The UK Minister in charge of the country's EITI process explains why in this blog post.
Jo Swinson is UK Minister for Employment Relations and Consumer Affairs in the Department for Business, Innovation and Skills. This op-ed was first published in The Sunday Telegraph's Business Reporter.
We know that a wealth of natural resources can be a blessing or a curse. Each year, international oil, gas, forestry and mining companies pay millions to the governments of resource-rich countries.
This income should be used to build schools and hospitals, lay roads, train teachers and create jobs but all too often the 3.5 billion who live in these resource-rich countries fail to see any improvements in their quality of life.
This is why we are calling for greater transparency over how resources are used and what happens to the money that comes in. Only when this information is made available to local people will they be in a position to know how their resources are used, whether their money is going missing and whether they are really getting a good deal from their government.
Here in the UK we have a strong system of transparency and freedom of information. Over the past year we have pushed hard to agree rules at the EU level that ensure oil, gas, mining and forestry companies report the payments they make to governments in each country in which they operate.
This was an important step, but in order to make a real difference we need a common global transparency standard. This means that wherever they operate, extractive companies publish what they pay to governments, and governments publish what they receive.
That is why I was delighted when the prime minister announced in May 2013 that the UK would be adopting the Extractive Industries Transparency Initiative (EITI). As he said at the time, it will “create a level playing field for business, help the British people hold decision makers to account and encourage other countries around the world to take similar steps”.
The EITI will help shine a light on the revenues that countries earn from their natural resources. In 2009 an EITI report on Nigeria identified an $800million discrepancy between companies’ payments and the government’s receipts for oil. It is vital that gaps like these are identified if citizens are to be empowered to hold their governments to account, so that the sale of natural resources benefits the many, not just the few.
Our decision makes us real leaders in the battle to make sure natural resources are used to combat poverty, boost economic growth and improve social mobility.
I will be championing the UK’s EITI commitments, and am keen for the UK to drive forward with implementation – providing real international leadership that will encourage other countries to follow suit.
Transparency has also been a key theme of our G8 presidency. This summer the prime minister successfully secured commitments from other countries at the G8 summit showing that an increasing number of countries across the world recognise how vital transparency is.
Alongside the UK, France, the US, Germany and Italy are all taking steps to implement or pilot the EITI. Australia, the next chair of the G20, is also currently conducting a pilot.
In July I welcomed more than 130 representatives from industry, civil society and government departments to our EITI launch event. The next step is to set up the Multi Stakeholder Group. UK Oil and Gas and civil society organisations are currently considering nominations for representatives on this group, which will take all the key decisions on implementation. The first meeting of the group is due to take place next Wednesday, October 9, and I look forward to working with our partners to implement the EITI here in the UK.
There is much to be done to encourage the adoption of strong reporting rules so that citizens in the UK and around the world have access to this important information. However, with the example we are setting, I am hopeful that we will see more countries making commitments to fairness and transparency as well.
This will give people the detailed information they need to track payments and work out whether they are seeing the benefits of the funding invested in their country.