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The Board agreed that Togo has made meaningful progress in implementing the 2016 Standard.

Outcome of the Validation of Togo.

Decision reference
2018-24 / BC-249
Decision basis
2016 EITI Standard, Requirement 8.3 EITI Validation deadlines and consequences

Board decision

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

In taking this decision, the EITI Board commends the efforts of the Government of Togo on progress made in using the EITI to enhance transparency and accountability in the country’s extractive industries. The EITI Board notes that the EITI has contributed to bring valuable information to the public domain and improve the country’s statistics, particularly on employment and production. EITI implementation has contributed to accelerate tax reforms in the mining. It has also led to improved oversight of subnational transfers to local authorities. The Board encourages the government to enshrine transparency requirements in regulations for the new mining code, including provisions related to beneficial ownership disclosure.

The Board notes Togo’s efforts to go beyond the requirements of the EITI Standard in disclosing voluntary social expenditures (6.1). The Board also notes the government’s efforts in using the EITI to bring more transparency in the marketing of precious minerals, transportation, and groundwater exploitation.

To put the EITI process on a stronger footing, the Board encourages Togo to improve the governance of the EITI Steering Committee by clarifying rules and procedures for constituency nominations and representation. The Board also encourages Togo to enhance transparency of state owned companies (SOEs) managing state participation in the extractives sector, by providing more information on the financial relationship between the state and SOEs. The Board encourages the MSG to work with the Office Togolais des Recettes to develop a procedure for regular and systematic disclosure of disaggregated data on mining revenues. The Board determines that Togo will have 18 months, i.e. until 8 November 2019 before a second Validation to carry out corrective actions regarding the requirements relating to MSG governance (1.4), EITI workplans (1.5), contract transparency (2.4), state participation (2.6), barter agreements (4.3), SOE transactions (4.5) and subnational transfers (5.2). The Board strongly encourages Togo to address corrective actions related to MSG governance (1.4) as a priority. 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, Togo’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 Togo. Progress in addressing these corrective actions will be assessed in a second Validation commencing on 8 November 2019:

  1. In accordance with requirement 1.4, the MSG should update its internal governance document with provisions ensuring that (i) representation on the MSG comprises appropriate stakeholders; (ii) there are clear procedures for alternate Steering Committee members and replacement of Steering Committee members; (iii) MSG members liaise with their constituencies; (iv) there is a mechanism for dealing with conflicts of interest; and (v) the Steering Committee’s policy on per diems is clear and transparent. The MSG should consider the adoption of the Ministerial order on the renewal of the MSG.

  2. In accordance with requirement 1.5, the MSG should ensure that the work plan sets clear implementation objectives that are linked to the EITI Principles and reflect national priorities, and that the workplan clearly sets out the agreed activities and responsible parties.

  3. In accordance with requirement 2.4, the MSG should clarify the government’s policy on contract transparency, including relevant legal provisions, actual disclosure practices and any government reforms that are planned or underway.

  4. In accordance with requirement 2.6, the MSG should disclose details regarding the terms attached to the SOE’s equity stake, including their level of responsibility to cover expenses at various phases of the project cycle, e.g., full-paid equity, free equity, carried interest, for instance on the company’s website. The MSG should also provide details on loans and loan guarantees to SNPT.

  5. In accordance with requirement 4.3, the MSG should gain a full understanding of the terms of the relevant barter agreements and contracts, the parties involved, the resources which have been pledged by the state, the value of the balancing benefit stream (e.g. infrastructure works), and the materiality of these agreements relative to conventional contracts. The multi-stakeholder group and the Independent Administrator should ensure that the EITI Report addresses these arrangements, providing a level of detail commensurate with the disclosure and reconciliation of other payments and revenues streams.

  6. In accordance with requirement 4.5, the MSG should ensure that SNPT provides the detailed information requested by the Independent Administrator allowing for more in-depth reconciliation with government figures.

  7. In accordance with requirement 5.2, the MSG should liaise with the OTR to disclose the revenue sharing formula for any transfers between national and subnational government entities that are related to revenues generated by the extractive industries, including any discrepancies between the transfer amount calculated in accordance with the relevant revenue sharing formula and the actual amount that was transferred between the central government and each relevant subnational entity.

