EITI's evolution from CSR to governance standard is the key to emerging economies

“East outmanoeuvres west over Africa” was the heading of a contribution by Patrick Smith, the longstanding editor of Africa Confidential, to a series in the Financial Times on the competition between East and West (FT 2 June 2010). If it is true that companies from in particular China are gaining an upper hand in the race to control Africa’s oil and minerals, does it come at a price with a race to the bottom of standards? There are reasons to believe why this is not the case. The experience of the Extractive Industries Transparency Initiative indicates that level playing fields can be created. More could be done to learn from this experience.
 
China’s unparalleled economic expansion has made it the second largest global energy consumer. Chinese state and private companies have been aggressive in recent years in taking control of oil, gas and mining assets in Africa and elsewhere. With this has come a debate about whether standards, often voluntary and CSR approaches, are being undermined.
 
For western companies and stakeholders, let us begin by humbly recognising that the impact of our activities has not always been what it should have been. It was for example not long ago that bribes to foreign officials were tax deductible in most European countries. Indeed, many CSR efforts have evolved from a call for mitigation of western companies' activities impact in Africa and elsewhere. The EITI is a case in point: It is a CSR effort, in that companies can decide to support. But, the EITI is a lot more than that. It is an openness and accountability standard implemented by governments. Western-based oil, gas and mining companies’ support for the EITI has been critical for the evolution of the EITI, and one of key reasons for why EITI is now implemented in 31 countries, 20 of which are in Africa.
 
The countries and companies quickly recognised that for a standard to be effective, it has to apply to all companies in a country. There has to be a high and level playing field. This is why when a government, like the Nigerian, implements the EITI, it is not optional for companies to report according to the EITI. In fact, in Nigeria and a growing number of EITI implementing countries, EITI reporting has become mandated by law. Regardless of whether a company supports the EITI or not, they still have to report and follow the rules of the EITI. So far, we have not seen a single incident where  a company based in China or another emerging market has refused to collaborate with a host country implementing the EITI. The opposite is true, with companies from emerging markets becoming increasingly involved. In early June, a representative from a Chinese state-owned company joined for example the Iraqi EITI stakeholder group.
 
Thus a conclusion that can be drawn from the early experiences with the EITI is that it came about in part as a CSR response by companies, that quickly evolved into a standard implemented by governments. This has had many advantages, amongst them that its competitive impact is neutral. Chinese and western companies have to follow the same openness standard.
 
This experience with the EITI is yet another reminder of the importance of collaborative approaches to governance. It took civil society campaigning as well as engagement; it took company leadership; it took representatives from supporting countries such as the UK to provide facilitation: and finally and arguably most importantly, it took leaders from implementing countries to respond and take ownership.