The Board agreed that Burkina Faso has made meaningful progress in implementing the 2016 EITI Standard.

Outcome of the Validation of Burkina Faso.

Decision reference: 2018-12 / BM-39
Decision basis: 2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

13 February 2018

Board decision

The Board came to the following decision regarding Burkina Faso's status:

Following the conclusion of Burkina Faso’s Validation, the EITI Board decides that Burkina Faso has made meaningful progress overall in implementing the EITI Standard.

The Board congratulates the Government of Burkina Faso and the Steering Committee on the progress made in improving transparency and accountability in the extractive industries in a period of political turmoil, including a popular uprising in 2014 and an abortive coup in 2015. During and following the transition period, the government has remained committed to keeping the space for civil society open and dynamic. The public administration is using the EITI to drive reforms in government systems and oversight of the mining sector. The Steering Committee continues to provide timely and reliable information to the public, including civil society, media and affected communities.

Burkina Faso has gradually expanded its EITI reporting in response to demand for more information, including on sub-national payments and local content. The Board encourages the government to explore opportunities to open EITIA data and support efforts to mainstream EITI implementation by working closely with the Burkina Faso Open data initiative. The Board encourages the government and the national Steering Committee to explore opportunities to improve transparency in the artisanal mining sector and implement recommendations from the recently completed mainstreaming feasibility study.

The Board recognises Burkina Faso’s efforts to go beyond the requirements of the EITI Standard regarding civil society engagement (1.3) as well as disclosures on voluntary social payments (6.1). The Board encourages Burkina Faso to improve the internal governance of the EITI steering committee and to enhance transparency of state owned companies managing the state participation in the extractive sector. The Board also takes note of Burkina Faso’s achievements in publishing comprehensive, timely and reliable information and the government’s increased contribution to financing implementation in the country (see full assessment of EITI requirements on figure 1 below).

The Board recognizes the EITI’s efforts to provide reliable data on gold production, exports, and the sector’s contribution to fiscal revenues. Stakeholders engaged in the EITI process contributed in the debate that led to the adoption of the 2015 mining code, which allows for the transfer of 1% of company turnover to a local development fund that would be managed by local committees (source). Given its tri-partite nature and trust in the process, the Board recognizes the role of the EITI Steering Committee to provide a safe space for constructive dialogue, at the central and local level and address local communities’ concerns. With respect to improved governance systems, the Board notes the elaboration of the regulations to operationalize the environmental rehabilitation fund following the publication of the first EITI report; the modernization of the mining cadastre through the implementation of a new cadastral management software; and the inter-ministerial committee for the reconciliation and validation of mining revenues collected by central government.

The Board has determined that Burkina Faso will have 18 months, i.e. until 13 August 2019 before a second Validation to carry out corrective actions regarding the requirements relating to MSG governance (1.4), and state participation (2.6) being the main area of concern. Failure to achieve meaningful progress with considerable improvements across several individual requirements in the second Validation will result in suspension in accordance with the EITI Standard. In accordance with the EITI Standard, Burkina Faso’s multi-stakeholder group may request an extension of this timeframe, or request that Validation commences earlier than scheduled.

The Board’s decision followed a Validation that commenced on 1 April 2017. In accordance with the 2016 EITI Standard, an initial assessment was undertaken by the International Secretariat. The findings were reviewed by an Independent Validator, who submitted a draft Validation report to the MSG for comment. The MSG’s comments on the report were taken into consideration by the independent Validator in finalising the Validation report and the independent Validator responded to the MSG’s comments. The final decision was taken by the EITI Board.

Corrective actions and strategic recommendations

The EITI Board agreed the following corrective actions to be undertaken by Burkina Faso. Progress in addressing these corrective actions will be assessed in a second Validation commencing on 13 August 2019:

In line with Requirement 1.4, the MSG should task each stakeholder group to clarify their internal nominations and representation procedures to improve the transparency and participation in the process. The MSG should also agree a process to ensure greater accountability of MSG representatives to the constituencies and ensure that its per diem practice is publicly codified. As a matter of urgency, the MSG should agree a clear and formalised ToRs in line with Requirement 1.4.b. The MSG may also wish to formalise its relations with local multi-stakeholder chapters to guide developments and ensure that vibrant discussions at the local level are fed into the national MSG’s discussions.

