discussion and implementation of recommendations. Rather the focus has tended to be on producing the next report.We need to change the emphasis, we must not produce reports for their own sake but in order to encourage reform and improved accountability. The 2016 EITI Standard will require that MSGs document the reasons for not implementing the recommendations from their EITI Reports. Hopefully this will lead to more emphasis on using the EITI to encourage reform.

From recommendations to action

Publishing reports is not a goal in itself.  Rather, the EITI should work to use Reports to trigger debate about better management of the oil, gas and mining sector  in order to contribute to improvements in the lives of citizens.

The EITI itself needs to shift from a predominant focus on compliance with the rules and issuing of annual reports, to support for governments in taking on the more difficult and longer term reforms. In these times of low commodity prices, the EITI needs to work harder to produce more useful information that helps in the management of current challenges.

My second challenge to the EITI is therefore that the EITI needs to ensure that the information in EITI Reports is useful in providing recommendations for reform.  And that every effort is made to try to ensure that the recommendations are considered and acted upon by policy-makers, parliamentarians and others.  Unless the EITI shifts its focus in this way EITI will continue to create transparency, but this transparency will have limited practical impact.