EITI Strategy Review: Everything on the Table, part 1

(Part 1 of 2)

We all know the story so far: the EITI has got off to a good start. But as the 2011 evaluation of the EITI warns us, now is not the time to rest on our laurels.

The principles established by the EITI Conference back in 2003 are not necessarily fulfilled by the EITI minimum standards, and the simple pass or fail benchmark is too crude for our present needs.

The EITI Reports

In the current standard, EITI reports tell citizens what was paid. Also, in most cases they say how much was paid by each sector or each company.

However, the reports could go further. Some have asked that they inform citizens more about how much should have been paid, whether that represents a good deal, how the money was managed and whether it was properly spent for the benefit of the people.

Furthermore, some would like to use the reports to become more useful for analysis of tax management and regimes, the economic consequences of price fluctuations, and/or the exhaustion of resources.

I’m not suggesting that the reports so far have not been useful. Readers of the 2008/09 Democratic Republic of Congo (DRC) report would surely have been shocked to note that the DRC Government received less than $200m for its mining resources.

That’s less than $1 per person per year for resources that are linked to the deaths of over 5 million people and thrown the economy back many generations. Hence it’s clear that even a minimal EITI report highlights important issues nationally and internationally.

Beyond the minimum

Many countries have, in their own ways, already gone beyond the minimum standard:

• Nigeria’s EITI are full audits of the sector, including physical audits
• Mongolia‘s EITI includes environmental costs
• Iraq’s EITI discloses export sales by the national oil company
• Peru’s EITI reports transfers to subnational levels of government enable citizens to see how government revenue from mining is distributed across regions
• Liberia’s EITI reveals forestry and agriculture revenues

These and other EITI innovations need to be recognised and welcomed by the EITI system.

Enhancing the EITI

There is Board consensus that standing still is not an option. Through the evaluation we saw the need to develop a more sophisticated quality assurance mechanism that encourages continuous improvement.

Whatever the future EITI framework looks like, it will likely need to reflect the four evolutions in the EITI concept over the past decade:

1. That the EITI is no longer just an initiative. It is certainly a standard, and it is seeking to be something more.
2. That the EITI needs to be better at providing incentives and recognition of those providing leadership.
3. That the focus should be on EITI reconciliation reports, rather than EITI Validation reports, as it better reflects the EITI’s ultimate product: annual, timely, comprehensive and comprehensible data.
4. That the EITI should not be seen as a stand-alone country exercise, but should be embedded into the governments’ financial and other oversight systems.

The New EITI System

The EITI Board has set up a Strategy Working Group and an online, public consultation mechanism to consider these questions. This represents the best chance for stakeholders to shape the EITI in the coming decade.

Alongside policy proposals from our stakeholders, the Secretariat was asked to develop a proposal for a scoring system to replace EITI Validation (the current assessment mechanism).

The International Secretariat believes that the proposed new system would:

• Better address the EITI principles by providing implementing countries and their stakeholders with incentives for going beyond the minimum standard, including making links to other governance reform programmes.
• Maintain a minimum, albeit more nuanced, EITI standard.
• Address the weaknesses with the current EITI Validation procedures, including the inherent temptation for validators to be generous when considering a country’s compliance which puts a burden on the Board and Secretariat to reassess the assessments.
• Replace most of the focus from validation deadlines to reconciliation reporting deadlines.
• Strengthen the emphasis on country ownership, through country-led plans and self-assessments.

As I said, EITI is certainly off to a good start. But, as you can see, it still has an ocean of possibilities for further development. The countries that are already extending beyond the bare minimum EITI standard can be a rich source of inspiration to this development.