In line with Requirement 1.5, the MSG should agree a work plan linked to national priorities and that is the product of wide consultation with stakeholders. The MSG is encouraged to consider how more meaningful discussions through the EITI, linking to national priorities, could encourage more active participation by all stakeholder groups.

In line with Requirement 2.2, the MSG should ensure comprehensive disclosure of the mining, oil and gas licenses awarded and transferred in the year(s) under review, a description of the detailed procedures for transferring mining, oil and gas licenses, including technical and financial criteria assessed, and highlight any non-trivial deviations in practice in the award and transfer of licenses in the year(s) under review.

In line with Requirement 2.3, the MSG should ensure comprehensive disclosure of the dates of application and license coordinates for all licenses held by material companies, if not for all extractives licenses irrespective of the license-owner’s identity. This information may be made available through government and company reporting systems as a routine feature of their management systems.

In line with Requirement 2.4, the MSG should encourage comprehensive disclosure on actual practice of contract disclosure in the mining sector as well as the implication of the revised government policy on contract transparency.

In line with Requirement 2.5, to strengthen implementation and prepare for full disclosure of beneficial ownership by 2020, it is recommended that the MSG continues to pilot beneficial ownership reporting in future EITI reporting.

In line with Requirement 2.6, the MSG should ensure comprehensive disclosure of the extractives companies in which the government, or any SOE, holds equity and the terms associated with this equity. It should also work with government stakeholders to clarify and document the rules and practice related to the financial relation between SOEs and the government (such as those related to retained earnings, reinvestment and third-party funding) as well as the existence of any loans or loan guarantees from the state or any SOE to companies operating in the mining sector.

In line with Requirement 3.2, the MSG is encouraged to comprehensively disclose production volumes and values for each mineral commodity produced in the year under review. The MSG may wish to work with relevant government entities to distinguish between official data on industrial and artisanal production. The MSG may also ensure that information on domestic prices of all minerals is published as part of routine government disclosures.

In line with Requirement 3.3, the MSG is encouraged to ensure comprehensive disclosure of the official figures for export volumes and values for each of the minerals exported in the year(s) under review. The MSG may also wish to distinguish between industrial and artisanal production in future disclosures.

In line with requirement 4.1, it is recommended that the national secretariat revise the scope and thresholds of reporting to expedite the reporting process and facilitate mainstreamed disclosures.

In line with requirement 4.9, the MSG may wish to liaise with key revenue collecting agencies and sector regulators to explore means of embedding disclosures of EITI-required information in routine government and company systems to ensure timelier disclosures.

In line with Requirement 6.3, the MSG should ensure comprehensive disclosure, in absolute and relative terms, of the extractive industries’ contribution to employment as well as an overview of informal activities, such as artisanal mining.

In line with Requirement 7.3, the MSG should ensure broad consultations on all recommendations from Burkina Faso’s EITI process, including Validation as a means of building stakeholder buy-in to following up on concrete reforms. The MSG should act upon lessons learned and identify, investigate and address the causes of any discrepancies in company and government reporting, establishing a clear timeframe and responsibilities for implementation of reforms. The MSG, in consultation with government stakeholders in particular, may wish to consider institutionalising its mechanisms for following up on recommendations from the EITI process, including Validation, as a means of ensuring closer attention to implementation.

The government and the National Steering Committee are encouraged to consider the other recommendations in the Validator’s Report and the International Secretariat’s initial assessment, and to document the Steering Committee’s responses to these recommendations in the next annual progress report.

Background

The Government of Burkina Faso committed to implementing the EITI in 2008 and a multi-stakeholder group was created on 16 April 2008. The country was accepted as an EITI candidate on 15 May 2009, and became compliant with the 2011 EITI Rules in February 2013.