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

Background

The Government of Togo committed to implementing the EITI in December 2009 and a multi-stakeholder group was created in March 2010. The country was accepted as an EITI candidate in October 2010, and became compliant with the 2011 EITI Rules in May 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 from the MSG were received on 1 February 2018 [English | 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 26 January 2018 and presented a paper for discussion at the Board’s 39th meeting in Oslo on 13 February 2018. Following receipt of MSG comments and finalisation of the Validation report, the Validation Committee reviewed the case again on 26 March 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 Togo’s 2016 and 2017 EITI Reports.

Scorecard for Togo: 2018

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

Government stakeholders appear fully, actively and effectively engaged in all aspects of EITI implementation, including scoping, reporting, dissemination and outreach.

1.2Company engagement

Mining and water companies are actively and effectively engaged in the EITI process as providers of information. In the absence of Chamber of Mines, the professional association of extractive industries in Togo (APIET) aims to fill this void. Despite challenges linked to land ownership, companies did not express any real barriers to operations in Togo.

1.3Civil society engagement

Civil society seems to be able to speak freely despite rare cases of repression, not directly linked to the EITI. Although civil society is fragmented across over 5,000 associations and NGOs, the efforts of MSG members to disseminate information to civil society through the print media are acknowledged.

1.4MSG governance

One key EITI structure, the National Supervisory Council, has not met since the appointment of the new Prime Minister and Chair of the Council, in 2015 and the reporting mechanism between the three EITI structures remains unclear. The policy of reimbursement of the Steering Committee transportation expenses is not clarified by official documentation and the Terms of Reference could explicitly refer conflicts of interest and replacement of MSG members.

1.5Work plan

While significant aspects of the work plan have been implemented, due to limited funding, other aspects such as broad dissemination of EITI Reports, have not been achieved. Further attention could be given to links with national priorities.

Licenses and contracts

2.1Legal framework

The 2014 EITI Report includes a summary description of the fiscal regime, including gaps in the legislation. The report covers the level of fiscal devolution, an overview of the relevant laws and regulations, and information on the roles and responsibilities of the relevant government agencies. The report also includes information about reforms underway.

2.2License allocations

The EITI 2014 Report indicates the process for awarding or transferring the license(s), and gives information on the award of licenses. Information on transfers were included in the stakeholder consultations. There was no evidence of competitive bidding in 2014.

2.3License register

The 2014 EITI Report includes the names of licence holders and date of award and expiry for all the licenses. Further information on the dates of application and coordinates for all licenses is on the Ministry of Mines' website.

2.4Policy on contract disclosure

The government does not have a clear written policy on the publication of contracts including the relevant legal provisions and any reforms that are planned or underway. However, the report gives information on actual disclosure of allocation decrees.

2.5Beneficial ownership

Not assessed

The MSG has agreed and applied its definition of BO for EITI reporting and made attempts to disclose the beneficial owners of material companies reporting in EITI Reports. The latest EITI Report lists physical persons as beneficial owners for five companies. However, the EITI Report has not clarified the government’s beneficial ownership policy. The list of legal owners is not comprehensive in the 2014 EITI Report. The MSG established a BO working group to steer preparations of Togo’s three-year roadmap by 1 January 2017.

2.6State participation

The 2014 EITI Report provides some information on the prevailing rules and practices regarding the financial relationship between the government and SOEs and discloses dividend payments from the government’s 10% free carry. The report does not clarify the rules for retained earnings, reinvestment and third-party financing for the SOEs in the country. The report has not documented any information on the loan from the World Bank to revive the SNPT.

Monitoring production

3.1Exploration data

The EITI Report gives an overview of the extractive sector, including on exploration activities.

3.2Production data

Togo has no official comprehensive statistics on production. To address this gap, the MSG requested that participating companies and government agencies provide production data, which is reconciled in the EITI Report. While there are some gaps and concerns about data quality, the issues are addressed transparently in the report.

