EITI and the nature of multistakeholder initiatives

By Eddie Rich, Deputy Head of the EITI Secretariat

There is little doubt that multi-stakeholder initiatives are the flavour of the month in the development world.  With levels of trust under severe strain between governments, companies and communities due to the current economic environment, the role and profile of such initiatives is likely to increase still further.As well as the EITI, the Voluntary Principles on Security and Human Rights, and the Kimberly Process, are well-established multi-stakeholder initiatives in the extractive sector.  There are also initiatives being developed in other sectors such as construction and medicines.  However, there has been remarkably little drawing together of the lessons on how these initiatives have been designed to meet the governance and accountability challenges that they have been established to address.

From the EITI's experience, there are four key lessons for multi-stakeholder initiatives:

1. FOCUS, FOCUS, FOCUS

The EITI has benefitted enormously from having a very well defined and narrow core.  There is no such thing as a simple sector with straightforward value chains, and a tight focus will necessarily exclude some important issues.  The focus on the revenue element of the extractive chain was and remains controversial.  Some countries have kept a tight focus in their EITI on the revenue element of the chain - the 'core' EITI.  Whilst these countries may not have made as much progress as yet on transparency and accountability in the sector, their focused implementation made it less threatening for some other implementing countries and for some companies, and has therefore helped attract more engagement and trust.   Other initiatives should try to resist the overwhelming and compelling arguments to try to cover everything at the risk of achieving very little in the end. The EITI is a global minimum standard for revenue disclosure, not a standard for best practice, and this is important in being flexible enough to be a truly country-led initiative.

2. Take it step-by-step

It took almost five years of EITI before the Validation Grid was written - 20 indicators that transformed the initiative into a concrete standard.  Over 1½ years later and we still do not have an accredited EITI Compliant country.  Worrying?  Perhaps.  But there has been good reason to define the "rules" as we go: a standard written before seeing the practice would no doubt have been inappropriate and a possible hindrance to improving the standard.  It would have had to be amended frequently, creating an impression of constantly changing the rules.  So, the second lesson is not to be in too much of a rush to write the 'rules'. However, if you take too long the momentum dies and cynicism builds-a tricky balance.

3. Make and build 'the Business Case'

There was also undoubtedly a strong business case for the EITI, but there was resistance from businesses simply because of institutional inertia.  That was largely broken by the extraordinarily pro-active behaviour of the institutional investors.  The role of the investors is often a forgotten, and always an underrated, near-unique feature of the EITI.  They did it because they saw the case for transparency for the success of the businesses that they invest in.  That case needs to be made in for other sectors undertaking similar initiatives.

4. Build a clear structure

We have a well-defined Board with representatives of the all key constituencies: implementing countries, supporting countries, supporting companies, investors and civil society, plus the Chair.  Progress is being made to ensure that these Board members more formally represent their constituencies, and for the constituencies to function more effectively.  There is an independent Secretariat.  This structure is broadly replicated at the country-level (though without supporting countries and investors).  Adopting a clear governance structure like this will provide a very powerful and efficient decision-making system and it will help widen buy-in and participation (and broaden funding-the EITI has funding from about 40 institutions).  Finally, establishing the initiative as a legal entity early can avoid distraction and funding obstacles later on.

At 08:30 on Tuesday 17th February at the Ritz-Carlton in Doha, the International Business Forum and EITI International Secretariat invite you to join a breakfast dialogue to discuss lessons learned about the governance of multi-stakeholder initiatives.