The Validation process commenced on 1 April 2017. In accordance with the Validation procedures, an initial assessment [English | French] was prepared by the International Secretariat. The Independent Validator reviewed the findings and wrote a draft Validation report [English | French]. Comments were received from the MSG on the initial assessment [French] and the draft Validation Report [French]. The Independent Validator reviewed the comments and responded to the MSG, before finalising the Validation Report [English | French].

The Validation Committee reviewed the case on 12 January 2018. Based on the findings above, the Validation Committee agreed to recommend the assessment card and corrective actions outlined below.

The Committee also agreed to recommend an overall assessment of “meaningful progress” in implementing the 2016 EITI Standard. Requirement 8.3.c. of the EITI Standard states that:

ii. Overall assessments. Pursuant to the Validation Process, the EITI Board will make an assessment of overall compliance with all requirements in the EITI Standard.

…

iv. Meaningful progress. The country will be considered an EITI candidate and requested to undertake corrective actions until the second Validation.

The Validation Committee agreed to recommend a period of 18 months to undertake the corrective actions. This recommendation takes into account that the challenges identified are relatively significant and seeks to align the Validation deadline with the timetable for Burkina Faso’s 2016 and 2017 EITI Reports.

Assessment of EITI requirements

Not met
Partly met
Mostly met
Fully met
Exceeded

Scorecard by requirement View more	Assessment View more
Overall Progress
MSG oversight
1.1Government engagement
There is a strong political commitment on behalf of the government. The government has enacted legal reforms to facilitate EITI implementation, and provided adequate funding for EITI implementation.
1.2Company engagement
Mining companies are actively and effectively engaged in the EITI process, as providers of information and implementation and monitoring the EITI process. The establishment of EITI focal points in each material company demonstrates sustained industry engagement by stakeholders consulted. Industry representatives are taking part in outreach efforts to promote public debate, both at a national and regional level. Revisions to the Mining Code in 2015 have made participation in EITI reporting mandatory for all mining licenses-holders.
1.3Civil society engagement
There is a strong and vibrant civil society in Burkina Faso, which is adequately represented in the MSG. Through their active and savvy campaigning, civil society has effectively influenced policies and shaped the reform agenda for the government, including transparency provisions and new mechanisms for revenue redistributions in the new mining code. Civil society participate actively and effectively in the design, implementation and monitoring of the EITI process in Burkina Faso.
1.4MSG governance
The MSG includes self-appointed representatives from each stakeholder group with no suggestion of interference or coercion, although the lack of clear nominations and replacement procedures or records and the lack of clarity on the number of MSG members is a concern. Both committees overseeing EITI implementation have faced challenges of inconsistent and insufficiently high-level participation. Aside from the foundational decree, the EITI Chair has never signed the MSG’s ToRs and there are gaps between the draft ToRs and aspects of Requirement 1.4. Per diem policies and rates did not appear to be adequately codified for public accountability.
1.5Work plan
Stakeholders on the MSG consider that they have been involved in the drafting of the work plan. Civil society confirmed that their priorities were taken into account. The work plan is linked to national priorities for the mining sector. The 2016-2018 action plan is fully costed, includes measurable results, an indication of funding sources and is published on the EITI website. However, there is scope for broader consultation on the work plan and inclusion of other relevant government activities in the sector. The work plan could also better reflect ongoing activities by the Ministry of Energy and Mines.
Licenses and contracts
2.2License allocations
The 2015 EITI Report describes the statutory license allocation and transfer procedures, highlighting the number of licenses that were granted or transferred in 201. However, it does not highlight non-trivial deviations from the statutory procedures for awards and transfers in the year under review (2015), when consulted stakeholders highlighted the existence of deviations from statutory allocation procedures. The independent Validator recommended that requirement 2.2 on licence allocations be upgraded to satisfactory progress, noting that there was no evidence of non-trivial deviations from the statutory allocation process and that all awards were made in accordance with the statutory licence allocation process.
2.3License register
