By Graham Baxter, Director, Responsible Business Solutions, International Business Leaders Forum
I was there at the start, Johannesburg 2002, although I have to admit I was a bit busy promoting BP's Solar business in the Ubuntu Village tent to spare much time for the launch by the UK Prime Minster, Tony Blair, of the Extractive Industries Transparency Initiative. When I was asked to take on BP's corporate responsibility role the next year, I was delighted to find that it included the BP "seat" in the emerging governance structures of the initiative.
So it may be appropriate for me to offer my reflections, from a business perspective, on what has been achieved and what can be done to accelerate progress in increasing transparency and thereby talking corruption associated with oil, gas and mineral extraction operations around the world.
Let's start with the good news. Thanks to some extraordinary leadership, a great deal has been achieved. Leadership has come from within the initiative, where we must recognise the roles of the Chair, Peter Eigen; the original Secretariat led by Ben Mellor at DfID; the current Secretariat in Oslo led by Jonas Moberg; and the Board representatives, all of whom have driven the initiative forward. But we should also acknowledge the personal leadership and commitment given in the participating countries, firstly in Nigeria and Azerbaijan, and now in a further 21 countries from all over the world. Eleven of these have produced some form of EITI report, which, after all, is the primary objective of the work. This is a voluntary multi-stakeholder initiative and the political "prizes" for participation are largely intangible. So for a politician to take the first steps to engage the initiative requires personal conviction that it is right for the country and the right thing to do.
However, as we approach the Third Plenary session in Doha, it is also easy to be critical about the slow rate of progress which has been achieved in the seven years since the initiative was launched. Although there is hope that the first validation report will result in the first fully compliant country being announced shortly, the fact is that the process has been painfully slow. As a result, the endorsed ambition that EITI should become "mainstreamed" common practice and thus cease to be necessary as a voluntary initiative, seems as far away today as it did when the vision was first established.
There are a number of reasons for the slow progress, with some being more valid than others. Any voluntary multi-stakeholder process can only move forward through consensus, a valuable and sometimes illusory quality which takes time and effort to build. There are also very few working models to copy in this domain, requiring much of the governing processes to be invented for the first time. Time and momentum were certainly lost when the Secretariat was transferred from the UK government to the current arrangements in Oslo and there may have been opportunities lost for fast tracking the process which has at times got bogged down in the consensus mire.
However, let me offer three suggestions which may help to accelerate progress:
- Validation. This has been the subject of intense discussion since the early days of the EITI Core Group and rightly so, since without an objective review of the reporting process, how is the integrity of the process to be assessed? However, given the relative fragility of the initiative (which remains voluntary) and the un-charted waters it is attempting to navigate, I believe there is a strong argument for pushing for further validations to be commissioned, even if they have to be paid for by independent third parties. This will gain more practical experience in the validation process, which is so far largely untested. This will provide a sound basis for further refining the process rather than endless scenarios and what-ifs.
- Multi-stakeholder processes. I will admit that in my early exposure to the EITI, I was somewhat at a loss to understand my NGO colleagues' focus and concern over in-country multi-stakeholder processes and in particular the role and active participation of local civil society in them. I have come to recognise how fundamentally important this dimension of the process really is and why more practical support and financial resources are needed to strengthen these fledgling institutions so they can play their essential part in the process.
- Disaggregated reporting and confidentiality. At the risk of alienating my former colleagues in the participating companies, I do agree with the conclusions of the Revenue Watch Report "EITI Beyond the Basics" in this area. Responsible extraction companies participating in the EITI don't have anything to hide and should, I believe, be actively encouraging host governments to require disaggregated reporting of company data. The confidentiality issues can all be overcome, as Nigeria and some companies in Azerbaijan have demonstrated, and the issue is simply getting in the way of trust building and openness-essential ingredients if more rapid progress is to be achieved.
Finally, a comment on "Beyond EITI" or "EITI plus plus" as the redoubtable former Nigerian Minister Obi Ezekwesili often used to referred to the extension of the transparency process and "following the money" to how it is spent by the host governments. While I agree that extending the process both downstream and into other business sectors are ultimately the right directions to travel, we should remember that it has taken nearly ten years to get even one country to fully Compliant status under the existing limits of the initiative. We should be careful not to lose focus on the basics of the EITI, which in themselves can make a big contribution in the fight against corruption on the back of natural resources development. Let's not throw the revenue transparency baby out with the good governance bathwater!