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A look into the future of the EITI from Latin America

It has been 10 years since the Extractive Industries Transparency Initiative (EITI), a global standard towards good governance in the extractive industries, came into effect. During this decade, the EITI has expanded to all regions of the world and its impact has deepened in each of the links of the value chain of the extractive sector. With the update of the EITI standard in 2013, it is no longer merely a matter of reconciling corporate payments with government revenues. Today the EITI must show its impact on key issues for the management of the sector such as licenses, contracts, legal and tax frameworks, beneficial or final owners, subnational transfers and public spending. 

Since then, the EITI has managed, with increasing success, to be part of the countries' governance systems, promoting transparency and accountability mainstreaming. This allows us to support informed decision-making with quality data on the reforms needed by the mining, gas and oil sectors.

In this context, Latin America has been a test scenario of high relevance for the application of the standard at an international level. The countries of our region have innovated and, therefore, contributed decisively with a very important debate at a global level. A few weeks ago, we had the opportunity to discuss these experiences in the framework of a regional training organized by the EITI Secretariat in Santo Domingo, Dominican Republic.

These are the main highlights of this debate:

  • Peru was the first country to implement EITI in the region since 2007 and it has stood out as the first country to implement the EITI Standard at the sub-national level. The Peruvian regional EITI established tripartite dialogue boards at the regional government level and publishes detailed reports with data on transfers from the central government to regional and municipal governments, local universities and development funds as established by law. Currently, the Peruvian government is developing / considering an online information system so that these disclosures reach the 26 regional governments' constituencies in a timely and traceable manner.
  • Colombia carried out a program of institutional strengthening of the energy mining sector that addressed: (i) processes, particularly in the mining authority at the national level; (ii) knowledge, related to mining inspection and formalization; (iii) information for decision-making; and (iv) multi-stakeholder dialogue, through the EITI. The country innovated by putting the technology implementation at the forefront of these reforms. The National Planning Department, with the support of the IDB, developed and put into operation the MapaRegalías platform that provides transparency and traceability to all the resources coming from the sector. With these improvements, described in the Report Colombia 2030: Improving the management of the extractive sector, Colombia is positioned today to continue with the EITI agenda of automating the disclosures required by the standard with the support of existing information systems that now contain updated data and which are comparable among government entities.
  • Trinidad and Tobago managed to publish its first EITI report in 2015. In this case, the IDB supported the EITI steering committee in the country in the review of confidentiality provisions in the T & T legislation, which apparently made it illegal to publicly disclose information on payments in the extractive sector and implement the EITI. Having gained a more detailed knowledge of the legal challenges, the steering committee negotiated the signing of agreements to exchange information with the industry, and asked for a reinterpretation of the legislation to the nation's attorney general, a process that ultimately proved successful as the country was able to comply with the disclosure of the information. The innovation of Trinidad and Tobago was that the country was the first to disclose social payments, something that is recommended but not all countries achieve.
  • Dominican Republic is the most recent country to comply with the EITI information disclosure. The country has innovated in publishing its first EITI report directly in a Transparency Portal, where information is disclosed on how the Dominican mining sector is managed along the sector's value chain. This Portal includes key statistical data in open data digital format that allows filtering information, direct access links to regulations, visualizations and infographics. Since the creation of the Ministry of Energy and Mines, the Dominican Republic has promoted transparency as a basis for the management of the sector and, with the support of the IDB, is working in a program to strengthen institutional capacities with a view to ensuring an integrated and articulated governance of its mining sector.

Beyond these cases, the reality is that the sustainability of the extractive sector in Latin America and the Caribbean is at a crossroads. On the one hand, there is a general lack of trust in governments, especially in those areas where operations are carried out at the regional / sub-national level. On the other hand, the resulting tensions grow due to the impact of lower commodity prices, which mean less investments and tax revenues, which in turn implies greater budgetary and fiscal restrictions.  

Innovation is the only way out from this situation, making the most out of what we have. When looking at the standard from the challenges and innovations found in Latin America, we believe in that three key elements will strengthen the sustainability of the standard: 

  1. The countries expand their possibilities of impact on public policies if they manage to incorporate the implementation of the EITI within the framework of an integral plan or program to strengthen the management of the energy mining sector.
  2. It is essential to understand and maximize the use of information technologies, to capture and analyse information and disseminate it through agile and intuitive formats. Information technologies make sector management systems efficient, compatible and interoperable. This means a greater mainstreaming of data, better cadastres and more robust control and monitoring, transfer and expenditure management systems.
  3. It is increasingly important to take advantage of the entry points provided by public investment systems to strengthen governance in the extractive sector, especially to strengthen institutional capacity at subnational levels of government.

Innovation must lead to restore confidence among key actors and ensure the impact of transparency policies in the sector. This is achieved through reliable and timely data allowing a more efficient coordination among governments, citizens and the private sector in order to achieve the goals set by the EITI Principles, where the key goal is how to improve the quality of life for citizens. 

This blog was published in Spanish here.

Authors:

Aida Aamot is a consultant specialized in public policy and transparency. She joined the IDB’s Innovation for Citizen Services Division in May 2017. Aida is currently supporting the institutional strengthening of the mining sector in the Dominican Republic, as well as the implementation and dissemination of knowledge about the EITI standard in this country. Previously, Aida worked in Oslo (Norway) in monitoring the EITI in the region, and also supported the Ministry of Energy of Peru regarding the implementation of this standard. She holds a BA in International Relations from the Universidad del Norte in Colombia, and also has a MPhil in Culture, Environment and Sustainability from the University of Oslo. Follow Aida on Twitter @aidaaamot

Juan Cruz Vieyra joined the IDB in 2006 and is currently a Specialist in the Innovation for Citizen Services Division. He has specialized in operations aimed at strengthening public management, transparency and access to information. Before joining the Bank, he was a researcher at the University of Buenos Aires, an associate professor of Comparative Political Systems at the Catholic University of La Plata, and also a research assistant at the Johns Hopkins University School of Advanced International Studies (SAIS). He holds a degree in Political Science from the Catholic University of La Plata and a Master's degree in International Relations from the Universidad Torcuato Di Tella in Argentina and the Johns Hopkins University (SAIS). He is currently a PhD candidate in International Studies at the Universidad Torcuato Di Tella. Follow Juan Cruz on Twitter @jcruzvieyra