The 2015 EITI Report provides a list of mining licenses active in 2014 and provided information including license-holder name, dates of award and expiry, commodities covered and name of decree awarding the license, but not dates of application or license coordinates. The report also describes Burkina-Faso’s cadastral management system, which provides public access to dates of application but only of maps of licenses, rather than their specific coordinates.
2.4Policy on contract disclosure
The 2015 EITI Report clarifies the government’s policy on contract disclosure in the mining sector, although it does not clarify whether this 2015 policy is applied retroactively to contracts concluded prior to 2015. While the report comments on actual disclosure practice, noting that decrees approving and summarizing key terms of contracts are published but full-text of contracts are not (aside from Newmont’s Tambao contract), it does not provide guidance on how to access the full text of any contracts.
2.1Legal framework
The 2015 EITI Report includes a summary description of the fiscal regime, including the level of fiscal devolution, an overview of the relevant laws and regulation and information on the roles and responsibilities of the relevant government agencies. The report also includes coverage of ongoing reforms.
2.5Beneficial ownership	Not assessed
The 2015 EITI Report notes that there is no clear government policy on beneficial ownership disclosure in extractives companies but provides information on the legal ownership of all but three material companies. While the MSG piloted beneficial ownership reporting in the 2015 EITI Report, only two companies reported details of physical owners.
2.6State participation
While the 2015 EITI Report describes the existence of three SOEs, it does not provide an explanation of the prevailing rules and practices regarding the financial relationship between the government and SOEs. The report provides a list of state participations in the mining sector, and describes the terms associated with the state’s 10% free-carry equity in mining projects, but not of the state’s equity in the three SOEs. The report highlights changes to state participation in the year under review 2015.
Monitoring production
3.1Exploration data
The 2015 EITI Report includes an overview of the extractive industries, including any significant exploration activities.
3.2Production data
The 2015 EITI Report provides official production volumes for gold, zinc and quarrying minerals (granite, limestone, clay and feldspar) but production values are not disclosed for granite, limestone, clay and feldspar. Given the significant difference between gold production volumes between official government sources and EITI reporting, likely due to the large size of artisanal-mined gold production, it cannot be concluded that the production values reported in the 2015 EITI Report are comprehensive.
3.3Export data
The 2015 EITI Report discloses export volumes and values for the two largest mineral exports in 2015 (gold and zinc), sourced from material companies’ EITI reporting, but only provides official statistics on the export values of these two minerals, not export volumes. Meanwhile the volumes and values of “other mineral exports” is only provided in aggregate, rather than disaggregated by mineral commodity, although the aggregate value of these exports appears marginal at USD 1,801. There is no distinction between industrial and artisanal production in the report.
Revenue collection
4.3Barter agreements	Not applicable
This Requirement 4.3 is not applicable to Burkina Faso in the year under review (2015), given the lack of evidence of any payments related to infrastructure provisions of the Tambao contract and the consensus amongst stakeholders consulted over the absence of such payments in 2015.
4.6Direct subnational payments	Not applicable
The 2015 EITI Report clearly states that municipal taxes are not specific to mining companies and thus not considered extractives-related direct subnational payments.
4.7Disaggregation
The data in the 2015 EITI Report is disaggregated by individual company, government entity and reporting entity.
4.9Data quality
The MSG appears to have approved the selection of the IA for the 2015 EITI Report, including ToRs consistent with the Board-approved template, as well as the reporting templates. While the IA appears to have reviewed material entities’ statutory audit procedures prior to agreeing quality assurance procedures for ensuring the reliability of reconciled data in the 2015 EITI Report, there is no evidence that the IA reviewed reporting entities’ actual audit practices. The 2015 EITI Report assesses the materiality of payments from entities that did not comply with the agreed quality assurance procedures and provides an overall assessment of the comprehensiveness and reliability of the 2015 EITI Report. The IA has not prepared summary tables of data in Burkina Faso’s EITI Reports.
4.1Comprehensiveness
The 2015 EITI Report includes a definition of the materiality threshold for payments and companies to be included in reconciliation. The MSG was involved in setting the materiality threshold for payments and for companies and all revenue flows listed in Requirement 4.1.b have been included in the scope of reconciliation. The companies that did not report are named and the value of their payments to government is provided relative to government-reported revenues. The share of non-reporting companies appears to be insignificant. The 2015 EITI Report states that all material government entities reported all revenues. The report also includes the IA’s commentary on the comprehensiveness of the EITI report.