3.3Export data

Togo has no official comprehensive statistics on exports. To address this gap, the MSG requested that participating companies and government agencies provide export data, which is reconciled in the EITI Report. While there are some gaps and concerns about data quality, the issues are addressed transparently in the report.

Revenue collection

4.1Comprehensiveness

The MSG has considered and agreed an approach to materiality and ensured that all material revenue streams are included in the scope of the 2014 EITI Report. The report includes a reconciliation of 97% of government revenues and company payments. The government has also disclosed total revenues received from each company.

4.2In-kind revenues

Not applicable

The EITI Report and stakeholder views have confirmed the absence of in-kind revenues as per requirement 4.2. of the EITI Standard.

4.3Barter agreements

Barter and infrastructure agreements exist in Togo, but documentation linked to this is not publicly available and has not been extensively disclosed by the MSG.

4.4Transportation revenues

Not applicable

The report includes a description of the transport agreements including transportation of minerals by rail. The report states that payment of transport-specific taxes amounted to zero in fiscal 2014.

4.5SOE transactions

The SOE, SNPT, disclosed its payments to the government. Although SNPT comprehensively disclosed its payments to the government, it did not provide detailed receipts allowing for more in-depth reconciliation with government figures.

4.6Direct subnational payments

The 2014 EITI Report discloses payments by companies and receipts by local government units. Where possible, these flows are also reconciled. This process could be better detailed in EITI Reports.

4.7Disaggregation

In accordance with Requirement 4.7 of the 2016 EITI Standard, the 2014 EITI Report notes that data was reported by company, by revenue streams and by reporting public entities.

4.8Data timeliness

Data covering financial year 2014 was published by the end of 2016, in accordance with the EITI’s timeliness requirements.

4.9Data quality

The IA and the MSG agreed ToRs to produce the EITI Report consistent with the standard ToRs and agreed upon procedures issued by the EITI Board, and applied this ToRs and procedures in practice. The report provides a clear statement from the Independent Administrator on the reliability of the (financial) data presented, including a summary of the work performed by the Independent Administrator and the limitations of the assessment provided.

Revenue allocation

5.1Distribution of revenues

The 2014 EITI Report notes that in Togo all mining taxes are collected by the financial authorities and allocated to the state budget, except for royalties, registration fees and specific fixed duties paid to the DGMG. The MGS did not discuss possible mechanisms that could be put in place to establish the traceability of extractive sector revenues.

5.2Subnational transfers

The report covers the main subnational transfers, but the actual revenue sharing formula used and the discrepancies between the amount transferred and the amount calculated were not clear to stakeholders.

5.3Revenue management and expenditures

Not assessed

It is encouraging that the MSG has made some attempt to including information on the budget-making process and audit processes the EITI Report.

Socio-economic contribution

6.1Mandatory social expenditures

The 2014 EITI Report discloses the nature and value of discretionary social expenditures, including identifying the beneficiaries.

6.2Quasi-fiscal expenditures

Not applicable

Stakeholder consultations have confirmed that quasi-fiscal expenditures do not occur in the extractive sector in Togo.

6.3Economic contribution

The 2014 EITI Report discloses details about the contribution of the extractive sector to the economy in terms of GDP, total government revenue, exports and producing regions. Togo has no official comprehensive statistics on employment in the sector. To address this gap, the MSG requested that participating companies and government agencies provide employment data. While there are some gaps and concerns about data quality, the issues are addressed transparently in the report.

Outcomes and impact

7.1Public debate

The EITI Reports are comprehensible, actively promoted through varied channels, publicly accessible and have tangibly contributed to public debate on the extractive industries.

7.2Data accessibility

Not assessed

EITI-Togo has published data in machine-readable format and summaries of EITI Reports in accessible infographic format.

7.3Follow up on recommendations

The MSG and the government have taken steps to act upon EITI recommendations which have positively impacted mining revenue governance in Togo.

7.4Outcomes and impact of implementation

The Steering Committee used annual progress reports and Validation self-assessments to document the impact of the EITI. These assessments could be done in a more systematic manner.

Countries
Togo