4.2In-kind revenues	Not applicable
The 2015 EITI Report states that the Mining Code and model mining contract do not provide for the possibility of paying any mining-related taxes or fees in kind.
4.4Transportation revenues	Not applicable
The 2015 EITI Report states that the government does not receive transportation revenues related to the transport of mineral commodities, in the sense of Requirement 4.4.
4.5SOE transactions	Not applicable
State’s participation in the extractive sector is managed directly by the treasury (DGTCP), which received USD 4,589,454 in dividends from mining companies in 2015. The newly created SOE, SOPAMIB that would manage state participation in the future was not operational during the period under review (2015), therefore no dividends transited through SOEs. Other SOEs operational in the mining sector (BUMIGEB and SEPB) receive government funding rather than make payments to the government.
4.8Data timeliness
All of Burkina Faso’s EITI Reports under the EITI Standard have been published within two years of the close of the fiscal year(s) under review.
Revenue allocation
5.1Distribution of revenues
The 2015 EITI Report indicates that all extractive industry revenues are recorded in the national budget, highlighting non-extractives revenues that are not recorded in the national budget.
5.2Subnational transfers
The 2015 EITI Report describes statutory subnational transfers of mining revenues, provides the general formula and the central government’s unilateral disclosures of actual transfers for 2015, disaggregated by subnational government. While the 2015 EITI Report does not provide the value of budgeted subnational transfers disaggregated by subnational government (only in aggregate), it provides sufficient information to calculate what each subnational government should have received according to the formula.
5.3Revenue management and expenditures	Not assessed
The 2015 EITI Report clearly describes and discloses the value of earmarked extractives revenues in 2015 and provides some information on the government’s budget-making and audit procedures.
Socio-economic contribution
6.1Mandatory social expenditures
There is a case for considering that Requirement 6.1 was not applicable to Burkina Faso in 2015, given that the 2015 EITI Report and stakeholder consultations confirmed that there were no mandatory social expenditures required by law or contract in 2015. However, given the MSG’s efforts to address “encouraged” aspects of the requirement by presenting companies’ unilateral disclosures of their voluntary social expenditures, albeit without reconciling these, the International Secretariat considers that Burkina Faso has made satisfactory progress in meeting this requirement.
6.2Quasi-fiscal expenditures	Not applicable
While the 2015 EITI Report does not sufficiently address the issue of quasi-fiscal expenditures, stakeholder consultations confirmed that SOEs did not undertake such expenditures in 2015.
6.3Economic contribution
The 2015 EITI Report provides, in absolute and relative terms, the contribution of the extractive industries to GDP, to total government revenues and to exports as well as the main locations of production. However, the report does not include comprehensive figures on employment in the sector. There is also a lack of information on the ASM sector, which is particularly significant in Burkina Faso.
Outcomes and impact
7.2Data accessibility	Not assessed
Burkina Faso’s EITI produces brief summaries of EITI Reports and has undertaken capacity building efforts to support the use of EITI data. As encouraged by the 2016 EITI Standard, the initiative is now considering automated online disclosure of production and export data through the Burkina Open Data Initiative.
7.4Outcomes and impact of implementation
The 2016 annual progress report includes a summary of activities and assessments of progress in meeting EITI Requirements, in achieving the objectives set out in the EITI work plan and in addressing the recommendations from reconciliation and Validation.
7.1Public debate
Burkina Faso’s EITI Reports are comprehensible, actively promoted through varied channels (including print, online and through active outreach), publicly accessible and have tangibly contributed to public debate on the extractive industries in the country, particularly on the issue of subnational transfers. The government has published a clear policy on the access, release and re-use of EITI data and the EITI report is available online in an open data format.
7.3Follow up on recommendations
The presence of high level officials on the MSG has led to actions to identify, investigate and address the causes of discrepancies and to consider the recommendations for improvements from the IA in previous EITI Reports. None of the recommendations in past EITI Reports have been fully implemented according to the 2015 EITI Report.